By Digital Account Director Mohini Lakhani
From the implementation of GDPR to the post-Brexit impact on the UK’s online user protection and privacy legislation, the advertising industry has undergone significant change over the past six years. And we’re set for more profound shifts in advertising practices as we know them this year, which will massively affect media beyond just digital.
An unmissable pivotal development has been the impending phasing out of third-party cookies, which have long been fundamental to advertising operations. Safari and Mozilla Firefox took the lead by eliminating third-party cookies in 2020, and despite its promise to do the same in 2022 (IAB UK, 2023), Google Chrome has yet to follow suit.
In the four years since the announcement, Google has developed its Privacy Sandbox (PSB) APIs, a suite of technologies to propel ad operations while maintaining user privacy rights. Given Google Chrome’s market share, the pressure to uphold these standards whilst retaining its competitive position and advertising revenue has been challenging, and so naturally, the tech giant has been faced with several pushbacks, leading to significant delays. Two years later, we’re edging somewhat closer, with the latest deadline currently planned for some point in the latter half of 2024.
The scale of alternatives in market is endless.
Since Google’s original announcement in 2020, tech platforms have scrambled to adapt their offerings to function in a cookieless world, typically addressing the core pillars of targeting, measurement and reporting.
The industry is saturated with choice, and the scale of testing currently taking place makes a granular analysis of every available solution challenging. However, aside from Google’s PSB APIs, there are a few key standout areas across the pillars that show initial promise:
Targeting
- Universal identifiers have emerged as one of the best alternatives for targeting, as they assign a unique user ID to an individual and allow for tracking across the supply chain without needing third-party cookies. Tech giants such as The Trade Desk and LiveRamp have also integrated iD5 and Nielsen ID, respectively, being increasingly tested in programmatic trading.
- Contextual targeting based on content semantics is on the rise, fuelled by recent progress in artificial intelligence.
- Diversification of digital budgets traditionally allocated against direct response platforms, and into emerging digital upper funnel formats e.g. CTV, BVOD, and Digital Audio are also being increasingly considered.
- First-party data is arguably the most robust and foolproof targeting alternative to the third-party cookie as this is solely owned by advertisers’ and gives the greatest insight into their audiences.
Measurement and reporting
- There has been a seismic shift from reliance on a single platform that de-duplicates performance results to offer a consolidated source of truth to an aggregation of reporting platforms that collectively provide the closest view of the actual results. Beyond this, advertisers are increasingly exploring econometrics to give a view on channel contribution across their entire marketing mix, though this typically comes after the fact and doesn’t measure short-term results.
- Server-to-server tracking is becoming more prominent in replacing cookie-based tracking, as seen by the developments from Meta and their Conversions API (CAPI) and Google’s Consent Mode to model back lost conversion reporting. These tools become fundamental in environments where data is already lost, so advertisers are urged to explore these as soon as possible.
The predicted impact beyond digital.
It’s not just digital marketing efforts that will be impacted by the upcoming changes but offline and beyond, too. Third-party cookies are often used in best practice TV attribution methodology to spot-match DRTV data through the likes of Adalyser or TVSquared, and so understanding the broader effectiveness of TV is expected to become more challenging. In this space, advertisers may become increasingly reliant on user-initiated drop-down data despite it not being overly reliable.
From a first-party data threat, dependent on how advertisers’ cookie consent banners are set up, if these are to be refined to comply with the Information Commissioner’s Office (ICO) stricter regulation enforcement in line with PECR, increased user opt-out rates threaten to impact tracking. Taking this as it stands, it would mean that performance cookies used by the likes of GA4 and other analytics platforms wouldn’t be able to track those opted-out users.
Offline attribution is often heavily dependent on analytic platform measurement. For example, this would implicate an indication of OOH regional uplift in site traffic or QR codes on print media that are specifically UTM-tagged to measure follow-through to the site. Therefore, advertisers who are currently reliant on GA4 to give a holistic view of their site traffic, user journey drop-off, and conversion rates would need to shift their mindsets from being over reliant on a single platform to tell their story, switching to an aggregated view of reporting sources. That said, we can expect GA4 to model users who haven’t consented to performance cookie tracking if Google’s Consent Mode has been implemented, and so these functions should not be 100% lost if advertisers comply.
With the impending shift away from third-party and first-party cookies, advertising practices as we know them are on the brink of transformation. Advertisers must swiftly adapt by embracing cookieless alternatives to avoid losing track of valuable, measurable interactions. In a post-cookie era, the landscape of advertising effectiveness is bound to evolve, emphasizing the urgency for proactive marketing strategies.
At The Kite Factory, we have seen green shoots across a multitude of cookieless alternatives that we have been exploring with clients, as guided by industry-wide efforts. Stay tuned for the next instalment of our cookie-less series, where we will share our learnings and successful tests across the three advertising pillars.
To discuss how we can support your business to prepare for the deprecation of the third-party cookie, please get in touch.