Internet Third Party Cookie Collapse: 5 Strategic Imperatives

As Google releases more details about its Privacy Sandbox, the demise of third party cookies will mean the industry needs to pay attention to five key strategic areas to avoid business collapse.

The digital marketing ecosystem will undergo dramatic change as the third party cookie crumbles, forcing marketers to examine five big meta trends to maintain competitive advantage. While third party cookies - along with mobile ad IDs, device-based targeting, measurement and attribution - will change as Google, Apple and others announce that 3rd party cookie-based tagging will end, the data-driven marketing industry needs to empower businesses and people and watch and act on market shifts.

These five big trends are a good lens for ADMA members and businesses to apply to their own unique circumstances to navigate the changes coming:

Trend 1: Consumer trust around data matters

Trust is an essential element of all good marketing, and it’s no secret that consumers are starting to pay attention to how their time and attention is monetised by tech platforms, publishers, advertisers, apps and websites.

The Cambridge Analytica scandal of 2018, the changes in WhatsApp terms has spiked consumer interest in data privacy. What’s more, the federal government is also reviewing the Privacy Act.

This means most of the general public - who never gave much thought to their data privacy -will start doing more ‘mental maths’ about the way they browse the internet and  share their personal data.

Consumers are keenly aware that ‘free’ products like websites, apps, technology platforms and more take their personal data, often without clear or obvious opt ins or terms.

As more consumers become victims of online scams, phishing attacks, security breaches and privacy scandals, their trust in brands who inadvertently expose their data - or use it to covertly advertise and market to them - will begin to erode.

ACCC chief Rod Sims has said: “consumers do not understand the amount of data collected and the use to which it's put. This issue is only going to get worse. It's only going to grow.” Smaller businesses operating within the technology ecosystem will also need to invest in skills and technology to comply with ever-changing regulations and consumer expectations of data use.

Regulators have shown that they won’t hesitate to make businesses accountable for their actions and where they are in breach, fine these businesses, as well as name them publicly through the OAIC, the ACMA and ACCC reports.

Strategic imperatives:

• Maintain and publish clear data privacy policies, cookie policies, and ensure the terms in your legal agreements are up to date.

• Implement robust privacy practices and compliant data collection.

• Invest in data security.

• Phase out data use, processing and campaigns that aren’t in line with best practice.

• Understand that first party data is not always owned by the business that collects the data - consumers will increasingly want to have a say and give permission around their data.

• Have crisis communication plans and processes in place should the worst ever happen - brands will need to protect their reputation.

Trend 2: Technology will evolve leading to some tech skill shortages

The war for good talent around technology, data and best practices will continue with changes to third party cookie tracking.

While advertisers and publishers - the ‘sell’ side of programmatic advertising - will be hoping the end of third party cookies will boost their ad revenue, they may need to invest to change the way they tag and track their inventory.

The ‘demand side’ practitioners will also need to invest in learning how to use non-third-party programmatic advertising elements, possibly changing vendors and/or consultants and where possible, upskilling employees. Technology and staff who value and respect compliance and are able to enable advertisers to run successful targeted ads without having direct access to personal data from third-party cookies will be in demand. Equally, individuals who enable best-practice first party data collection will be in high demand.

Strategic imperatives:

• Maintain strategic overview of data and technology at the executive and board level.

• Ensure campaigns use quality data for all programmatic advertising - some sources may decay in value over time.

• Maintain staff engagement, education and training to ensure access to the talent and skills you need to evolve.

Trend 3: Industry market power - and pricing - may increase for some and decline for others

For many consumers and agencies, third party cookie changes will be mostly invisible.

But smaller players - especially independent web publishers and businesses who rely on programmatic advertising - could find their circumstances compromised.

American experts and regulators have said eliminating third party cookies from the advertising technology ecosystem will put smaller advertising players out of business.

The third party cookie changes could also negatively impact websites relying on ad revenue to fund content creation, increasing the pressure to move to subscription models.

Most of the industry has been aware that third party cookies would eventually be purged but didn’t know enough about Google’s plans for its new Privacy Sandbox to predict what could happen.

Pundits like Wired and Digiday have argued that Google’s Privacy Sandbox is likely to further entrench Google’s power over programmatic advertising, helping it further monopolise the valuable first party data it gains from services like YouTube, Gmail, Maps, Search and other products.

Strategic imperatives:

• Make sure you are aware of industry news, ACCC submissions and have your say to protect your business interests.

• Watch for how technology change upends the different mix of advertising, vendors, costs and campaign styles your business model relies on.

• Prepare to  change the way you work with programmatic advertising and cookies.

• Make sure your own first party data collection is robust.

• Ensure campaigns use quality data for all programmatic advertising - different data sources may decay in value over time.

• Educate yourself to better understand the options available to you (including Google’s Privacy Sandbox)

Trend 4: News, information and advertising disruption will continue

Regardless of third party cookie changes, news and entertainment websites have been losing advertising revenue to platforms like Google and Facebook.

Publishers and websites that rely on third party cookies for revenue may have to rapidly evolve their freemium and subscription models to fund content and services.

For advertisers and marketers, this change is likely to result in disruption to:

• Audience sizes and numbers

• The ability for advertisers to easily target their consumers through existing sources that rely on third party cookies

• Certain audience segments that can only be targeted through first party data will become more expensive to reach

Trend 5: Navigating a cookie-free path

Technology change is a distinguishing feature of the data-driven marketing industry, with many agencies, vendors and players expanding rapidly on the back of real time bidding and SaaS technology that has lowered costs.

The removal of third party cookies is likely to be the most dramatic change to the industry since programmatic advertising opportunities began more than a decade ago.

It’s likely that smaller businesses will have to watch the changes more closely than larger incumbents.

ADMA encourages all members to take advantage of our education offerings to stay on top of third party cookie changes.

Learn more about Internet cookie changes and how to manage them at ADMA Internet Cookies Masterclass.

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