By Steve Pelletier, SVP, Strategic Partnerships and Corporate Development, FatTail
Many in digital advertising argue that the end of the third-party cookie, without an equivalent replacement, will bring about the demise of the open web. Without third-party data-driven programmatic ad targeting, the argument goes, publishers will not be able to monetize their content or audiences, and the free and open internet will suffer. As McKinsey notes, many publishers, especially “non-premium” outlets, depend on third-party targeting for the vast majority of their ad revenue.
These arguments about the “cookiepocolypse” have led to a race to reinvent the third-party cookie before it expires on Chrome in 2024. With hashed emails, mobile phone numbers, and other data points, adtech providers are attempting to replace the cookie’s functionality so that advertisers can still track consumers across digital properties and target them individually at scale. Consumers themselves supposedly need these technologies, lest the open web they enjoy disappear.
Consider me skeptical. The open web thrived before cookie-style programmatic targeting and will thrive afterward. Premium publishers will depend more on direct sales, which will allow them to keep a higher share of ad revenue. Quality long-tail publishers will still monetize content with the help of automation. And the quality of content on the web will increase as it becomes harder to monetize clickbait.
The open web thrived before cookie-style targeting
The open web thrived before programmatic ad targeting. In fact, not only did publishers find a way to monetize their content before the third-party cookie, but they had more control over ad revenue, larger staffs, and more high-quality content.
Publishers managed to support themselves with the help of a few ad networks for back-fill and more robust direct sales businesses. Walled gardens such as Google were around, but publishers stood out for the high-quality environments and targeted audiences they provided. Plus, because they were selling more ads directly, publishers kept more of their ad revenue and were able to finance the rich content readers enjoyed.
To this, one might object that advertisers have grown used to hyper-personalized targeting, and without the cookie or an equivalent, publishers will be unable to compete with ad targeting juggernauts like Google, Facebook, and Amazon. But the resurgence of contextual advertising and publisher-owned first-party audiences will fill the gaps in ad targeting — and they will do so while respecting consumer privacy, which is what the death of the cookie is all about.
Premium and quality long-tail sites will survive the cookie
The ability of premium and quality long-tail sites to survive the death of the cookie does not mean that there will not be some necessary adjustments. For example, publishers may need to take some of the fees they have been paying the intermediaries enabling third-party data-driven targeting and redirect them into the expansion of direct ad sales businesses.
But the shift to direct will be a boon to publishers, who will boost revenue per transaction and offer more differentiated proprietary audience-driven targeting. It will also benefit advertisers, as more of each dollar spent will go toward media, not intermediary technology fees.
Long-tail sites, too, will survive and even thrive in the post-cookie era — with the help of automation. Consider a site with only 50,000 unique visitors per month that focuses on a niche topic like wood working. In the post-cookie landscape, a manufacturer of those tools will still pay top dollar to allocate some of its spend to long-tail sites narrowly focused on its target audience. Automated tools will connect the niche buyer and seller. Contextual targeting plus automatic marketplaces that connect advertisers and publishers will solve the quality long-tail site’s dilemma.
The quality of content on the web is going to increase after the cookie
A shift to direct sales, proprietary audiences, and contextual targeting will indeed be very challenging for one segment of the open web: low-quality long-tail sites. Clickbait farms will no longer be able to rely on the programmatic open market financing their sites with the dollars of advertisers chasing specific users (and bots!), not high-quality content in trusted environments.
As a result, sites who cannot make the case for ad spend based on the quality of their content and audiences will struggle. But if these sites go away, the open web will be healthier for their disappearance. This would be an example of capitalism’s more virtuous forces at work: the market punishing publishers for sensationalist or plagiaristic content.
As for the sites providing quality content to real audiences, they will get stronger as a result of the death of cookie-style targeting, not weaker. Without cookie-supported open programmatic advertising, publishers will keep more revenue, journalism will enjoy better financing, and advertisers will get more bang for their buck. Plus, adtech will have to focus on facilitating direct sales and enabling content-driven targeting instead of devising ways to track users across the web without their knowledge.
I, for one, am not fretting over that.