Interviews, insight & analysis on digital media & marketing

A Cookieless Future: What it means for marketers and publishers

By Chris Hogg, EMEA Managing Director at Lotame

Marketers and publishers have adapted brilliantly to the ever-shifting situations thrown at them by the global pandemic, but other challenges still loom large.

Consumers are more aware than ever of their data rights, and decision-makers are taking notice. With laws already in place across the EU, and in parts of the US, new privacy regulations continue to be introduced; a recent example is China’s Personal Information Privacy Law, affecting anyone wanting to do business in the region.

There have also been much-publicised developments in the tracking landscape. Apple implemented changes to its Identifier for Advertisers (IDFA) and App Tracking Transparency (ATT) back in April, while Google’s decision to scrap cookies will seismically shift the market.

The demise of third-party identifiers leaves advertisers looking for alternative ways to target users and will make measurement considerably more difficult. Though some new options have been mooted, and while Google keeps pushing the deadline back, sooner or later the industry will need a responsible and workable backup plan.

The impact of eliminating third-party cookies for marketers and publishers

Recent figures show that 64% of internet users worldwide prefer Google Chrome, so changes to its privacy policy will have huge ramifications for advertisers and publishers, affecting how brands track users throughout the entire sales funnel. Privacy Sandbox and Federated Learning of Cohorts (FLoC) have been touted as solutions by Google, but how effective these will be is yet to be seen.

What has raised eyebrows is Google’s decision to delay its deadline for phasing out cookies. A Lotame survey found that while many welcomed the stay of execution,  40% of marketers and publishers are suspicious of the reasoning behind the delay, with many believing it was to allow for more time to test and develop a single lane identity solution.

A scalable solution does have to be found though. Two-fifths of marketers in the Lotame study say the loss of cookies will decrease revenue and over half of these expect a drop of 10-25%.

Meanwhile, nearly half of publishers foresee having to reduce their workforce due to revenue loss. Three out of seven publishers also see a significant loss of programmatic revenue and loss of ad spend to walled gardens.

Some publishers could gain from the loss of cookies. Larger publishers, for example, will be in an advantageous position when it comes to collecting first-party data and requiring consumers to subscribe for their services. For smaller publishers, however, this is an expensive and resource-intensive process, and direct advertising deals are harder to come by.

Identity solution selection: Where are we today?

First-party data has never been more valuable. However, customers are more aware of their data choices and ready to take action against brands that misuse it – eight out of 10 are “willing to abandon a brand” if their data is used unknowingly. At the same time, many consumers use multiple email addresses which can prevent first-party data from being consistently reliable.

More marketers and publishers are now open to an identity portfolio approach in order to scale first-party data. 49% of marketers and 63% of publishers say data privacy is the key driver to testing identity solutions, creating a transparent and well-managed consent based-approach will be key.

With a plethora of solutions available for different purposes, using multiple identity solutions is looking a likely option for three out of five marketers, with interoperability as a key requirement. Embracing this diversity means that advertisers will be able to test which solution works best for their company. From authenticated to probabilistic, a variety of identity solutions offer professionals the widest coverage or scale, alongside the ability to meet their various goals, whether prospective or converting existing customers.

Taking advantage of the extra breathing room

Marketers are feeling the pressure to test and implement a solution more than publishers, neither believe it is a high priority. With the feeling that Google is continuing to keep its cards close to its chest, many smaller or mid-sized companies are simply employing a ‘wait and see’ approach to future-proofing their identities, targeting, and custom audience solutions.

Identity space solutions such as email and context have an adoption advantage simply by being familiar but these solutions don’t come without their challenges. It’s questionable how scalable both are, plus email’s privacy concerns have raised red flags. Context lacks standardisation and also fails to solve for marketer use cases such as frequency capping and attribution and a 360-degree view of the individual.

Right now, marketers feel a slightly greater sense of urgency than publishers to test and implement identity solutions, but it’s not a top priority. Overall, it appears that the industry has taken its foot off the gas. Despite this apparent inactivity, 28% plan on testing a probabilistic solution – a non-PII, privacy-first approach to addressability – while around half of marketers already work with an identity partner.

Whether or not the industry is prepared, the death of the third-party cookie marches closer. Sometimes it is consumers that set the agenda, and their rapid uptake of CTV – a cookie-less environment – offers an alternative ad avenue. But even if ad spend can be increased in new channels to increasingly positive results, finding the right identity solution is no easy task. Both marketers and publishers must adjust their mode of play to consider the pros and cons for every available option, not just waiting for one magic bullet.