By Steve Pelletier, SVP, Strategic Partnerships and Corporate Development, FatTail
The imminent demise of the third-party cookie has set off a mad dash to find a replacement identifier. Some are putting their faith in hashed emails, others in mobile phone numbers, and other IDs still in the hopes that allegedly privacy-safe data sharing abilities through emerging technologies will maintain the third-party data-driven ad targeting status quo with less risk to the consumer.
But creepy by any other name is still creepy. Regulators from California to China and tech giants such as Google and Apple (albeit to their own benefit) are cracking down on tracking because consumers do not like reading content on one site and then getting ads for a related product on another site minutes later. They don’t care whether clean rooms, hashed emails, or cookies are enabling the ad targeting. They just don’t like getting ad content outside of first-party contexts where it makes sense.
The good news is that the digital advertising industry already has the core solutions it needs to support publishers and allow advertisers to connect with consumers in the post-cookie universe. Publishers and advertisers do not need to reinvent the cookie.
To understand what those solutions are, let’s review why alternate cookie-style identifiers don’t solve the privacy problem, what targeting solutions will win the day, and how adtech companies can provide real value in a privacy-adjusted environment.
Alternate identifiers don’t solve the privacy problem
Whether you believe alternate identifiers such as hashed email or mobile phone numbers can sustainably replace the cookies hinges on your understanding of why the cookie is going away in the first place. Do you think it’s a problem with the cookie specifically? Or do you think digital advertising has gone too far in surveilling consumer activities, and the consumer genuinely needs to be given back control of their data?
It’s the latter, and we know that because it’s not just the cookie that is going away. Apple also downgraded its mobile identifier, the Identifier for Advertisers, and has been pouring money into privacy-centric marketing. Google has its own Privacy Sandbox. Privacy startups are popping up left and right. Finally, a handful of US states, Europe, and China have all recently passed regulations aiming to give the consumer control over their data and limit covert tracking.
Alternate identifiers, then, are doomed to fail for a few reasons. They won’t outlast ecosystem changes by gatekeepers like Google and Apple. Today, it’s the cookie getting the ax; tomorrow, it will be email that gets obfuscated (as is already happening). Future laws may yield the same effect. Plus, if the end goal for everyone — advertisers and publishers — is building stronger relationships with consumers, and consumers find tracking creepy, alternate IDs come with the same risks as the cookie.
We already have the core solutions to a post-cookie universe
But the insufficiency of 1:1 cookie replacements does not mean the digital advertising industry has not yet discovered the mechanisms that will finance digital media and connect advertisers with customers in the future. On the contrary, what’s old is new again. The solutions advertisers and publishers need predate the cookie: contextual targeting and publisher proprietary first-party audiences.
Both of these solutions are future-proof, highly effective, and premised on respect for consumer privacy. Contextual targeting will allow advertisers to reach audiences who are likely in the market for their products and services without any third-party tracking. Proprietary audiences will then be overlaid to enhance that targeting, combining synergy in subject matter between advertiser and publisher with first-party audience details where helpful.
This combination of existing ad targeting technologies and methods will benefit advertisers, publishers, and consumers as the industry moves beyond the cookie. Advertisers will get more media for their spend because they’ll go directly to publishers for audience data instead of relying on third-party audience brokers. Publishers will boost their revenue. And consumers will get paid media related to the content they’re reading while their data remains with the publishers with whom they have first-party relationships instead of getting passed around by unknown brokers.
Adtech intermediaries need a new value proposition
If the digital advertising industry has had difficulty reimagining targeting beyond the cookie, it is perhaps not because advertisers and publishers need a 1:1 cookie replacement but because intermediaries need that replacement. Many adtech companies’ value proposition has long been enabling individualized, third-party data-driven targeting at scale in a vast media ecosystem. If we forsake the cookie and third-party targeting for contextual and proprietary audiences, that offer is less compelling.
But the changing state of affairs does not mean adtech will go away. Advertisers and publishers will still rely on the industry to enable direct sales at scale, automate contextual targeting, manage revenue, and much more. Adtech companies will need to ensure that their value propositions align with the needs of an ecosystem that has given up hyper-targeting for other effective advertising methods.
Because creepy is still creepy by any other name, the cookie is not coming back. But adtech companies, advertisers, and publishers do not need to cry over spilled milk. Digital media and adtech are not going the way of the cookie. They are going to move into an era that is more respectful of the consumer and the organizations that provide the media they consume.