In a single blog post back in January, Justin Schuh, Director, Chrome Engineering, served notice that the time is almost up on the use of third-party cookies to link identities and behaviors online. Google follows Apple and Firefox in removing the use of third-party cookies from the advertising and marketing world.
This action from the browser industry comes off the back of regulatory interventions following on from the implementation of GDPR, with stricter guidelines from the UK Information Commissioner backed up by the explicit threat of stronger enforcement. There is a fear that the ability of publishers to monetize inventory through programmatic trading will be adversely impacted. However, smart publishers see this change as an opportunity to regain some of the value of their audiences that is lost in the programmatic process.
We have just completed an extensive review of the outlook for identity in advertising and marketing and considered the impact, options and choices facing publishers, advertisers and technology providers in this changing world. There’s only 18 months until Google switches off the third-party cookie forever so the time to understand the options is now.
What we found, after over 100 interviews with senior industry experts across Europe and the U.S., is that the paths to a solution are multiple, that one size doesn’t fit all and that publishers, agencies and advertisers will need to have multiple technologies at their fingertips. This creates simultaneous change and increasing complexity meaning that this is a strategic C-level problem. It should not be considered merely an operational change in trading practices.
We see the future solutions falling into the following main categories:
• A proprietary ID based on first-party data where the brand or media owner has established a unique ID for use on their owned properties and uses it for matching with partners either directly or through privacy-safe environments. This is really an extension of database marketing, but in the digital era it is how the walled gardens prosper.
• A common ID based on a first-party data match to an external third-party, personal data-based reference set in order to enable scale while maintaining high levels of accuracy. This is what many publishers have encountered via onboarding, however the data behind the onboarding platform will become first party-centric with the loss of third-party cookies fuelling brand and media owner marketplaces.
• A common identity “token” used to facilitate enhanced recognition across the programmatic trading ecosystem. This is a technological replacement for the cookie within the supply and demand side of programmatic.
• A second-party data environment based on clean environments with anonymous ID linking to allow privacy-safe data partnerships to be created. This approach allows publishers to collaborate and get closer to clients, and clients or publishers can join forces to drive accuracy and create scale.
In addition to the above approaches, contextual targeting, although not strictly “identity,” is re-emerging as a complementary and standalone option where there is limited or no first-party data available.
What is clear from our interviews is that no single technology supplier or publisher believes that a single identity solution to replace third-party cookies is likely or desirable.
Also, the type of first-party data management envisaged to optimize both advertising and subscriptions in this future world is a real-time, omnichannel system, not a traditional batch-based single customer view. The Customer Data Platform is a core technology. It is also clear that a number of providers of identity solutions are currently offering solutions free for publishers, presumably to gain both currency and critical mass. These may offer a suitable solution but there’s very rarely a truly free lunch. Publishers with existing substantial subscriber bases have a number of “clean room” based technologies available that allow the simple privacy safe use of advertiser data to improve digital ad targeting and enhance yield.
It will come as no surprise that the accumulation and effective management of first-party data is the single best strategy. It’s what has made the “walled gardens” of Google and Facebook dominant and is critical in enabling them to define the way that publishers and advertisers interact with them, such as their unwillingness to provide any data except aggregated reporting. However, the defining characteristics of a walled garden around scale, universal content appeal and a high frequency of visitation aren’t features of many publishing environments.
Publishers and advertisers with less scale can take advantage of many of the walled garden benefits. However, the lack of scale will mean that technology costs are amortised over a smaller revenue base. This in turn means that these publishers tend to me more amenable about sharing granular performance data or building strategic partnerships.
Some publishers and advertisers are grouping together to create scale, both driving efficiencies and making them a more attractive buying point – this is happening across Europe and is attracting much attention in the U.S. from both publishers and advertisers.
Those lacking either scale of first-party data or frequency of visitation sit in the “long tail.” These will be the most impacted by the loss of the third-party cookie. However, the developments in contextual targeting, aided by the growth in machine learning technologies is showing a path to significantly improved revenues via technology providers.
The key trends that we see as dominating the industry approach to the loss of the third-party cookie and the better monetisation of identity are:
• First-party data and identity graphs will need to scale: In addition to volume, accuracy should be placed at a premium in constructing a first-party graph. The use of partnerships between brands—and between brands and media owners—will enable enhanced scale to be leveraged across use cases.
• Co-operation is critical to combat the scale of walled gardens: Co-operation is a key part of the future, whether through publishers grouping together to generate scale or through media owners and advertisers participating in ID sharing technologies.
• Measurement and attribution will become more challenging: Measurement and attribution are going “back to the future” to build insights on a broader canvas of data feeds and identity solutions. MTA solutions will remain at the top of marketers’ desired data and identity capability wish lists.
• Organisational talent gaps: The lack of coherent approaches within marketer/agency organizations across advertising, marketing, and commerce groups may hinder the adoption of holistic privacy-compliant identity options. Publishers will need to have competence across these areas.
• Complexity may lead to a deeper review of in-housing: In-housing has grown in an environment when it was possible for clients to implement a limited number of established tools to manage media within a stable and growing economy. In the emerging identity market, the implementation of identity solutions and a more complex media planning and buying ecosystem is likely to result in a pause in the shift to in-house models.
These factors are driving a focus within publishing and advertising on a new set of identity solutions. The focus on consumer engagement combined with the determination by the industry to find a better, more privacy-compliant path forward will come together to drive adoption.
The significant value of advertising and subscription strategies that are supported by the use of identity means that this fast-changing market will be creating news for the years to come.
Managing Director EMEA of Winterberry Group
Winterberry Group is a specialized management consultancy with deep experience in advertising, marketing, data, technology and commerce. Download Winterberry Group’s research entitled, “Identity Outlook 2020: The Evolution of Identity in a Privacy-First, Post-Cooke World”.
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