Google recently announced that it will drop third-party cookies in the next two years on its browser, Chrome. Meaning, the Digital Management Platforms (DMPs) brands use today to mix various third-party data segments in order to target their ideal prospect for advertising won’t work as they do now. The announcement also states that the browser will remove all cross-site tracking to include fingerprinting and other various technologies. Once all of this goes away so will a advertisers’ ability to target these audiences how they do today.
The only thing that will remain is retargeting off of a brand’s owned data (i.e. visitors to a brand’s website) per individual domain, as that is first-party data. Brands will need to rely exclusively on first-party data and will be forced to start building their own databases of prospects because they will no longer be able to rent third-party data.
Brands realize that interruptive advertising is going away and that by building first-party databases they can avoid the negative impact of third-party tracking and cookies going away. This trend has been exacerbated by the passing of the EU’s GDPR and California’s CCPA laws. Consumer privacy is trending in all of these announcements and laws. It also means brands and publishers must rely on publishing quality content like never before. And the trends bear this out:
As of now, Google’s future policy is completely disrupting tomorrow’s advertising infrastructure development because technology companies don’t know exactly what Google will produce as an alternative to third-party cookie tracking.
The Role of Government Regulations
In the midst of this announcement, California implemented its online Consumer Privacy Act (CCPA). The CCPA states that any business that collects, shares or sells the consumer data of more than 50,000 people or produced revenue of more than $25 million in the previous year, must comply with the new law. Sharing or selling this information creates third-party data, which browsers like Chrome will soon ignore and brands’ DMPs will be unable to use in almost all cases.
As it stands now, every individual website or app visited has its own cookies and consumers have no control of their data besides deleting cookies from every browser they use. The exception is California and the EU. They have laws allowing folks to opt-in or out of cookies per website. In other locals, companies are able to take the data they track and do almost anything they want with it, including selling or sharing.
As a result, brands must build their own first-party audiences by bringing consumers to their web properties and capturing their data, like email addresses and more. This is the most optimal data to use for retargeting and advertising to prospects over time. While California and the EU has laws in place to opt-in or out of this data collection, the information so far suggest this will only impact five to 10% of first-party databases moving forward.
What is the Privacy Sandbox?
Google’s is telling brands, marketers, advertisers, and publishers that their replacement for third-party cookie tracking is a new technology they’re still developing called the “Privacy Sandbox.” This announcement causes many to feel uneasy because it’s not a technology that’s developed yet. As a result, industry folks remain uncertain as to the impact this will have on both attribution and programmatic ad buying.
“The two areas [in which] we’d anticipate the most change is the increase in the value of first-party data for both advertisers and publishers as well as an increase in scarcity of third-party audience data sourced through data brokers and partners who do not have a direct relationship with users,” said Paul Cuckoo, PHD Media’s worldwide head of analytics. In other words, creating and publishing quality owned content is more important than ever.
Advertisers, marketers, and publishers are sounding off with both excitement and confusion because they don’t know how the Privacy Sandbox will work, yet. The concept from Google is clear, if they can pull it off. The Privacy Sandbox will be a new standard for ad targeting, fraud prevention and measurement. This is a good thing if done correctly. This will give consumers much of what the GDPR and CCPA are trying to set as online standards for privacy control.
“The most significant item in the Privacy Sandbox is Google’s proposal to move all user data into the browser where it will be stored and processed,” said Amit Kotecha, marketing director at data management platform provider Permutive. “This means that data stays on the user’s device and is privacy compliant. This is now table stakes and the gold standard for privacy.”
How will this Impact Advertisers and Marketers?
Marketers will no longer be able to do the granular audience targeting they’re used to on desktop. The question is: Does over-targeting using third-party cookies today lead to a negative consumer experience? Take retargeting for example. In cases where it’s over-aggressive it can lead to a poor consumer experience with a brand. If this can be corrected by dropping third-party cookies it may be a good thing for consumers.
With Google’s recent announcement that it will block cookies, the Internet is heading to a privacy-friendly era that’s good for both advertisers and consumers, alike, signaling a future of interruption-free advertising. Much of the ad industry took this as a bad thing and rushed to assure their investors that this won’t put them out of business.
This signals a new era in digital advertising. One that’s more mature and sensitive to the needs of consumers. In 1999 click through rates (CTRs) on banner ads was 10%. Today 0.05% is the average CTR on a banner ad because the industry has lost touch with consumers by interrupting their online experiences. Forrester reports that CMOs moved over $2.9 billion from interruptive display advertising to content-experiences last year.
A full 99.95% don’t click on ads. Given Google’s recent announcement, digital advertising will need a new technological model in the next decade. It’ll be more human, less targeted and boldly creative. Story telling with prudent content creation will become the most efficient marketing and advertising strategy that any brand can deploy because stalking online will no longer be allowed and first-party data will be gold.
