The Cookieless Future

“Resolving advertising’s identity crisis is like negotiating a maze and advertisers have no idea what waits for them at the end of the labyrinth.” -MediaPost

While we may not have a map to get through the maze, we do have a compass; in the following we’ll provide additional context and background, an overview of the current situation and Norbella’s point of view on what the future may look like to help clients navigate “The Cookieless Future”.

Background

There are three technological changes related to data privacy that are impacting the digital industry:

· With the release of iOS14, Apple now requires users to opt-in to the Identifier for Advertisers (IDFA). As more users choose to not opt-in to tracking, advertisers will lose the ability to target and measure in-app installs, resulting up to 60% of inventory being less trackable.

· Following the lead of Firefox and Safari, Google’s Chrome browser will block 3rd party cookies sometime in 2022 (i.e., Google has not released the actual date). This will impact all ad tech players (demand side platforms, supply side platforms, and 3rd party data providers) as they will lose the ability to identify users to target, manage frequency capping of exposures, and measure performance. For perspective, Chrome has 55% share of the browser market, blocking 3rd party cookies will result in a 97% loss of cookies in the browser market.

· With the European Union and California cracking down on data sharing and restricting privacy further with the General Data Protection Regulations (GDPR) and California Consumer Privacy Act (CCPA), respectively; further federal privacy legislation will limit how companies collect and use data and provide consumers the ability to opt-out of data collection.

Taken together, these changes have forced the marketing and advertising industry to determine solutions for digital targeting and measurement that does not require a cookie identifier.

Current Situation

Adtech companies, media publishers and digital platforms are proposing multiple solutions for establishing identity-based advertising in a post-cookie world. The following outlines a few potential solutions currently in development:

· Hashed Email-based Identifier: LiveRamp has created IdentityLink (IDL) and The Trade Desk developed Unified ID 2.0 which “hashes” email addresses (removes any personally identifiable information using an alphanumeric code) that are used to login to website to access content. Large publishers are showing adoption of this method but “long tail” websites that do not require a login to access content could limit the addressable market.

· Google’s Privacy Sandbox: Google is aggregating data of users with similar interests and behaviors into FLOCs (Federated Learning of Cohorts). Google has indicated that it will allow advertisers and adtech companies access to these FLOCs for targeting and conversion tracking. This technology is still in beta-testing and early feedback has indicated this is another Google “power play” to capture a great share of digital budgets.

· Panel-based data: Companies such as Nielsen and Comscore maintain panels of consumers who have opted-in and are usually compensated for tracking. These panels are currently used for brand studies, TV measurement and cross-channel media measurement and could potentially be used for digital targeting and measurement. Since panels represent a sub-set of the total digital users, it is important that the panels are stratified to the U.S. Census in order to extrapolate the data to a larger population.

The Future
Norbella does not expect many changes to the way it targets audiences and measures performance for client’s campaigns until Q4 2021. We have been working with our media partners to review their approaches to cookieless targeting and measurement, however it is unlikely there will be a “one size fits all” identity solution. A single solution would require standardization across multiple companies and adoption from a critical mass of advertisers which will take time and patience.

In the interim, we have been putting a greater emphasis on targeting tactics that rely less on cookies or device IDs through working with partners that target based on 1st party data profiles (i.e., does not require a cookie), contextual targeting, location-based targeting, and private marketplace (PMP) deals. Targeting tactics that will be the most impacted when 3rd party cookies are blocked are as follows:

· Behavioral targeting: this tactic is heavily dependent on 3rd party cookies but some publishers are evaluating their 1st party data to create audience segments that can be used for targeting by advertisers

· Retargeting: This tactic will be adversely impacted due to the reliance on 3rd party cookies. Retargeting platforms such as Criteo are pivoting to use 1st party data for retargeting and partnering with companies like The Trade Desk on their Unified ID 2.0.

Moving forward, a brand’s 1st party data will become imperative in determining the success of its digital marketing. We see the opportunity of brands working with publishers to create lookalike audiences to target based on cookieless identifiers. These approaches will require data clean rooms, a solution for advertisers, publishers, and tech companies to share their anonymized data in a privacy-safe environment to match IDs and measure performance across channels.

We are confident the industry will continue to evolve and adapt while providing the privacy and personalization necessary for effective digital marketing.

Bob Deininger is the Vice President of Digital Media & Analytics at Norbella. He directs client engagement and oversees the team that manages digital channels encompassing display/programmatic, social, mobile, video, SEM and analytics. In his free time, Bob is an amateur ornithologist, maritime historian, and a grateful dad.

Ongoing questions & confessions of a modern-day media agency.