New technology, consumer sentiment, and industry changes are all affecting the future of the third-party cookie (3PC). While the cookie-based revenue on retargeting and third party data is still strong, the golden age of the 3PC is at its end. This is causing great turmoil for some in the digital advertising industry, but some — like me — see it as a good thing. Before we get to the why I believe this, we need to understand the challenges, implications, and benefits of the cookie-less consumer.
First Challenge: The rise of the multi-device consumer. If you take me as an example of the modern digital consumer, my “best of breed” devices include an android smartphone, an iPad, and a MacBook Air. I engage with brands on all three, and I am a nightmare to measure by any ad tech company. Even if cookies stick 100% of the time, I have three different identities on those devices. In the very near future there will be many more digital devices introduced (glasses and watches being the next trend), making the multi-device consumer a very real challenge. The saving grace with these new devices is that the smartphone is likely the common nucleus for connectivity of these valence devices.
Second Challenge: Third party cookie browser support is fading. With Apple never showing up to the 3PC party on desktop, Safari and Mobile Safari, and Firefox planning (but postponing) to end their support of 3PC from their default, this effectively means 30% of the entire browser market will not be countable, or re-target-able if a company is only relying on the 3PC. This is in addition to another 30% of users who also delete their cookies four times a month on average. (Comscore/Digiday)
Third Challenge: It’s an app world out there. To make it matters worse, cookies don’t persist across apps and the web when advertising on mobile devices. Apple has introduced the IDFA which raises the bar for consumers to opt out of targeting. Android provides a unique ID but you cannot prevent apps from sending your unique device identifier through global settings like on the iPhone.
These challenges present very real implications to the entire business of digital marketing.
- Your cookie based reports are not telling the whole story: Your CPA is likely lower in reality as well since you might not be applying activity attribution properly Your unique reach will be lower and your frequency will be higher How do you stay on message across channels to the same consumer? How do you make a decision on the value of a channel if cookies are not an option? Does a retargeting-only media plan make sense anymore?
- Your CPA is likely lower in reality as well since you might not be applying activity attribution properly
- Your unique reach will be lower and your frequency will be higher
- How do you stay on message across channels to the same consumer?
- How do you make a decision on the value of a channel if cookies are not an option?
- Does a retargeting-only media plan make sense anymore?
So why is a cookie-less consumer a good thing? My favourite answer is that it enables us to think hard about marketing in the greater context of a multi-device consumer. Remember that actual person we’re trying to reach with the right message on the right device? Marketing shouldn’t be about dropping the last cookie in the cheapest way on their desktop browser just before they convert. We as an ad tech community have been caught up in this game for too long. It’s time to move on!
But where do we move to exactly? Hunting for the next “cookie replacement technology” is going to cause intense debate among privacy advocates, ad tech companies, publishers, brands and consumers. The one thing we can agree on is that there will be plenty of experimentation in the near future. If you ask any ad tech company what they think, they probably have some “house-holding” or “multi-device” technology, or they are working on it in skunk works.
In reality, these “cookie replacement” methods and technologies can be bucketed in a few categories:
- “Super-Publishers”: Google and Facebook are great examples of “Super-Publishers” that have a persistent user identifier across all devices (and have native apps as well as websites). Owners of this data will likely monetise it internally rather than expose it externally. This is a great opportunity for publishers with large user bases which extend between mobile phone and the web.
- House-holding or Wifi-Bridging: Taking data available on the HTTP request (user agent, IP address, timestamps) and intelligently mapping that user to a household or group of households for profiling.
- Algorithms: Does the same iPad IDFA and desktop cookie show up on the same network between 9am and 5pm and then again on another network between 6pm and midnight? It’s probably the same person. Think about algorithms like that – there are many ways to link devices together based on HTTP and other types of data.
- Fingerprinting: Running extra code on the impression or retargeting action to generate a unique ID that only a single browser can produce. There are many competing technologies for this, but running that code snippet tends to be the overall issue as publishers don’t like it.
- Cookie Trusts: This is a concept where publishers, consumers, and advertisers can all use a common non-profit clearing house for IDs and essentially builds their own federated “Super-Publisher”.
- Opt-in Paneling: Installing opt-in panel software across a consumers devices to track them as they surf. Sounds a lot like “Nielsen” families for TV, but for the digital age.
With all that technology above, eventually something will win out or be considered the “right” methodology by the IAB. That being said, whatever we do, it must be equal or better than what we do today – giving the consumer notice and choice. We must provide a consistent opt-out mechanism that works for every bit of technology used. If I had to put my money into it, “Super-publishers” will be the first to truly nail targeting and analytics for a digital consumer. Their Achilles heel though is they do not have access to a full media plan unless all ads run through them.
What does a Brand do in the meantime? My advice is to:
- Keep calm! Cookies still do the same thing they’ve always done. Firefox has postponed their planned removal of 3PC by default. At DataXu, if Firefox actually releases the update, we’ve estimated the impact of 3PC loss to be about 6.5% of retargeting in the case when all users upgrade and delete their cookies. The sky isn’t falling, but your media plan might need to be tweaked.
- Be cautious of cookie-less targeting technology. Understand what’s really going on (or hire someone who can help you understand) to ensure that your Brand will not be a poster-child for privacy legislation.
- Cookies might not have been the answer in the first place. Develop heuristics, analytics, and first party data for campaign performance that can show lift even if your ad server can’t count the conversion.
Rely on trusted marketing platforms and services teams that don’t rely solely cookies to fuel their media buying!
Lastly, enjoy this period of marketing history. We’re in the digital wild west right now and are likely setting standards for marketing that will be around long after even our youngest media planners are retired.
Adam Markey is a Senior Product Manager at DataXu. He focuses on omnichannel media and analytics products, and is a technical leader in the exchange traded media space.
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