It’s been known for some time that true post-click engagement helps drive quality first-party audiences that convert. With Chrome’s recent announcement, more brands will now be focused on building quality owned audiences and that requires specific algorithms and post-click engagement data that inPowered has already been doing for over the past five years
Among other things, both advertisers and marketers are very concerned about the effectiveness of tracking online cross-channel attribution in this model. And rightfully so. Google claims its Privacy Sandbox will address this issue, but since it’s still in the planning stage people have no way of knowing if attribution will be supported as well or better than today.
Regardless of the attribution outcome, advertisers and marketers must build their very own first-party data strategy using content to attract the right people at the proper time. Many have been or are doing so now through both paid and owned media distribution. Renting third-party data through advertising will go away after Google implements this new technology. Contextual data from content topics engaged with by a first-party consumer will be more important than ever.
Walled gardens such as Facebook should remain unscathed when it comes to micro-targeting to consumers and thrive. They’re not beholden to browsers for tracking in the least bit. There’s a real possibility that these future revelations may actually help grow revenue for the walled garden networks out there today.
Another thing we don’t know from the announcement is if consumer frequency capping will go away or be available. This gives advertisers control of how many times individuals can see an ad or ad group from a brand through retargeting, native or display.
Several industry folks are predicting that this move will lead to last click attribution only across channels. While that’s possible, if that happens it will have a negative impact on Google’s current analytics and attribution modeling. It’s unlikely Google would do that.
Agencies will become even more important to brands, helping them develop robust content strategies to drive owned first-party audiences. This will put pressure on the content to drive actual engagement rather than just clicks and bounces. Paid media to promote such content may look like current television targeting today – focusing it on smaller groups of demographics.
How will this Impact Publishers?
Last year, Google released a study showing that removing third-party cookies could reduce publisher ad revenue by 52%. “Making sure this change doesn’t negatively impact publishers is a priority,” a Google spokesperson said. In addition, Chetna Bindra, Google senior product manager for user trust and privacy shared, “keep content alive through personalized ads” to avoid steep revenue drops from happening.
YouTube and the core search engine both run on first-party cookies so this shouldn’t impact them and their use by publishers. Publishers that have built their owned walled garden audiences via login will continue to thrive with little to no impact. Those that do not will have a diminished value proposition for potential advertisers because individual consumer tracking will be much more challenging.
The new reliance on first-party data represents an opportunity for publishers to focus on growing their owned audiences and to directly collaborate with advertisers through native channels such as sponsored content through their studios. Google’s lack of support for third-party cookies will likely drive up the demand for these services, thus, driving up the value and revenue. This is a good thing for publishers and can circumvent any loss in revenue from third-party cookies going away.
Publishers with multiple domains that rely on cross-domain tracking will lose that ability after this goes into effect. As mentioned above, most of the current use of DMPs will go away, thus tracking consumers across domain properties will not work as it does today.
Lastly, publishers with robust context-targeting models (content topic matched to individual consumer interests via first-party data) will have much more valuable inventory for programmatic advertisers. It’s likely that this announcement from Google will pressure even more robust innovation in contextual targeting development in the near future.
Publishers should be doing everything in their power to grow and scale their first-party data in preparation of Google abandoning third-party cookies starting now, if they haven’t already. A big concern is how this will impact local and regional publishers. It has the potential to impact them negatively the most.
Click-Bait and Fake News
One of the major silver linings of this announcement is the impact this shift will have on click-bait and fake news. Since neither are contextual in nature to consumers in the actual content or have logins, the value of its ad inventory will plummet. Content such as this could, in theory, still thrive in walled gardens such as Facebook.
However, once ad revenue from those sites starts to dry up it won’t be worth running them as revenue-driving businesses. While it’s possible that certain foreign entities looking to interfere in global elections may decide to prop them up, brand advertising will dry up. This may be one of the solutions governments have been looking for to curve this interference. It’s too early to say exactly what the impact will be but seeing less of this content would generally be a good thing.
Conclusion
With Google’s road map still unclear, there’s a lot of uncertainty about how the death of the third-party cookie in Chrome will affect ad buyers and publishers. What is clear, is that there will be an impact. There will be some winners and some losers. Brands and publishers that focus on building robust first-party databases from high quality content should come out winners. The more data collected from owned websites the better – subscriptions and gated content will help fill the data-gap.
While governments are scrambling to give their citizens data rights, protections and control, Google, has perhaps, solved most of their privacy concerns for them. And in doing so, may have solved the problems with fake news and click-bait by drying up brand-driven revenue sources.
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