Imagine a world where you make candy and cakes. Almost all your competitors make similar candy and cakes, but you do well because your cakes are awesome. In this world, you and your fellow confectioners in the marketplace rely on the same kind of chocolate. One company controls a huge percentage of that high-quality chocolate supply. Everybody grumbles that the company is too big and powerful, but they still buy it because the chocolate is good and cheaper than everybody else’s. Suddenly, with much fanfare and public outcry, the world deems chocolate harmful to public health. It’s not like chocolate won’t exist. People will still make and consume it. But the biggest chocolate distributors, including that huge supplier, say, “No more chocolate!” Do you change your business model and products to fit in the new world? Or do you turn into a chocolate outlaw? Before you decide, the major chocolate provider says, “We’re going to make something that’s just like chocolate but without any of the dangerous things the public is worried about. Trust us. And you can only get this new chocolate from us.” Does that affect your business choice? Would you think the chocolate supplier might be taking advantage of the situation? Well, that’s where publishers and advertisers are today with third-party cookies. In response to privacy concerns, Google is stopping support of third-party cookies. But it’s also got a “new” version that it says you’ll want. Yet, you still have no idea what goes into that new bite. Who knows what the right answer is? CMI’s chief strategy advisor, Robert Rose, has a few ideas. Watch this video or read on for his take.
The story of third-party cookies
We’ve covered the idea of privacy and the departure of third-party cookies a few times on this channel. But recent developments may have you saying, “I just don’t understand. Are third-party cookies going away? Is something going to change? Do I have to do something?” The answer is yes. So as not to let the many buzzwords, technicalities, and double-speak in the conversation continue to frustrate you, I’ll break it down. A few weeks ago, I talked about Google and the status of the third-party cookie. I defined what a cookie means and how it plays into personalized or customized ads for a targeted audience across digital channels. As I said, the third-party cookie has been an embattled feature for years. But now Google has large market shares for web browsers, content/publishers, AND search advertising. Google is the lynchpin of the ad industry. So, about two months ago, Apple made a simple but extraordinarily significant change to how it manages podcasts. Prior to the change, a subscriber who skipped a week or two of a podcast would return to find the app downloaded all the missed episodes. After its recent system update, Apple doesn’t retroactively download episodes, leading many podcasts to lose about 25% of their downloads. Podcasters had a collective meltdown. It’s a big deal for those who monetized their podcasts through advertising, given it’s a $2 billion industry. Now imagine that impact almost 300 times bigger. Programmatic advertising is a $546 billion industry. Google is about $230 billion of that, so this third-party cookie change hits at a tectonic-scale level. When Google eliminates third-party cookies, everybody in business will see their ad performance take a huge hit. Publishers, media companies, the Interactive Advertising Bureau (IAB), and even tech companies are having toxic freakouts. Google is smart, of course. It’s not just taking away the third-party cookie. After all, it fuels their revenue, too. In 2019, Google basically said, “Uh, yeah, hey. We’re going all in on privacy, and we’re gonna start working on new solutions that don’t involve third-party cookies. We’d love to work with you on this. Let’s shoot for — I dunno, 2022?” Around that time, it launched what became known as the Google Privacy Sandbox — an “industry-wide effort to develop new technology that will improve people’s privacy across the web and apps.”
Turmoil in potential cookie-free solutions
As Google started the work in 2019, great debates arose with groups like IAB, representing the affected industries, on how to do things. Delays ensued. In 2021, Google said, “OK, we get it. This is hard. So we’ll delay killing third-party cookies until 2023.” Meanwhile, Google just kept doing stuff. It tried new technologies. It experimented. Nobody in advertising and media paid attention, or if they did, they didn’t like it. So, Google again said, “OK, we’ll delay it. But come on, we’re serious — 2024 is it.” In 2023, it rolled out the solution to a cookie-free world — a clean room technology with partner vendors like Habu and LiveRamp. The concept would allow advertisers to match Google data with the product company’s data. It created a data exchange called “Switzerland,” a neutral place to identify people to target with ads without either side giving up their data identities. Google called this PAIR — Publisher Advertiser Identity Reconciliation. To confuse things more and stretch the sanity of acronym bingo, Google also announced FLEDGE — First Locally Executed Decisions over Groups Experiment. It lumped people into a set of content categories. The test found that Google’s category definitions performed similarly to those using third-party cookies. Thankfully, they switched the name to Protected Audience API and were like, “Hey, this kinda works. So whaddya say?” Underwhelmed publishers and others replied, “Meh, I don’t get it.” And that brings us to today. A few weeks ago, Google made good on its promise. It rolled out real changes, limiting third-party cookies on 1% of Chrome browsers, and people weren’t happy. Now, the news is that IAB — that industry group representing advertisers and publishers — issued a report outlining all the things wrong with Google’s Privacy Sandbox approach and why it’s not ready for prime time. They cried, “What?! You’re actually doing the thing you told us you were going to do five years ago!” In their outrage, they not so subtly tried to make the point Google might not be transparent in how it’s doing things. The Competition and Markets Authority in the United Kingdom picked up on the unsubstantiated hint. It basically said, “Google must do more to address the issues with the Privacy Sandbox because, well, because Google may be building an advantage to Google in the way they are architecting the sandbox.” Shocking, right? Google might structure the next generation of ad targeting to benefit itself over everybody else.
Overcome third-party debate with first-party solution
What does all this mean for you? You’ll see similar headlines about third-party data fixes for a while. The thrashing will go on about standardized ways to target advertising. It’s in everyone’s interest to delay, obfuscate, and make everything complex about this. So, don’t expect this to resolve itself any time soon. But don’t use all that as an excuse to delay your business, team, or you from refining your first-party data approach – and using that data collected from your customers, site visitors, etc., to manage how you target content and create value for the audiences and customers you desire. Whatever the outcome of all this thrashing, it will fundamentally change how ad media is purchased. It’s not if it will change, but how much and what will change. I guarantee no matter which solution ends up being the standard, it’s not going to be easier to target content. If you don’t have a first-party data strategy and a way to get a 360-degree view of your audience as they journey through your content experiences, marketing and advertising will get a lot more expensive. That I know for sure. Want more content marketing tips, insights, and examples? Subscribe to workday or weekly emails from CMI.
