Putting the Death of the Cookie into Context
Google's announcement to phase out the third party cookie broke the internet - as far as advertisers are concerned. For decades the online advertising ecosystem was fuelled by third party cookies to enable user-level targeting, retargeting, view-through-tracking and multi touch attribution. The third party cookie was the essential ingredient and lifeblood for DMPs, audience models at agency trading desks, retargeting companies and attribution models. All of this will change once the privacy update is rolled out across all chrome browsers in 2022.
Why is the Third Party Cookie dying?
First we have seen Apple’s Intelligent Tracking Prevention (ITP) and Firefox’s Enhanced Tracking Protection (ETP) to block third party cookies by default. But the change was only effecting approximately 30% of programmatic traffic. However, on January 14th 2020, Google finally announced that Google Chrome, which commands a 66% market share, is phasing out third party cookies in 2 years time.
POWER TO THE PEOPLE?
In addition to technical blocks, we have seen regulatory changes, such as GDPR and the California Consumer Privacy Act (CCPA) affecting the privacy of users and giving back control to users. Users are demanding a sea-change in privacy controls including transparency, choice and control over how their data is used. This means that technical and invasive workarounds such as fingerprinting to replace the third party pixel without addressing the core issue of a demand for privacy from users, will fail. Google's own workaround, aka "privacy sandbox" is using an API instead of fingerprinting and acts as a independent proxy between a publisher and a user without disclosing the identity of the user. But will this solution be a win-win to create a balanced ad-supported web or will it substantially grow Google's walled garden?
Who are the losers in a post-cookie world?
- Publishers - According to a Google research piece published on a blog in 2019 publishers will see a drop in revenue of 52% and news publishers up to 62% without third party cookies.
- Advertisers - In a column on Adexchanger industry thought leader and former Google employee Ari Paparo, CEO of Beeswax, goes further and predicts the death of several key components of every up-to-date CMO's tech stack:
- traditional DMPs (Data Management Platforms)
Who are the WINNERS in a post-cookie world?
1. Contextual Targeting - The next generation of contextual targeting relies on predictive models rather than just keywords
2. Connected TV - CTV have always been a cookie-less environment and leverage deterministic first party data
3. The Triopoly - Google/YouTube, Facebook and Amazon will thrive based on their unparalleled first party data
I'm an advertiser - how can Next Generation contextual TARGETING help?
Contextual Targeting has evolved rapidly and recent M&A activities such as Oracle's acquisition of Grapeshot for $400m, DoubleVerify's acquisition of Finnish contextual startup Leiki and PE investment in contextual targeting platform Peer39 show how demand from advertisers is fuelling growth in the sector.
Traditional contextual marketing essentially used what you’ve learned about the past, such as content taxonomy, to help you make decisions about the presence. Predictive contextual targeting, which is applied by Precise TV, instead looks at the current moment and uses AI to predict the who is behind the screen. In the absence of behavioural data from a third party cookie, it uses all the data available in that moment like context and live signals on who is likely to be behind the screen and what their mindset might be like – it’s all probabilistic, but with a very high confidence that it will resonate.
How does a contextual DMP work?
The main difference is that a contextual DMP, such as Precise+Graph DMP is a non-PII DMP, meaning it doesn’t contain any personally identifiable information such as cookies. Precise+Graph DMP is certified COPPA (Children’s Online Privacy Protection Rule) and HIPAA (Health Insurance Portability and Accountability Act ) compliant. Under COPPA for example, you’re legally not allowed to store any personally identifiable information, or use it for modelling or targeting, on children’s content. A contextual DMP is a hub for brands and advertisers to create, analyze and segment audiences that can be targeted using predictive modelling of content placements such as videos or publisher pages.