Written by Zac Selby, Global Senior Programmatic Director, Global Addressable Media, dentsu and Ricardo Honing, Global Senior Performance Director, Global Addressable Media, dentsu
This piece is in response to the recent implementation of Google’s third-party cookies phase out in their propriety Chrome browser (1), joining Apple’s iOS and Mozilla’s Firefox. This is a phased test that currently impacts 1% of users, with the intention to be scaled to all users over time. To replace cookies, Google is proposing to have a range of functional alternatives via the privacy sandbox. Regardless, the phase out of third-party cookies has and will continue to impact a range of digital capabilities. Dentsu recommends advertisers explore the impacted areas to have future-proofed solutions that function within and outside of Google’s eco-system. There are multiple factors to consider in a cookie-less era, spanning across targeting, frequency, measurement and attribution.
Targeting
Many methodologies have been weakened through the loss of cookies, but lower funnel strategies that are relied on for performance campaigns, such as retargeting, will be the most heavily impacted owing to reduced alternative methodologies.
However, there are various solutions in-market that do not rely on third-party cookies, with some approaches moving away from direct addressability, and others proposing an alternative to cookies, such as contextual, semantic, first- and second-party data, panel data, walled garden audiences and identity solutions.
One of the primary motivations for advertisers to employ programmatic technology is the ability to personalize ads, thereby enhancing their relevance to consumers. However, with third-party cookies depreciating, numerous personalization solutions are becoming obsolete. According to Statista, in 2022, 37% of advertisers relied exclusively on first-party data for personalizing ads (2). This percentage is projected to increase in 2024.
As such, there is an increasing need for advertisers to safeguard their first-party data and investigate in emerging technologies such as clean rooms. These technologies enable advertisers to leverage their Customer Relationship Management (CRM) data in paid media and tailor advertising to customer specifics.
For dentsu, the integration of a clean room solution into our proprietary data and identity platform, Merkury, drives data-driven decisions for advertisers. We simplify the integration for advertisers by offering an interoperable, end-to-end identity platform that enables brands to own their identity (3), while giving advertisers the opportunity to personalize advertising in a cookieless future.
All in all, there are ready solutions in place, and they should be thoroughly tested alongside their peers to ascertain what works best for each advertiser.
Frequency
Another use for third party cookies is frequency capping – the ability to limit the number of times a user sees a particular campaign or piece of creative. The consequences of losing frequency capping from the withdrawal of third-party cookies are vast. The most immediate issue is that reach reporting will be hindered, leading to potential budget inefficiencies. Alongside this, the inability to accurately frequency cap within digital platforms could also lead to negative brand associations, if a user sees the same ad too frequently.
It is also important to state that frequency capping through third-party cookies was not perfect. User visibility was lost when they switched browsers, platforms, or devices (when not logged in) or when they cleared their cookies.
Measurement and Attribution
Marketing attribution, identifying which touchpoints are driving or contributing sales[SK2] , is also poised to undergo significant transformation (4). Critical for all performance marketers, it was already challenging with cookies; without them, it becomes even more complex. As with frequency, the development of new tools to bridge the attribution gap is essential for advertisers’ success in a cookieless world.
It is imperative that performance strategies are redesigned, as reliance on existing strategies, particularly retargeting, may no longer give the expected results. While relevancy in retargeting has been proven to drive positive business outcomes, it is worth questioning whether tailored ads are necessary to achieve these outcomes. Advertisers should ask themselves to what degree it is required and whether a contextually relevant ad might have a similar impact.
One method to maintain advertising relevancy is through opt-in environments, often referred to as walled gardens. The utilization of opt-in environments to take advantage of the first-part data they offer is proving to be an effective strategy for advertisers to drive personalized advertising, shown by the industry development in this area.
Finally, there is the rise of identity solutions. These solutions aim to consolidate first-party data from publishers, advertisers, and agencies to establish new ways to identify users online. These solutions have already seen considerable adoption in the US, and are gaining traction in the EMEA region, with platforms like The TradeDesk, offering (E)UID, and LiveRamp, offering RampID. This trend holds potential but needs to be developed to demonstrate its true added value.
All these developments can be covered by the term “identity refocus”. Whether it is through walled gardens, publisher-created opt-in environments, or identity solutions, advertisers need to pivot to new methods in the face of rising consumer privacy.
Conclusion
We are already in a partial cookieless era and are moving towards a total cookieless era as Google rolls out their privacy initiatives. Agencies and advertisers should continually test initiatives that are not just cookieless but are future-proofed by design. With the right tools and methodologies in place, we are confident that digital advertising will be as effective as before and perhaps even surpass the capabilities of the third-party cookie era.
Sources
Source 1:https://blog.google/products/chrome/privacy-sandbox-tracking-protection/
Source 2: https://www.statista.com/statistics/451641/customer-data-used-marketing-personalization-worldwide/
Source 3: https://www.dentsu.com/us/en/media-and-investors/merkury