It’s Finally Over for the 3rd party Cookie — What Now?

Recently Google announced that is would phase out support for third-party cookies on Google Chrome. In this article, Daniel Heer, co-founder and CEO, zeotap, explores its implications and how it will impact the marketers.

Google dropped a bombshell recently on the advertising industry saying it would “phase out support” for third-party cookies on Google Chrome by 2022 (effectively killing them). To level-set, first-party cookies help web publishers track users on their own properties, while third-party cookies help advertisers track user activity across their web travels in order to better target them with relevant ads.

The Wall Street Journal and other outlets reported that the Association of National Advertisers and the American Association of Advertising Agencies (4A’s) issued a statement that Google’s decision could hurt digital businesses, consumers and technological innovation. The statement specifically reads, “it would threaten to substantially disrupt much of the infrastructure of today’s Internet without providing any viable alternative, and it may choke off the economic oxygen from advertising that startups and emerging companies need to survive.” 

Learn More: Collaboration: The Key to the ‘Cookie Conundrum’Opens a new window

Recently, I wrote another pieceOpens a new window  in this publication predicting that cookies were not long for this world, a sentiment widely accepted by the industry for some time. Safari and Firefox already allow users to turn off tracking —and Google’s move is another nail in the coffin (especially considering their dominant market share).

So, what now for digital advertisers? 
 

The Google Answer – Play in the Sandbox

Google has suggested its Privacy SandboxOpens a new window  — a set of web standards (web browser APIs)— as a replacement for cookies. The solution is supposed to still give advertisers the ability to target and measure campaigns while preserving user privacy. It represents a new way of sharing data over the internet in which an advertiser must call an API to get a certain cohort of users (not an individual user) who have performed a specific action. 

This process addresses the privacy problem, but it will also severely limit the ability to offer customization to a user or the 1:1 experience so many of us have come to expect from our favorite brands.

That’s what everyone is worried about, but the good news is that Google is asking for feedback from the ecosystem — and all invested parties should make sure they’re part of the conversation. As per Google,  industry feedbackOpens a new window  is being solicited on the web standards community proposals via GitHub.

The Cookie-Less Future

Digital identity — or cross-channel and cross-device identity graphs — is critical to the future of advertising. As discussed in my previous article, MAIDs (mobile AdIds) are inherently mobile-based and more sustainable and efficient identifiers than cookies — and will take center stage as the cookie-less world approaches. The industry now has more reason to improve on known in-app mobile challenges to drive more demand towards it – considering that 90% of a user’s timeOpens a new window  on their smartphones/tablets is spent in apps (vs. 10% on web browsing).

Historically, the migration of marketing spend from web to in-app advertising hasn’t kept pace with the amount of time users spend in apps. This disconnect has mainly been due to viewability issues, brand safety concerns, and the fact that audience ratings vendors have been slow to pay attention to the app space. Google’s announcement should help catalyze the industry to improve on these issues and finally drive the deserved demand to in-app advertising. 

First Party Offline Data Will Be a Goldmine

Brands will always have the need to identify their customers in their CRM database through hashed email/phone numbers with a digital identifier (ideally, mobile AdIDs, smart TV IDs and other digital device identifiers). Therefore, identity linkages that originate from more permanent CRM data will still be a viable solution for advertisers. 

There is no doubt that brands will hold tight their offline first-party data as the cookie-less future becomes a reality. Why? Simply because emails and phone numbers will still be the most permanent identifiers that brands can rely on for digital re-identification. They become extremely important when planning acquisition strategies to suppress current customers, as well as for churn prevention and cross/upselling strategies to only target current customers. 

Therefore, brands will continue to have the need to identify their CRM customers while executing their online marketing strategies. This will not be affected by the Google position. Brands will be scaling their efforts to gather as many emails as possible to build up their first-party data based on permanent identifiers.

The Universal ID – a Shift for Vendors Looking to Survive

Some technology platforms that currently rely on cookies to resolve identity are already coming up with their universal, agnostic ID solutions in an effort to bypass the upcoming Google restrictions. 

A real universal ID used by every single player in the industry would provide the underlying plumbing for the marketing ecosystem in an ideal world. However, it’s an ambitious goal for any company undertaking this path as it requires massive industry alignments as well as complex technology integrations across the ecosystem. 

The race has already started so vendors only have two years remaining to develop their universal ID solution, win enough partners to become relevant in scale and a feasible industry alternative (in fact selective Customer Intelligence platforms have started establishing such IDs.)

Publishers will have an incentive to work with a couple of universal ID suppliers to not make themselves too dependent on any one provider. 

Learn More: First-Price Auctions: A Key Piece of The Transparency Puzzle Opens a new window

Paywalls and Logins — Expect More

It’s been a growing trend for web publishers to start charging for content — this may start to increase and, at the very least, we can expect more publishers to require logins to access their content (in order to capture valuable first-party data such as phone and email). 

This will enable any identity resolution provider to deliver enrichment and activation of these offline IDs, either via direct deals or private marketplaces. In some respects, this means a publisher’s first-party cookie (owned by the Wall Street Journal, for example, based on their consensual relationship with the user) will be treated similarly to how the industry historically handled a channel cookie (such as those offered by The Trade Desk for example). Publisher’s first-party cookies will become a valuable digital currency as brands will use them to find and target their customers across different publishers’ domains. 

It’s a new frontier for digital advertising and it’s time for all parties to adapt — ideally before 2022 rolls around.