Future of Advertising in a Cookieless World
7 min read
It’s no longer impossible to imagine an era without cookies in online advertising. The post-cookie world is almost here thanks to consumer demand and new legislations.
It’s no longer impossible to imagine an era without cookies in online advertising. The post-cookie world is almost here thanks to consumer demand, legislations such as GDPR and CCPA. Google first announced in August 2019 it was taking measures to protect the privacy of website users within its Chrome browser — a move that is similar to Mozilla with its browser Firefox (Enhanced Tracking Protection) and Apple with Safari (Intelligent Tracking Protection) and IOS 14.5 update. Google’s Privacy Sandbox, scheduled to be completed in 2023, is under construction. ‘’The Privacy Sandbox will lay new foundations for a safer, more sustainable, and more private web.’’ says Google on their dedicated website: https://privacysandbox.com/
So What Will Happen?
In a nutshell, agencies and brands won’t be able to accumulate data via third-party cookies. Targeting and retargeting audiences will change: FloC and Fledge by Google are the first to come to mind. In one of our previous blog posts, we mentioned that FloC will assign users to cohort IDs that resonate with their browsing interests hence creating anonymized targeting groups.
Questions the Advertising Industry Has to Face Besides Targeting
Retargeting: Normally, retargeting tracks internet users’ browsing patterns and displays relevant ads across partner sites while they browse. In the absence of third-party cookies, this will not be possible in the same way.
Audience extension: One of the most effective ways to maximise engagement is to show an ad across different websites. This involves recognizing other audiences who fit a wider profile and joining them to a campaign. After third-party cookies are removed, recognizing these groups will require alternative methods.
View-through attribution: Marketers depend on view-through attribution to get a holistic view of their marketing mix. The limitation of data streams provided by cookies will force marketers to find new ways of investing budgets according to their performance.
More paywalls and/or logins: The loss of revenue from cookie-based advertising campaigns might force publishers to put their content behind paywalls. Yet, publishers have the option to serve content free and take login information as first-party data in return. Over the years Google, Facebook and Apple logins (SSO) have also sieged this stage, saving users time, not having to set passwords while logging in. This means, both for paywalls and platform logins, users’ preferences will be the decisive factor.
Frequency capping: This limits how many times a user is shown an ad in a predetermined period of time, increasing media efficiency and reducing fatigue risk. Without cookies, that information will no longer be available in the traditional sense.
Browsers and Apps Block Third-Party Cookies
As a result of data protection concerns by users, browsers have recently taken steps to block third-party cookies. With Firefox and Safari already having blocked third-party cookies, Apple took this a step further and disabled app tracking by default in their iOS 14.5 update. As of 2021, worldwide only %21 of users allow app-tracking. (Statista, 2021)
Possible Implications on Publishers
The majority of large digital publishers generate their revenue from partners who collect user data from their pages. A 2019 study by Google found that for the top 500 publishers worldwide, disabling third-party cookies would decrease ad revenue by 52% (Effect of Disabling Third-Party Cookies on Publisher Revenue, 2019) Publishers will have to develop new revenue-generating strategies for using the large data sets they produce.
Expected Changes for Demand Side Platforms
According to Deloitte there should not be a drastic reduction in the appeal of DSPs. The majority of these platforms enable granular targeting and campaign management using other parameters (such as whitelisting, content categories, keywords, location, device, browser, and first-party audiences), in addition to the vast supply of display and video inventory available through partnering ad exchanges. (How the Cookie Crumbled: Marketing in a Cookie-Less World, 2020)
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Improve first-party data collection
With the planned phase-out of cookies from the ad realm, everyone feels like there is a crisis upcoming but at the end of the day were the third-party cookies that effective? Research conducted in 2018 suggested that 64% of the tracking cookies were either blocked or deleted by web browsers(users). (Sullivan, 2018)
Unlike third-party cookies, first-party cookies will be of particular importance in the future because they will enable clean, yet targeted communication under data protection laws. Additionally, these cookies offer a more accurate view of the visitor’s journey and have a longer lifespan. Often, cookies can be deleted by users, but first-party cookies can’t be blocked by automatic cookie blockers or private browsers.
Due to disconnected marketing technologies, it can be challenging to combine first-party data into something actionable and coherent. A customer data platform might be useful here. In a customer data platform(CDP), user data from various sources (e.g. app, website, offline) can be compiled, analyzed in a business intelligence solution and then reactivated for marketing.
Second-Party Data — First Time So Important
Second-party data is someone else’s first-party data purchased. Marketers can access second-party data from another brand for a mutually beneficial outcome. An example would be credit card providers working with airline companies to identify travel-intent audiences across their portfolio and provide them with offers based on their specific usage of travel services. (Zelcer, 2021) Marketers have endless opportunities to use second-party data, but brands should offer consumers an option to opt-out of these programs.
Contextual Targeting as a Savior
Since contextual ads have been around for a few years, they have been used as a complement to more traditional cookie-based campaigns. Times are changing and it looks like contextual targeting will come to the rescue when third-party cookies are completely phased out. The research depicts that the Global Contextual Advertising Market to Reach US$376.2 Billion by the Year 2027. (Global Contextual Advertising Industry, n.d.)
In this process, the content of websites is scanned for keywords or, in the next step, various parameters of the environment (e.g. still visuals and, videos) are included in the analysis and semantic connections are utilized to draw conclusions about the interests of the visitor. While the methods are now sufficient for example to determine that an article is not a car comparison but a report on car accidents, this form of targeting is projected to progress as a complementary way to navigate.
Some news publishers have long started offering contextual targeting. However, there are still disadvantages to consider since the blacklists of advertisers, who block a large number of words due to brand safety measures. But it is obvious that contextual targeting would be overbooked in the post the cookie era, because advertisers could at least target users with a likely interest in buying.
In addition, there are probabilistic methods, so-called fingerprinting, which uses an “imprint” of the system settings (plugins, fonts, browser version, etc.) to create a profile. But one thing is clear: Fingerprinting will not save the advertising world either. Google has already spoken out against it with Chrome as the market leader. (Introducing the Privacy Budget, 2020)
A recent Epsilon study found that 80% of marketers still rely on third-party cookies, and 83% expect their advertising efforts to suffer as a result. Evidently, advertisers have some work to do in preparation for cookie deprecation. They need to be at the ready with innovative approaches for surviving a world where each platform seems to build their own way to conserve data and therefore disconnect from one another, disabling a holistic advertising scene.