With less than a year to go until the industry bids farewell to the third-party cookie internet and ushers in a new era of digital advertising, where are we now and what does the future hold?
Third-party cookies have been the bedrock of digital advertising since the late-1990s. For more than two decades, they have allowed advertisers to follow internet users across the web and target them with ads, giving unique insight into how audiences behave in a way other forms of media simply cannot do. But this has, many feel, been at the expense of people’s privacy online.
Google’s deadline to remove third-party cookies from Chrome by the end of this year is fast approaching and the media industry is on the precipice of one of the single biggest changes to digital advertising in its history. The foundations on which digital advertising is built are crumbling.
With less than a year to go, questions remain over how prepared the industry is, who stands to benefit and what a “privacy-first” future might look like.
Race to evaluate
While Google continues to wrangle with adtech vendors and working groups about what a cookie-less future actually looks like, publishers are trying to work out what it means for their bottom line, while advertisers figure out how to plug the cookie-shaped hole left in their digital marketing evaluation strategies. It feels like there is some way to go.
Crucially, advertisers need to develop new evaluation techniques to ensure their view of the consumer purchase journey is not limited to the last click.
“This is a big problem because some types of advertising are more likely to be the last click than others,” says Dr Grace Kite, founder and managing director of consultancy Gracious Economics. “Without cookies, advertisers are at risk of being misled into thinking that the end-of-journey type is more effective than it really is.”
Retail brand Made.com is thinking about how to expedite its investment in modelling in a way that will enable it to understand relationships and make media mix or optimisation decisions.
“While the depreciation of cookies challenges the ability to personalise and measure digital media, it does not challenge the value of the medium itself,” says Made.com’s performance marketing director Matt Pollington.
“Importantly, marketers will need to invest in talent and work with partners who enable them to leverage their first-party customer and behavioural data insights to get the best outcomes from their media and digital advertising.”
Control, context and collaboration
As publishers and advertisers seek to regain control of their first-party data and increasingly build their own walled gardens, advertisers will need to learn to reframe their understanding of effectiveness in terms of understanding audiences are still valuable even if they cannot measure them in the same way.
“The biggest challenge is around resetting expectations because we have come so far along the road in using third-party cookies that we have expectations of what digital advertising delivers compared to other media,” says IAB UK’s head of adtech Tina Lakhani. “Right now it’s fairly consistent in what you can do and expect in terms of reporting and measurement across the ecosystem.
“In future it will be around understanding the nuances of working in different environments and forming the right strategy and measurement approach off the back of those.”
In line with the shift towards subscription models and logged-in environments, contextual advertising will continue to gain popularity as a privacy-friendly, brand-safe way for advertisers to work with publishers to reach niche audiences in quality environments and in an increasingly personalised way.
The industry was issued a stark warning last year when a study by the Incorporated Society of British Advertisers found 50 per cent of the money advertisers invest in programmatic advertising never reaches online publishers. A national newspaper investigation previously found adtech businesses were extracting up to 70 per cent of advertisers’ money without being able to quantify the value they provide to the brand.
An internet without third-party cookies gives advertisers and publishers a crucial opportunity to collaborate to understand their audiences better and build a sustainable internet where every penny spent is accounted for.
Privacy, competition and walled gardens
Google’s Privacy Sandbox alternative to third-party cookies is already being criticised for not being as privacy-friendly as Google would want you to think, given it will provide Google with more directly identifiable, personal information about its users.
It is important to remember that Google’s fortunes are tied to online advertising, so it is not in Google’s interests to break how online advertising works.
Joseph Evans, head of tech at Enders Analysis, says there are a few key things Google is interested in stopping, which are the “leaky bits” of the data economy that allow people to be profiled or tracked without their consent.
“The proposals will put a stop to that but [Google] is not interested in stopping the whole principle of being able to serve ads to people based on who they are or what they’ve been doing online,” says Evans. “If you see the privacy harm as consisting in that principle of online advertising, you won’t be satisfied with what Google is doing.”
Given Privacy Sandbox will effectively create a Google-owned walled garden, the Competition and Markets Authority is currently investigating whether this will cause advertising spend to become even more concentrated on Google’s ecosystem at the expense of its competitors.
Changes like this do tend to concentrate the market further and the bigger players that already have strong media fundamentals, those with high usage, massive reach and first-party data, will almost certainly be hurt to a lesser extent than smaller publishers on the open internet.
Amazon stands to emerge from this in an especially strong position from an advertising point of view, given everything happens within its walled garden. Facebook and Google are increasingly making similar moves to try and bridge the gap between an advert and sale so users never have to leave that environment. We can be certain this will only intensify as the fight for data in a cookie-less era goes on.
The Information Commissioner’s Office (ICO) has resumed its investigation into adtech and real-time bidding (RTB) following a nine-month pause due to coronavirus. The data regulator has been reviewing the way people’s personal data is being used since 2019.
It has shone a fierce spotlight on how the RTB system has been using people’s sensitive data, which relates directly to health, sexuality or religion, to serve ads, at scale, without having their explicit consent.
Much of the attention has fallen on the role brands have been playing in continuing to fund businesses that misuse people’s personal data. The ICO issued a warning in January 2020 that it will issue heavy General Data Protection Regulation fines to brands that continue to engage in illegal practices, which are propping up an unethical, non-transparent digital ecosystem.
The ICO is taking a slightly different approach to its investigation this time round in that its initial focus will be on auditing data-management platforms. It intends to find out exactly what data is being supplied for RTB purposes, where it is coming from and whether it is being shared in a regulatory compliant way.