By Saqib Mausoof, Advisory Board member, Audiencerate
Google triggered a panic in advertising in January 2020 when it announced third-party cookies would be phased out of Chrome by early 2022. At a time when many in the industry are still struggling to understand their options, Google’s recent decision to postpone deprecation until late 2023 gives those involved much-needed time to prepare for the unfolding landscape ahead.
Two years is a long time in adtech, and it’s most likely that the future will not be as we imagine it today. But if we are to be prepared for this brand-new ad ecosystem, we still need to address the challenges of data disparity and privacy-compliance that are causing so much concern. It’s clear that first-party data is key, but brands of all sizes need to know exactly how to manage it.
The data divide
Any change in an industry standard causes a messy, but positive, period of innovation, and this is where the ad tech industry finds itself right now; there has been a proliferation of new solutions based upon different technical specifications and business models. This has left publishers, brands, agencies, and tech platforms scratching their heads as they try to understand what to use.
Large walled gardens, such as Google Ads and Facebook Ads, collect first-party data at scale and provide an end-to-end working advertising system. The deprecation of third-party cookies won’t harm their business model, and will probably strengthen it in the short-term, as more clients join them, seeking market certainty.
Moreover, fragmentation of identity solutions will allow further consolidation of these large platforms. Since adtech is heavily pivoting towards first-party data ownership, the situation is creating a divide between industry players: those that are data-rich and those that are data-poor. And an entity’s position will likely depend on whether it has a large or a small audience, respectively.
How smaller players should respond
The announced cookie delay demonstrates just how dependent the market is on Google, and how unclear it is about FLoC and alternative solutions. The more user data provided, the more useful their cohorts will be. Google’s proposed targeting solution has therefore been criticised for favouring larger ad platforms with greater resources, which may put smaller publishers at greater risk.
One alternative is identity solutions, of which there are a plethora, such as LiveRamp’s IdentityLink or The Trade Desk’s UID 2.0. Longer term, these will likely consolidate into two or three IDs. But in the meantime, cooperation between smaller players is paramount, we need to test and learn rapidly, while allowing interoperability.
For data-rich brands, the technology is available – in the form of an identity hub – which enables the deployment of a privacy-first Customer Data Platform (CDP) and allows for ROAS tracking and measurement using industry-approved personal identifier systems. For these types of brands, this is fast becoming a viable option, both in the short and long term.
For data-poor brands, consortium-based data taxonomies can be created, which can then be used to aggregate data into cohorts. These can be collected to a level where they are supported by consumer privacy-based initiatives, such as Google’s FLoC. It’s important for publishers to carry out data design carefully, including taxonomies and consent levels that support activation by either identifiers or cohort mechanisms. In many cases, it will require going back to the drawing board with regards to data and commercial models or rely on platforms that can support both.
The importance of consumer trust
Examination of online data practices by government bodies has led to the enactment of stringent regulations, such as Europe’s GDPR and Brazil’s LGPD. California’s CPRA will take effect on the 1st of January 2023, placing restrictions on the sharing and selling of personal information generated within the State. This represents a line in the sand which disinclines the industry from dismantling the third-party cookie system just yet.
However, it also illustrates why independence and neutrality are key in adtech: An objective approach is needed which satisfies the triple requirement for advertisers to track ROAS, for publishers to generate revenue, and for consumers to feel secure about their data.
This sea change is happening for one reason only: privacy concerns. The industry should expect legal scrutiny to continue for the foreseeable future. Therefore, it’s important to remember that new solutions need to deliver real innovation for advertising and consumer privacy and not simply workarounds to bypass the problem. Consumers need to remain in control of their data, and should be able to manage their preferences across all platforms and technologies, in real time where possible.
Innovation almost always evolves from challenging situations, and this is nothing to be scared about. We need to invest our time and attention in options that will provide value for the whole ecosystem, not just a few data-rich players. The postponement of the death of third-party cookies provides an opportunity to better prepare our first-party data solutions. The change will still happen, regardless of when.
So, as an industry, we should not slow our search for a better approach. Now is the time to test and learn, and to be prepared for deployment as soon as the solution works for each business. Ethical and privacy-compliant considerations demonstrate that tech and trust need to go hand in hand. After all, targeted advertising has enabled tremendous value in the form of free content across the Internet – we just have to be mindful of how we use it.