As the cookie crumbles, what comes next for digital advertisers?

While the demise of third-party cookies is shaking up the adtech world, marketers face the dual challenge of finding alternatives that enable identification and are privacy compliant.

The end of third-party cookies will soon be a reality for marketers and as adtech and martech players move to adapt, there will be a range of new tools for identification. What alternatives are emerging and how do they handle protecting user privacy and providing addressability?

As the recent Deloitte Privacy Index 2020 pointed out, meaningful consent should be front and centre for every industry and every sector. Yet 83 per cent of consumers said they are concerned by Internet cookies that track their activity online for use in marketing or to sell information on to third parties.

Deloitte national privacy and data protection lead partner and author of the index, David Batch, said while meaningful consent and permission are intrinsically personal, the consulting group's research overwhelmingly demonstrates a disconnect between what consumers expect and what brands actually do.

“No one wants to give consent through constant pop-ups,” Batch said. “Nor does a consumer consider consent is given when driven through a catch-all, non-specific privacy notice. The key is in empowering people to choose if, when and how they participate.”

It’s a sentiment echoed by Gartner research analyst, Andrew Frank, who told CMO what’s needed is a more innovative approach than just banning cookies and requiring consumers to opt-in or opt-out of alternative tracking schemes for every website or app.

“So far, a solution that serves consumer privacy interests as well as the economic interests of publishers and brands has been elusive,” Frank said.

If that's the case, just how are we going to find the cookie alternative for digital advertising?

How did we get here?

The demise of cookies kicked into overdrive in 2019 when Google announced third-party cookies would become obsolete in its Chrome Web browser within two years. It’s part of a wider push for better user privacy protections, spurred on by EU requirements like GDPR and the ones that have followed like California’s CCPA.

For Google, the aim is to give users more control over their own privacy, while still enabling publishers to generate revenue and brands to be able to target consumers. 

“Users are demanding greater privacy - including transparency, choice and control over how their data is used - and it’s clear the web ecosystem needs to evolve to meet these increasing demands,” director of Chrome engineering, Justin Schuh, wrote in a blog post at the time of the announcement.

No longer fit for purpose, the search giant views third-party cookie blockers as a blunt instrument that can lead to more invasive tracking like fingerprinting and give users a poor experience on websites. And Google saw the writing on the wall for cookies with increasing adoption of cookie-blocking tools, the ability for users to clear cookies in a few clicks and the rise in privacy requirements and the wider push back against online tracking.

Google's cookie crumbling move came six months after its ‘Privacy Sandbox’ plans for Chrome. This aims to get the right balance between advertising revenue and user rights to privacy. Instead of relying on individually identifying information, an API or interface, in the browser allows access to centrally held data when Chrome verifies that it will be used anonymously. 

Google isn’t the only one turning its back on cookies. Mozilla, which is behind the Firefox browser, has been beefing up the tracking protection for users of its browser and has also declared last year it will block many third-party cookies through the browser. Likewise, Apple joined their ranks two years ago to block cookies in its Safari browser.

But with third-party cookies arguably the lifeblood of marketing and advertising in targeting and tracking Internet users for ads and programmatic advertising, these decisions have put the industry on notice that it's time to change their practices. It also requires new martech and adtech solutions. And it raises concerns about Google’s dominance of the digital ad space, with the move to disable cookies serving to strengthen its walled garden.

In Gartner’s view, the demise of cookies, which have persisted for more than a decade and paid for a predominantly free Internet, will require substantial preparation. But with marketing teams facing increasing restrictions around data collection, enrichment and analytics, the end of cookies will both curtail the ability to optimise or even determine the value of its media investments.

Gartner recommended marketers identify existing dependencies on invasive adtech and develop a new digital marketing strategy which preserves user privacy through a structured transition to alternative adtech. The goal is to have capabilities which are privacy-risk-aware and less reliant on detailed identifiable data and more on persona-based insight.

Google’s Privacy Sandbox

Some sceptics looked at Google’s decision to dump third-party cookies as a smart move on two fronts - get on the right side of the shift to tighter user privacy protections and strengthen its proprietary first-part data offering to keep advertisers in its orbit.

Google wants its Privacy Sandbox to be private by default ecosystem. It involves three central initiatives: Replacing the functionality of cross-party tracking, disable third-party cookies and mitigating privacy reducing alternatives. 

To provide the functionality like personalisation and single sign-in without cookies, Google is proposing trust tokens to combat fraud and spam, aggregated reporting for ad measurement, contextual first-party data for ad targeting, a privacy preserving WebID, creating first-party datasets and limiting other forms of tracking such as fingerprinting, browser cache inspection and network-level tracking.

Cookie-less identity alternatives

Marketers looking for alternatives to cookies can turn to their own data and insights to generate insights about customers. Owned sources of customer data could present new ways and approaches to glean insights to developing out marketing plans.

For example, email marketing may see a renewal with the crushing of cookies. Email newsletters and email-based advertising goes out to customers and potential customers with an existing brand awareness who’ve signalled a willingness to hear about the brand. Unique content, offers and even sponsored content are some of the opportunities to talk to brand-aware consumers and market directly to them. Segmentation provides easy opportunities to target specific audiences within the larger database with particular messages and content.

