Cookie-Pocalypse: Will the death of third-party cookies kill digital advertising?

April 7, 2021

With Google Chrome set to pull the plug on third-party cookies in January 2022, marketers will soon lose the primary tech system that tracks identity across the web, opening up huge questions about the future of digital advertising. The World Media Group invited a panel of experts to discuss what losing access to third-party data means to the industry, and how marketers and publishers can prepare themselves to benefit from this significant shift in how we use personal data.

The panel was chaired by Emily Roberts, Programmatic Trading Manager, BBC Global News, who set the scene by reminding the audience about the difference between first-party cookies – those that only share data back to the owners of the website you’re visiting at the time – and third-party cookies, which track your browsing habits to create a profile that is then used to target you with advertising based on your interests.

While other browsers have already undergone similar policy changes, Google Chrome’s 70% market share means the impact of third-party cookie removal will be far greater. While Roberts described it as “privacy milestone” for website users, she warned that if the industry doesn’t have a working alternative in place, publishers are likely to see huge drops in revenue.

Paul Coffey, Director of Platforms, Partnerships & Privacy, Google EMEA, said the changes are part of a long-term evolution of the online advertising ecosystem in response to consumer expectations. He said that 70% of users feel they are being tracked by advertisers, technology providers or other companies almost all the time, and over 80% feel that the potential risks they face from data collection outweigh the benefits.

Chrome’s commitment to phase out third-party cookies is a reflection of this and the broader changes happening in the industry, but Coffey explained there are plans in place to support advertisers, agencies, publishers and marketers, such as Google’s ‘Privacy Sandbox,” an industry-supported initiative to create privacy-led advertising solutions. Google is also pioneering an initiative called ‘Floc’ – Federation learning of cohorts, which anonymises individual data to create large groups of audience cohorts for advertisers.

Find the right partnerships

Elizabeth Brennan is Head of Advertiser Strategy at Permutive, an audience platform that enables premium advertisers and publishers to plan, build and activate cohorts while keeping everyone’s data safe. Brennan referenced a Permutive-commissioned study by Forrester Consulting, which shows that, as of March 2021, 41% of advertisers rely exclusively on third-party data for targeting and measurement. With potentially just nine months left to find a new solution, Brennan says brands must “wean themselves off third-party data” and future-proof their strategies. She suggested one way to do this is to form strategic alliances with publishers to take advantage of their audience insights and wealth of actionable first-party data.

Jay Glogovsky, Executive Director, Revenue Analytics and Operations, at The New York Times, agrees. The media brand has embraced the change, meeting its goal of removing all third-party cookies by the end of FY 2021, and, according to Glogovsky, without sacrificing any insights in their move to a purely first-party strategy. He stresses that advertisers need to have close relationships with their trusted premium publishers, who can be part of the solution. “We’re brilliant technologists and we’re going to solve this and be able to create products and experiences for our readers that embrace this first-party model,” he said.

Respect your consumers

It is those readers, and consumers in general, who stand to benefit from the changes to data regulations in the long run. As Ratul Shah, Head of Product Marketing, SAP Customer Data Solutions, pointed out, privacy regulations such as GDPR came as a result of what consumers have been asking for, for a long time. He believes brands need to respect consumers and allow them to feel in control of the relationship. “It all comes down to the customer experience, knowing who your customer is and how they want to be treated. And the only way to do that is through a trusted relationship, giving them transparency over why you’re collecting their data and why you need it. And, of course, control over how you’re using it.”

Shah believes that marketers who adopt that point and have the technology base to help them to create that relationship – to turn people from anonymous to known – will drive advocacy amongst customers by giving them what they want: “a trusted relationship with the brands they’re doing business with, ads that mean something to them, and experiences that keep them coming back for more.”

Balance contextual targeting

It’s estimated that the third-party data market is currently worth $19 billion a year. A poll during the webinar suggested that 56% of the audience expects that money to be reinvested into first party data strategies, while 31% said it would go to contextual targeting and 13% to direct partnerships.

Roberts asked the panel if the changes to third party data would mean more people would focus on contextual targeting. Erin Laughlin, Director of AdTech Products and Services at Dow Jones, (parent company of The Wall Street Journal, Barron’s MarketWatch, Mansion Global and Financial News) said that brands still want to target people, not just on the content they consume, but who they are. Dow Jones isn’t reliant on contextual targeting, but it has leveraged its digital community of three million members to create its own unique contextual product called DJ Thematic that is performing up to three times better than the average industry benchmark.

The product is able to target people based on their job title, their job industry and their job function because of the value exchange Dow Jones delivers: “Our readers are providing that information to us today because they know that they’re getting access to this premium content that’s helping them make really important business and financial decisions,” Laughlin said. When publishers can provide that sort of value exchange, they can go beyond typical contextual targeting to provide a far more sophisticated solution.

For publishers who don’t have high subscriptions or login rates, however, Permutive’s Brennan points out that contextual targeting offers an opportunity to reach beyond the known portions of the web. It allows advertisers to drive scale through their digital marketing strategies while respecting the data that they have access to, and, as such, it’s still a valid element of a diversified advertising strategy.

Commenting on the results of the audience poll and the redistribution of funds to first-party data, Brennan agreed with the majority of the audience, saying that “advertisers and publishers who really want to thrive, in the short term and long into the future, need to move towards privacy and make investment in world-class data, privacy collection analysis and activation infrastructure.”

Embrace the opportunity for positive change

As the discussion came to a close, Roberts asked each panellist to offer one piece of advice for the audience to take away.

For Glogovsky, it comes down to respect: “Privacy is an opportunity and it doesn’t sacrifice performance or insights – it actually enables innovation. My recommendation around that would be to communicate and experiment. Have conversations with your partners; have them internally with your stakeholders, and don’t be afraid to experiment. Lot of publishers are going about this differently, as are advertisers and agencies; I’m not saying any one of them is right. The only thing that I will say is respecting privacy is the right solution. So, however you go about doing that, I encourage you to experiment and communicate, so we can get this right as an industry as a whole.”

Brennan’s advice is all about preparation: “Really review how much first-party data you have now, what collection practices you have in place, understand the gaps that are there, and build strategies in order to address them. That could be through partnerships or better internal ways of working.” She views this as an “incredible opportunity” to maximise the value of first-party data but says that “understanding where the pockets of value are, and how you should be activating” against them is key.

Coffey’s advice is similar: “Whether you’re an advertiser or a publisher you need to think about what your value exchange is, and, once you’ve got that consented data, think about how you’re going to leverage it; how are you going to use the platforms? Don’t think of this as an imposition by platforms; this is really an industry-wide dialogue and discussion about how we work in lockstep to reflect user and regulator expectations.”

Laughlin views this as an opportunity to embrace change: “The death of third-party cookies does not mean the death of your digital advertising strategy. What it’s doing is essentially accelerating the first-party roadmaps of publishers and platforms in a way that we’ve never seen before. It’s providing insights and solutions that we would have never seen if we were still reliant on third-party cookies. So, get excited about this change, embrace it.”

Finally, Shah says, “A marketer’s job is to know who the customer is, to help drive the experiences that they want, and this new opportunity allows us to connect the dots inside of our organisations; to have new conversations. Marketers can sit across the table from privacy professionals to redefine what it really means to build a customer-first experience, not just within your organisation but across the ecosystem.”

It may be the death of the third-party cookie, but Shah would like re-name it “the rebirth of new customer experiences.” Whether you’re an advertiser, a publisher or platform, that’s something we can all get excited about.