Earlier this year Google Chrome announced that they will be phasing out 3rd party cookies over the next 24 months. Why? There is an industry-wide shift to providing more privacy protection to consumers. We first saw this with Europe’s Global Data Protection Regulation (GDPR) and later with the California Consumer Privacy Act (CCPA). Consumers value personal data privacy and have come to expect to have the power to “opt-out” or say “no” to cookie tracking.
So what does this mean for advertising stakeholders? One of the first things to consider is the significance of Google Chrome. Google dominates the web browser and digital ad markets, accounting for more than half of all web traffic worldwide. This market dominance creates new implications for advertisers who rely on 3rd party cookies to power successful advertising campaigns. This “new normal” will make it difficult for advertisers to target users based on behavior but we think it will also spur innovation and creativity in the digital advertising space.
What does this mean for the buy-side?
Google’s massive footprint enables them to identify users and show personalized ads without the need of a cookie or device ID, so this will only increase their ability to dominate the ad tech ecosystem. Only Facebook and Amazon arguably have large enough footprints to compete. Independent DSP technologies will struggle to compete as they will be at a disadvantage when trying to drive media performance and optimization. This is why, as an industry, we are seeing such a strong shift away from “people-based” marketing and a re-emphasis on contextual based targeting.
What does this mean for media buyers?
For many media buyers, not only is Google’s announcement a hit to the ability to target users with personalized messaging, but it also impacts conversion tracking accuracy and optimizations. Audience-based targeting was always a little overblown on the buy side, as buyers become obsessed with targeting the niche-est of audiences. Hundreds of buyers are targeting the same audiences and combined with the accompanying CPMs – for most, this is not an efficient or effective way to buy. From our perspective, a resurgence of contextual targeting is welcome in the industry. Moreover, for Digilant specifically, it demonstrates the importance of premiere partnerships with Google, Facebook, and Amazon, which help to prepare us for a cookieless future.
Will Google’s privacy sandbox tech actually deliver the same results for advertisers?
We think publishers have a right to worry about a drop in their ad revenue, cookie-based targeting brings in those high CPMs. As a buyer, Digilant doesn’t expect to see performance drops. Those that lose the ability to properly track conversions will struggle, but we don’t believe the potential loss of audience-based targeting will have a big impact.
This shift towards stronger privacy protection is just the beginning of a wave of new standards and regulations in advertising. But we are stacking the odds in our favor and in our clients’ favor through investments in capabilities, technologies, and partnerships (ex. LiveRamp, Google, Facebook, MediaMath) that rely less on cookies and more on viable alternatives that are as effective as they are efficient.