The death of cookies and the threat to digital marketing

“The pressing issue is that there will be significant disruptions in how business is done in addressable media. Proper solutions need to be devised that enable the economic model of digital marketing to continue.”

Sobering words from Bill Tucker, Group EVP leading the Data, Technology, and Measurement Practices at the ANA , and executive director of the Partnership for Responsible Addressable Media. The concern is provoked by the general threat to targeted advertising and marketing presented by the growing emphasis on user privacy. More specifically, it’s provoked by the threat to third-party cookies.

Some browsers—Safari and Mozilla Firefox—already no longer support third-party cookies. The announcement by Google that it too will block these cookies in Chrome within two years (i.e. by end of 2021) has provided the impetus for a range of responses from martech, adtech, advertisers and publishers.

To be clear, there is no threat to first-party cookies, the cookies used by websites to collect information about users who have chosen to interact with them.

The third-party cookie experience

The user experience third-party cookies support could hardly be more familiar. You do some online research, say, into car insurance. You visit a relevant website. For the following days, no matter where you surf to, or on which device, you’re pursued by ads for the same thing. Those ads aren’t generated by the website you visited, but by third parties, and the ads are finding you because third-party cookies were loaded onto your browser.

MediaMath is a leading omnichannel programmatic platform and DSP, and like any vendor in that space has made a big investment in addressability. We asked Anudit Vikram, SVP Product, to discuss the difference between first- and third-party cookies, and the significance of the latter for targeting purpose.

First-party cookies, he explained, are essential to a convenient web experience. “The browser knows what it’s doing with the user as long as the user and the browser keep engaging with each other. But if that engagement breaks for any reason, when the user comes back the browser has no idea who that user is anymore.” That is, unless it drops a first-party cookie on the user. When we find something we want to buy, say, and put it in a cart, if we break off from our web session and return later it’s still there. “Those facilities exist because there is the cookie,” Vikram explained. “As long as that engagement between the user and the browser is happening with the same website, app or endpoint, then the cookie is considered a first-party cookie.” This clearly makes for a better experience than if the user remained unrecognizable to a website he or she visits frequently.

“The concept was extended into the third-party cookie.” Vikram went on. A user might have a first-party relationship with a publisher like the New York Times, but the Times might be working with various third parties showing ads on its pages. “From my perspective,” said Vikram, “it’s not somebody that I know. We allow these cookies to be placed on the user’s browser. I might have cookies placed by Adobe, or MediaMath for that matter, or other players in this digital ecosystem. What the privacy advocates talk about, is that I don’t have any control over the downstream relationships the Times might have with other parties—who are essentially capturing my information and using my data for their own benefit.”

Why third-party cookies are a good thing

It might seem obvious that it’s disadvantageous to users to have unknown third-parties surreptitiously gathering their behavioral data and monetizing it. But there’s another way of looking at the situation.

“The existence of the third-party cookie, and the ability to create an eco-system around it, is what allows for there to be the personalization on web pages, personalized ads, as well as the ability of publishers to monetize their properties and therefore allow for the creation of content that we consume,” said Vikram. Publishers being able to monetize content without charging for consumption is a benefit to users. With exceptions, we’re not paying directly for much of the content we consume online, said Vikram. “We are paying through our data.”

Luke Taylor, founder and COO of TrafficGuard, agreed. “As an advertising industry, we’ve done a very poor job of communicating to the end user as to why we’re tracking them, and why this is beneficial. Few consumers understand how any of this works, and with lack of understanding it’s simple to just say no and block it.”

TrafficGuard is an ad fraud protection provider for brands, agencies and advertisers. Unlike MediaMath, it’s not involved in serving ads, but it has a deep interest in how the adtech eco-system is evolving. Taylor imagined a world in which third-party cookies vanish and nothing replaces them: “Anyone who is running a campaign doesn’t intend to show you ads over and over until you hate their brand. That’s not a good outcome for them. Yes, if you look at sunglasses on one site, you’re going to start seeing ads for sunglasses on other sites, because of demonstrated interest. Advertisers may show you seven or 20 impressions, but then they’re going to wait some time until they see further intent.” That’s in the current targeted world.

“In a world where you aren’t able to target someone specific,” Taylor went on, “everyone is going to get sunglasses ads. You could get one every day for the next five years. Because there is no cross-site view of who you are, or what you’ve seen, the ability to frequency cap, is removed.” Specifically, he said, you’ll see “a ton of ads” from the brands that are the biggest spenders in advertising, and who consider their audience to be everyone. “The consumer experience is far better in a targeted advertising world. Conversion ratios within targeted ads are high, because there is an interest in those.”

Come together

Whether or not the blocking of third-party cookies is good for consumers, it clearly presents a major challenge to brands, agencies, tech vendors, advertisers and publishers. That’s why they’ve come together as an industry to make use of the window of opportunity provided by Google.

“We decided to band together,” said Tucker. “The trades, representing the biggest marketers in the world—ANA and WFA. Publishers. Agencies and agency holding companies. The technology universe. We’re in dialog with the browsers.”

Related: How two martech companies are taking on the cookieless world

It would hardly seem to be in Google’s interest to cause havoc in the ad industry, given its dependence on ad revenue (Facebook, of course, targets ads using its vast trove of first-party data). “Google has given us a two-year window so we can work with them. We want Google’s experts in some of our working groups,” said Tucker. The Partnership for Responsible Addressable Media will have four working groups: legal and policy, business use cases, communication and education, and the IAB’s Project Rearc tech lab working on technical standards.

TrafficGuard is participating in Project Rearc. Said Taylor, “It’s not specifically looking at a single universal identity to replace cookies, but is more looking at how we can re-architect the digital marketing space—how we got to where we are. The problems that have led to consumers having a distrust for advertising, and how that could be handled better.”

This joint initiative, however, is running in tandem with commercial and competitive initiatives by individual vendors, precisely to develop identities which can be supported by methodologies other than cookie-dropping – initiatives which have in common the search for persistent rather than perishable identities. Does Tucker see a problem in having these two tracks?

“No,” he said, naming some of the vendors. “LiveRamp is a member of our group, and Neustar—they are absolutely going to be able to participate in the industry work. Our output is ultimately going to be standards that are made acceptable to browsers to enable the industry to do its addressable works. Providers, working with those standards, will be able to adapt their own customizable solutions to those standards. We’re not setting up one solution, but one common set of standards.”

In the second part of this article, we take a look at two of those vendor initiatives.