Last year it was estimated that the top walled garden ad-buying platforms – Google Ads, Display and Video 360 (Google’s DSP), Facebook’s Audience Network and Amazon’s demand-side platform – claimed an outsized 67% of the $49.8 billion in global programmatic display ad spend. For publishers, innovating with their own data is the answer to taking more of a cut and it starts with replacing the third-party cookie.
The truth is, although cookies have become ubiquitous in use, they have always been an imperfect identifier. Their existence has been less than transparent for consumers and subject to deletion by the user and browser, making them less persistent than other methods. Data loss is also a big issue for the third-party cookie. They represent the device and not the user, hampering techniques like frequency capping, since a user will end up being targeted numerous times across every device they own, resulting in ad fatigue. Finally, they’re not supported across connected TV (CTV), in-app environments, Safari, Firefox and soon, Chrome browsers.
With the end of third-party cookies in sight, data-driven marketing tactics that utilise cookies to deliver better consumer experiences and greater effectiveness will no longer work. But there is a solution. The industry has an opportunity to build an ecosystem based on trust, which takes inspiration from the walled gardens in fostering tight 1:1 relationships with consumers to demonstrate a value exchange, which encourages users to login while remaining transparent and ethical in its use of customer data.
This overhaul of the ecosystem is much needed. Although it’s easy to say that regulation and browser changes led us to this juncture, the reality is that the issues started upstream. The cookie, while imperfect, became a great tool for advertisers and publishers, and rather than acknowledging and attempting to rectify its inefficiencies, the industry turned a blind eye. In doing so, the industry lost the trust of consumers when it failed to be transparent about data usage. This resulted in the introduction of a series of regulations to protect consumer privacy, starting with the General Data Protection Regulation (GDPR), and followed by others including the California Consumer Privacy Act (CCPA) in the United States and Lei Geral de Proteção de Dados Pessoais (LGPD) in Brazil, with many more on the horizon. Further, web browsers Safari and Firefox began to restrict the use of third-party cookies for cross-site tracking. Chrome followed, announcing it would pull support by 2022, necessitating the need to implement a new infrastructure to replace them.
Third-party cookies enable publishers to employ retargeting, frequency capping, media attribution and optimisation. In the absence of these capabilities, advertisers may turn increasingly to the existing walled gardens, which only serves to strengthen these giants and boost their dominance of market share. Currently, the walled gardens receive two in every three pounds spent on digital, despite only acquiring 35% of consumers’ time. And the problem for publishers doesn’t stop there, big player manoeuvres like Apple’s decision to make its Identifier for Advertisers (IDFA) opt-in, mean that in less than three months, addressable advertising is likely to be affected yet again, and publishers will need to adapt in short order if they haven’t already.
In the face of such obstacles, for publishers across the ecosystem to thrive, they need a favourable value exchange, and it’s imperative they set about creating this via authentication strategies rooted in their first-party data. They should also seek to work with technology partners who are equally committed to providing a trusted environment for consumers. Moreover, to retain that trust, they should look to partners that ensure end-to-end security via partner-specific encoding rather than less secure alternatives such as cookie-based universal IDs, fingerprinting, and email hashing and salting.
The reason first-party data is so crucial is that it’s inherently rooted in trust and transparency, and where effective measurement is possible, it delivers a more impactful experience and strengthens the publisher’s relationship with their consumer. A further upshot of this is that publishers gain permission to personalise the experience, which in turn offers marketers a much more attractive proposition to buy into. By providing publishers with the tools they need to activate their first-party data, it’s possible for publishers to emulate the success of the walled gardens. To-date, Facebook and Google have attracted 60% of worldwide ad spend. This is because of the rich data they possess, which translates to high demand and CPMs that traditionally have outperformed display CPMs. Now, as technology has evolved and become more widely available, the playing field has been effectively leveled.
Using a secure people-based ID allows advertisers and publishers to deterministically connect their datasets, leveling the playing field and creating a world where publishers can compete against digital giants. As a result, publishers who successfully adopt addressability strategies can further attract ad budgets by continuing to uphold the value of their own content, making it work for them and their readers.
Yet for any of this to be possible – for first-party, authenticated strategies to really deliver ROI – publishers need to demonstrate their value exchange. More recently this has manifested itself in publications seeing high traffic to articles on Covid-19. In exchange for a few details, several publishers, including The Financial Times, New York Times and the Wall Street Journal, removed the paywall for some or all of their content, and The New Times reported that widespread interest in coronavirus drew nearly 600,000 digital subscribers over three months. The value exchange is there and we’re seeing it in real time.
In the not too distant future, it’s likely we’ll see a lot more publishers creating their own one-to-one, addressable, trusted relationships with consumers across the open internet, and encouraging consumers to sign up or authenticate to access content, personalised experiences, etc. It’s a big priority for publishers of all sizes, and even if they are still working towards a full rollout, many are in the testing stages. Moreover, as more demand comes in for cookieless targeting and eCPMs increase, publishers will grow in confidence and we’ll see inventory flourish outside the familiar garden walls.
The foundations of a value exchange lie in high-quality content, and publishers should make sure to identify the best way to use their content to build up a tight, ongoing relationship with their audiences. Publishers should also get creative in curating a value exchange that’s right for their users. This can be as simple as an exclusive subscriber newsletter, loyalty programmes or even tailoring the experience to provide added value.
For example, at CBS, my former employer, we played around with identity widgets targeting those who wanted to watch championship games (e.g., the American Football Conference championship) – individuals could then opt into receiving calendar reminders for future games along with more info on their favourite teams. It was successful because it offered valuable additional benefits to the user from a publisher they trusted.
Change can be scary, but putting the user back into the core focus brings so much more power to the publisher. And in light of revenues being hit in the publishing world, it’s easy to see why it makes sense to tackle this now and not when the last browser pulls the plug on third-party cookies. Publishers need to view the 18 months until cookies decease as a timeline not a deadline, and accelerate the pace of change immediately, or risk being eclipsed altogether.
SVP and Head of Publishers, LiveRamp