By Chris Hogg, EMEA Managing Director, Lotame
Since Google’s announcement in 2020 that it will phase out third-party cookies, the digital advertising industry has faced ongoing disruption and uncertainty. Particularly regarding Google’s initial two-year timeline for retirement and its subsequent extension to 2023. The recent launch of its Topics API to replace FLoC could impact Google’s timeline again, depending on its effectiveness.
Since the cookie’s debut in the 90s, it has become an easily abused technology but how did digital advertising come to rely on it in the first place and what does its demise mean for the industry’s future?
The History of Cookies: How They Were Intended for a Different Purpose
Invented in 1994, the cookie was designed to improve the user experience. By allowing data from a website to be stored on a user’s device, cookies meant consumers using e-commerce sites could keep items in their online shopping baskets.
DoubleClick was founded shortly after and, over the following decade, it made its name in the ad targeting space by exploiting cookies to track user activity across the web. In the late 2000s, Google acquired the company for $3.1 billion. Fast forward to 2016 and the announcement of the EU’s GDPR was set to change how cookies are used, as businesses would have to gain consent to collect, process and leverage user data.
Four years later Google confirmed its plans to block third-party cookies by default, walking in the footsteps of Apple’s Safari and Mozilla Firefox. The triumvirate of browsers took a much-needed stand to protect user privacy but what’s done cannot be undone — the third-party cookie was and still is, embedded in advertising. So, what are Google’s plans to address this?
Topics: Will It Impact Google’s Timeline?
Although Google was previously focused on its Federated Learning of Cohorts (FLoC) proposal, the industry critiqued it for being too unwieldy. Combined with feedback from the UK’s Competition and Markets Authority that FLoC would weaken market competition, this prompted Google to adapt its offering.
Its latest proposal, Topics, assigns interest areas to users and essentially gives marketers contextual targeting capabilities reminiscent of the mid-2000s. However, this simplified version of FLoC doesn’t meet modern marketers’ requirements.
To segment audiences, monitor brand relationships and fine-tune marketing for niche products, marketers need far more detailed personas. Being able to differentiate between consumers with an interest in “Film” and those who favour a specific genre can make or break a campaign. Furthermore, aggregated browsing labels won’t provide the means to adjust frequency or expand reach, causing marketers to query its effectiveness.
Gartner’s Eric Schmitt, research director, argues that limited information shared to date raises more questions than it answers. With this uncertainty, if Google cannot provide a viable alternative to third-party cookies, will it again push back their deprecation? Although 52% of industry professionals were relieved about its initial delay, the promise of more time shouldn’t hold them back from experimenting with other solutions.
Next Steps: Finding Cookie-Less Alternatives
First-party data is being lauded as the magic bullet for ad targeting post-cookies but the truth is that — similar to Topics — it won’t provide enough consumer insights to sustain marketing capabilities by itself. Through building new data strategies and exploring the increasingly competitive market of identity solutions, marketers can unlock the ability to connect first-party data with other assets, deepen their insights and use them to inform effective retention and prospecting campaigns.
The function and potential of identity solutions vary, however. Lotame research reveals that 63% of marketers and publishers are trialling or planning to trial authenticated identity solutions, which typically rely on users’ email addresses. This is a positive step but it’s important to consider that only 20% of web users are estimated to be authenticated in 2022.
For the remainder of users, marketers need probabilistic solutions that leverage non-PII (personal identifiable information) to approach addressability in a privacy-compliant way. A little over one-quarter (28%) of industry professionals plan on testing probabilistic solutions and a mere 7% view experimenting with and implementing identity solutions as an urgent priority. Altogether this suggests there is still progress to be made when adopting the best selection of targeting tools.
It is now critical for the advertising industry to investigate all available solutions, to discover which ones can deliver on their business requirements. The cookie-less landscape will soon become a reality and waiting for Google to deliver the answer could lead to a sea of troubles. Last year was the time to test a variety of identity solutions. This year, marketers should be proactively trialling a mix of targeting solutions based on those tests to be ahead of whatever changes Google does or doesn’t make should be front of mind for every marketer in the months to come.