Social media monitoring may also take on a renewed importance as cookies are retired. Rather than just show other website movements, it provides a richer, contextual landscape about your brand’s audiences and other similar audiences to understand competitors and other customer groups.

 It may also be time to take another look at the CMS insights, and even review if it’s the best option, and what analytics are available to glean deeper, more meaningful insights on your customers. 

Gartner’s Frank has been an advocate for cloud-based privacy proxies that can mediate the data collected by publishers and revealed to marketers on behalf of users, with full end-user transparency, portability and control across devices and contexts.

“Techniques like differential privacy and tokenisation can protect user anonymity while providing organisations with the data they need to optimize targeting and measurement,” he told CMO. However, even these types of solutions have their challenges. Frank said the main stumbling block is who provides these proxies.

“A decentralised solution would be best, but this is technically challenging and may be years away from feasibility,” Frank noted.

Google has clarified its position to say that third-party cookies won’t be disabled until there’s a viable alternative. Nevertheless, adtech outfits and publishers are already moving to provider alternatives and new tools for cookieless authentication.

Last week, for example, Publift announced its endorsement of LiveRamp’s cookieless Authenticated Traffic Solution (ATS), positioning it as Australia’s first publisher monetisation platform to offer addressable, programmatic marketing without the use of third-party cookies.

PubMatic A/NZ, regional director, Peter Barry, told CMO players from across the industry are collaborating in a way not seen before and with newer formats like mobile apps and connected TV (CTV) there’s a need to develop tools for all formats, and future proofed. 

According to Barry, the focus on privacy-compliant ID solutions is giving publishers more power. “They are the main point of contact with audiences, and work hard to build relationships and trust. A privacy-first approach to customer data is crucial to ensure this trust is maintained,” he said.

“We’re seeing an increasing appetite from the buy side to engage with premium partners and the benefits that brings in terms of brand association. As bidding becomes more crowded on audiences within walled gardens, by contrast, without walls, the open web is limitless."

In recent weeks, Neustar, which specialises in information services and identity resolution, launched Fabrick, a unified identity ecosystem. It comprises Neustar proprietary services, data and technologies for cookie-free audience targeting and content personalisation. 

In another move, customer data outfit, Amperity, has partnered with customer identity specialist, Infutor, on an end-to-end consumer identity solution. Bringing together Infutor's third-party data with Amperity's customer data platform technology is intended to allow brands to transform raw data into persistent customer profiles and enrich them with attribute data from a variety of premium and privacy compliant data sources.

On the demand side, Trade Desk is working on the second version of its Unified ID that’s open source and cookieless, and relies on an encrypted email address from opted-in consumers and follows the guidelines outlined by the IAB Tech Lab’s Project Rearc. The project will help the industry responsibly create new adtech, which both protects privacy and ensures addressability, and develops technical standards for the new breed of adtech.

As to how marketers can get prepared, they should start testing campaigns on cookie-less channels like Safari and Firefox ahead of the cookies’ demise, Amobee A/NZ head of sales, Andrew Dixon, advised. This is on top of investing in first-party data, and partnering with a technology outfit that can integrate their data with other opt-in data sources. This is where Amobee is hoping to get a foothold.

“Over the coming year, panel-based data will make a return," Dixon continued. “Combining all of these at scale, along with first-party data, will provide an opportunity for advertisers to build for the future of converged media buying."

IAB Australia technology lead, Jonas Jaanimagi, told CMO it’s imperative the industry has open technical standards for the cookie substitutes. But as yet there are no direct alternatives to cookies for marketing across the open Internet. He explained identity solutions and partnerships being announced are manageable solutions providing authentication and marketing capabilities within the smaller ecosystems, networks or partnerships they are servicing – not across the entire open internet.

“It’s an important distinction. All of these products will hopefully also be submitted into Project Rearc, for peer review and to help inform any of the resulting guidelines,” Jaanimagi said.

Balance of privacy and personalisation

It’s clear the use of third-party cookies hasn’t always been in the best interests of users and their privacy. As numerous respondents told CMO, some of the practices range from shady to potentially illegal.

“The increased focus on privacy is a welcome change and it is hard to deny that these technologies - designed to improve the user experience - have been abused by the industry to an extent that the user experience has been noticeably degraded,” MobileFuse founder and CEO, Ken Harlan, said.

So in tandem with protecting user privacy and providing a good user experience, the shift away from cookies, an upheaval now, but also an opportunity. 

Harlan saw the demise of the third-party cookie ushering in a “renaissance in probabilistic technologies more in common with traditional broadcast approaches than digital marketing”.

“We’re seeing a renewed interest in methods for measuring KPI lift, as opposed to deterministic counts, and an evolution to sophisticated methods of contextualising audience behaviors as a population, as opposed to individual tracking,” Harlan explained.

“While monitoring an individual's movements and actions can provide interesting insights, marketers should be more interested in the behavior of selected populations, and the development of technologies to generate and process this data into useable information."

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page, or join us on Facebook: https://www.facebook.com/CMOAustralia

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