Article

Fredrik Kinge
Fredrik Kinge 7 May 2021

How Should Advertisers Prepare and Adapt for the Post-Cookie Era?

In a blog post released on March 3rd, David Temkin, Google’s Director of Product Management, Ads Privacy and Trust, confirmed that Google would be killing off the cookie, as early as January 2022. He also clarified the tech giant’s plans for targeted advertising and a ‘privacy-first web’.

The tech, media and advertising industries have all known this is coming – Google first announced that it would be stopping support for cookies on Chrome back in early 2020, and it is not the first browser to do so. However, the blog post has got everyone talking about Google’s search for alternative solutions to targeted advertising, as well as proposals from other players. So what does it mean? And where will it leave advertisers?

Why is Google Stopping Support for Cookies?

Google, like the other tech giants, has come under increasing scrutiny and regulation around the world, with regulators and lawmakers looking very carefully at the company’s privacy and antitrust record. Indeed, two hires that the Biden administration recently made would appear to confirm that the US will continue to robustly enforce antitrust laws and other regulations.

What’s more, there is a prevailing and increasing sentiment amongst internet users that they are worried about their privacy: in research conducted by Pew Research Center in 2019, 79% of American adults reported being somewhat or very concerned about the way their data is used by companies.

It’s also as simple as a change in consumer habits: in the third quarter of 2020, mobile devices (excluding tablets) generated 50.81% of global website traffic – a share that has consistently hovered above the 50% mark since the start of 2017. Mobile browsers and apps don’t accommodate web-based cookie tracking as effectively as desktops, so there is a hole in advertisers’ ability to target their users.

What is Google Proposing as an Alternative?

Google’s statement earlier this month and the ensuing debate makes it clear that the industry is still only in the early stages of redefining how the online media market will work when the cookie becomes defunct. There is still a lot of uncertainty, and the industry is in a period of frantic experimentation, urgently seeking the best way to effectively target consumers with advertising.

In his blog, Temkin promised that Google would not implement new ways to track individual users around the internet, and vowed that the company would only use privacy-preserving technology that relies on methods such as anonymisation and aggregation of data.

Google’s Privacy Sandbox initiative, which is seeking ways to protect privacy whilst allowing content to remain freely available on the open web, has plans to start testing one proposal with a group of advertisers in Q2 of this year. This proposal would group internet users based on similar browsing behaviours; only cohort IDs, rather than individual user IDs, would be used to target them.

This approach is based on the same principle as Facebook’s, which offers advertisers the opportunity to target ads to certain categories of users based on their data. Google will be keen that this proposal is workable and appeals to brands, as marketers are already diversifying their ad spend up and down the funnel.

Other Players are Exploring Targeting Alternatives as Well

It’s not just Google with skin in this game: other collectives and ad tech players are also seeking ways to balance privacy with personalised, targeted advertising. A major collective formed last summer, called the Partnership for Responsible Addressable Media (PRAM), has brought together the IAB Tech Lab, the WFA, major advertisers like Ford, Unilever and IBM, media agencies, tech vendors and publishers.

PRAM is proposing relacing cookie-based tracking with tracking tied to individual email addresses, whereby a user would log into a participating site with their email address or phone number, which would then be scrambled and used to keep tabs on them as they navigate other participating sites.

Google has called this email-based approach impractical, and claims that it wouldn’t meet ‘rising consumer expectations for privacy’, or ‘stand up to rapidly evolving regulatory restrictions’ – and therefore wouldn’t be a sustainable investment in the long term.

Even taking into consideration Google’s motives for casting doubt on whether cross-site individual tracking will meet consumers’ and legislators’ expectations and therefore the wisdom of investing in such a targeting methodology, the tech giant isn’t wrong in its conclusions. Many view this as a bold act by Google – they are soberly letting go of bad habits while others are just trying to cut back on the worst parts and hoping it will be enough.

Perhaps Google’s statement was in fact the most helpful thing that they could do for the industry as it approaches this crossroads, pointing out that what they are trying to do won’t work, and they need to start over.

Industry Experts aren’t yet Sold

While some industry experts and commentators believe that Google’s Privacy Sandbox proposal would be an improvement on the current, cookie-supported situation, others are yet to be convinced. They claim that Google is just swapping one form of invasive tracking for another and could, for example, work out who a user is by cross-referencing their information with an email address from one of Google’s owned sites.

They are equally sceptical about the email address approach, pointing out that it would be easy to ‘reverse-engineer’ a user’s identity by combining scrambled information with other information available in the public domain.

What are the Implications?

The implications of Google’s announcement are still unclear, and the situation will continue to unfold over the coming months. It’s safe to say, however, that we will never see anything close to the breadth and width of tracking coverage that cookies have given marketers over the last 25 years. It is thought that the demise of the cookie will affect 85% of online advertising as we know it.

New solutions will come from a wide range of different sources and approaches, so will be fragmented. What’s more, a large share of online traffic may not be identified at all; outside walled gardens, contextual targeting is likely to become the main tool.

That isn’t necessarily a bad thing – it offers marketers the ability to deliver ads to consumers when they’re in a specific situation or frame of mind, which can only be a positive as consumer behaviour becomes more fragmented and unpredictable. It’s also an antidote to many of the issues around brand risk and safety.

It’s worth bearing in mind that, just because the ways in which we manage reach, frequency and targeting are being fundamentally redesigned, it does not mean that people will radically alter their media consumption patterns, or that there won’t be any ways to target people online. Large sites with good user experience and consumer trust will retain their traffic and they will still be open for ads, even if impressions are anonymous.

Ad impact on brand metrics and sales will remain, even when conversions can no longer be tracked. As Google said in their statement, ‘advertisers don’t need to track individual consumers across the web to get the performance benefits of digital advertising.’

How Should Advertisers Prepare and Adapt for the Post-Cookie Era?

For now, advertisers need to understand which tools will be lost, which will remain uncertain and which will not change. They should also keep their ad tech flexible and rely on their media agencies for guidance and updates. This is probably not the best time to be investing in ad tech or in-housing.

Looking ahead, even when data outside of Facebook and Google’s walled gardens is scarcer, advertisers should not resort to increasing their spend with these two platforms beyond what is proportional to media consumption patterns. They should also refrain from resorting to last-click attribution as view-through conversions tracking and MTA fail. Survey-based data and insights on brand metrics will undoubtedly surge.

Many advertisers are, rightly, focusing on their valuable first-party data, exploring ways to leverage it in order to make better-informed advertising decisions. Many will seek to work with partners to establish a data-exchange from different sources, including with the walled gardens.

Marketers will also be able to integrate their consumer research with their first-party data, giving a clearer picture of what consumers do, and why they do it. This will in turn allow them to more effectively target audiences with the best messaging in the best context.

The key takeaway? Hold tight – there’s no need to panic or do anything rash. Alternatives are being worked on and anyway, a world without the ability to track your consumers across the web might not be such a bad place.

The 2021 Guide to Advertising without Cookies will help unlock the new possibilities of a cookieless world.

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