By Max Yang, VP Ad Operations at AUDIENCEX
Cookies have been on the wane for many years. For over a year, we’ve known that Google, the most dominant force in advertising, plans to end support for third-party cookies sometime in 2023. And yet the fear, uncertainty, and doubt about a cookieless future is only now reaching fever pitch.
This intensification is largely fueled by ad tech companies, data companies, publishers and agencies, those with the most at stake in third-party cookies. Publishers stand to lose huge margins on the value of their inventory. Without cookies, many data companies will lose a significant signal underpinning their identity solutions. Many ad tech point solutions could find their footprint completely diminished.
But what about advertisers themselves? Much has been made about what big, Fortune 50 advertisers might do without cookies, but their situations don’t quite reflect the same concerns of middle-market marketers that have yet to fully establish practices on their 1st-party data collection and governance. What does a cookieless future mean for them? What should they be doing?
In short: there’s no need for them to panic. No doubt, the sunsetting of cookies represents a real change in the digital ecosystem and a major transition from one era to another. Changes of this magnitude always require adaptation, and there will be real winners and losers in certain layers of the ecosystem. But for middle-market performance advertisers, this transition will be simpler and smoother than it has been made out to be, and what awaits on the other side is likely an improvement over what they have now.
Here’s why.
There are plenty of opportunities to drive performance without cookies
Cookies are an integral linkage in digital advertising, but there are lots of channels that don’t depend on them at all. That list includes both the most established as well as some of the most promising channels for performance marketers.
Major closed ecosystems like Facebook, Google, Amazon, Twitter, Pinterest and Snapchat are all logged-in environments that operate without cookies. CTV/OTT is almost entirely without cookies, operating instead on an amalgamation of user authentication, device IDs and IP addresses. Digital audio, including podcasts, are also cookieless and most audio operates without mobile ad IDs (MAIDs). Many publishers have their own strong first-party data assets that are ready to serve to correlate sources of truth for targeting, attribution, and measurement, and marketers can increasingly access this supply directly via private marketplaces, where it is united with mapped data signals and premium inventory to offer scale.
If middle-market advertisers were to pull all cookie-based spending and retreat to only these channels, it would be a bad thing for many open-web publishers, data providers and ad tech companies. That said, it wouldn’t be intrinsically bad for the advertisers themselves — omnichannel advertising relies less on the third-party cookie and more on interoperable alternatives that can already be found on every device and at any part of the funnel.
It’s still a rich data ecosystem
Third-party cookies are going away, but third-party data isn’t going anywhere. There is still a wide variety of online and offline data that will guide buying and measurement – the only difference is that it will be linked and activated differently.
Google’s primary alternative to third-party cookies is cohort-based targeting, which allows advertisers to target groups rather than individuals. These cohorts are not blind segments; they can benefit from the full richness of data mined from Google’s user-authenticated environments, albeit in the context of a “privacy sandbox” that has yet to clarify on concerns with data transparency and control. The good news is that cohort-based methods are workable outside Google’s sandbox, and other media companies like Verizon are curating their own cohorts as alternatives. With the help of the right partners, marketers can leverage this type of probabilistic modeling to find new prospects and reach new audiences, growing and enriching their first-party assets along the way.
Then there is contextual data, which allows for targeting based on the content on the page, another major area of current investment and promise for marketers. Rich contextual sets already power lots of inventory, and this kind of data is moving closer into the bidstream and programmatic pipes. Targeting content rather than individuals is nothing new, in fact, it’s how most advertising worked before digital came along, and it has only become more granular and sophisticated since then.
Long term, the key to getting the most from the cookieless ecosystem is to build and maintain a strong first-party data set that can live and breathe as a critical enterprise asset. But not all advertisers are built on businesses that can realistically command such data as part of transparent value exchange. That alone is not a reflection of the brand’s ultimate value to consumers, nor is it a limitation that will critically harm marketing strategy. The prevalence of contextual data and probabilistic matching ensures that even brands with relatively meager first-party data assets can still compete on the new playing field.
There Are Already Promising Alternatives for Cookies In-Market
Lastly, there is a bevy of new ways to authenticate users for deterministic targeting, providing a mechanism for a 1-1 match based on the first-party data a brand collects. A great deal of the oxygen in the cookieless conversation emanates from these new and emergent “universal IDs,” marketed by mainstays in data onboarding and activation. LiveRamp has its IDL and ATS initiatives; The Trade Desk is behind UID 2.0, joining similar offerings from Lotame, ID5, Merkle, and others. No single ID has yet emerged as a clear market favorite, but it’s still early days. It’s been mere weeks since Google announced that it would not support such IDs in its own ecosystem, and it will be months, even years before advertisers have a clear sense of how to prioritize them. Middle-market advertisers should feel no pressure to pick a winner at this stage. Ultimately, that responsibility lies with the sell side, as different media companies select which ID will power their addressable inventory. The key for marketers, particularly those in the middle market, is to remain open to and interoperable with all of these new mechanisms for deterministic targeting.
Good things await those who can weather this sorting process because what emerges will likely be appreciably better than what cookies initially offered. Contrary to popular belief, third-party cookies have always been an imperfect foundation for data-driven advertising. Cookies represented devices, not people, and their anonymity created the conditions for exactly the types of advertising that consumers hate the most. Once digital advertising finds its footing in an identity-driven future, the identifiers that power it will be more stable, more accurate, and will provide richer signals around which to personalize messaging and optimize spend.
Stay Open, Stay Curious, and Select Good Partners
There’s no denying that advertising is in a transitional moment, and with that comes a lot of uncertainty. A great deal of the confusion is amplified and exacerbated by those who feel they have the most to lose: ad tech companies, publishers, and other solutions providers. There are countless companies in the overinflated LUMAScape for whom the shift to a cookieless world is an existential question, and their product development, marketing, and PR resources are docked against generating as much urgency as possible around their new offerings.
For middle-market advertisers, the deprecation of the cookie is nothing close to an existential question. It is a tactical question – and in that respect, it’s no different than the state of affairs that has prevailed in digital media for the last 20 years: namely, a state of constant change and adaptation. As always, they will navigate that change as they have all the others: with the help of experienced partners and with an eye firmly fixed on whatever delivers performance.
Middle-market companies don’t have the capital to invest in developing custom solutions and workarounds for a cookieless future, and they don’t have to. They just need to stay open and interoperable with best-of-breed solutions and work with partners who can help them select and maximize those opportunities. There’s no reason to panic about the deprecation of third-party cookies, and surely more still to look forward to about what comes next.
