Privacy, identity and audience addressability in a post-cookie world

Privacy, identity and audience addressability in a post-cookie world

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In creating a fairer future, we need to consider the role third-party cookies have played in defining consumer experiences of online advertising, writes PubMatic’s Emma Newman

In January 2022, Chrome, the largest global browser with almost 70% market share, will no longer support third-party cookies. Google’s decision has accelerated the need for publishers and advertisers to develop a robust, scalable, cookie-free advertising ecosystem.

Where did third-party cookies go wrong?

When the third-party cookie appeared on the scene, it was intended to enable publishers and brands to create a simple link between publisher audiences and brands’ target audiences – which is exactly what it did.

However, third-party cookies are capable of a lot more, and the online ad industry stretched the cookie’s functionality with extensive, pervasive use and created a situation that required legal intervention (e.g. GDPR and CCPA).

Today, ongoing privacy issues have led to the assumption that the only way out is to remove third-party cookies entirely. Or is it?

Who can shout the loudest?

Safari and Firefox already block third-party cookies by default, and you could be forgiven for thinking that Chrome is simply following suit. In reality, Google is using its scale in an attempt to control the future of online privacy and maintain control of the digital advertising ecosystem – in contrast to Safari, which many skeptics believe is simply aimed at driving more traffic to Apple’s walled garden.

The difference between the smaller browsers’ approach and Chrome’s is that the latter is rolling out a host of technologies designed to enable publishers and brands to continue to share data, albeit in a tightly (Chrome) controlled way.

At a high level, Google wants to create a “privacy sandbox,” where websites are able to gather some information but ultimately hit a wall where the browser cuts them off. Advertisers will have access to ‘cohorts’ – audiences built by Chrome based on users’ browsing history. There is also a ‘TURTLEDOVE’ proposal which will allow publishers to add their first party audiences to cohorts when similar behaviours are identified.

Up to now, third-party cookies have been the linchpins of audience addressability: gathering the data required to dynamically optimise creative, frequency cap, and retarget. While there’s still more than a year to go before Chrome’s stated deadline of January 2022, and a lot could change in that time, advertisers and publishers need to act now in order to weather the inevitable storm.

Creating a fairer future

The Partnership for Responsible Addressable Media (PRAM) is a collaborative effort that involves advertising trade associations and companies representing every sector of the global advertising industry.

PRAM’s stated principles are: privacy is important, a healthy open internet is better for society, all marketers and publishers should have equal access to the mechanism for operating an addressable internet, and everyone must abide by applicable laws. If successful, the work of PRAM will get us as close as possible to next-generation addressability solutions with accountability that are widely adopted.

In creating a fairer future, we need to consider the role third-party cookies have played in defining consumer experiences of online advertising. For the most part, third-party cookies have facilitated better experiences through frequency capping, targeting, and personalisation. However, consumers can find ads ‘creepy’ and irrelevant, especially when the data used for targeting is out of date.

To ensure that any new solution optimises the consumer experience, it needs to encompass current benefits as well as new capabilities to increase addressability, all the while protecting data privacy. That’s a big balancing act and success will require consumer education as well as industry collaboration and innovation.

What are the opportunities?

Advertisers and publishers need to reconsider how to identify, target, and engage audiences in a compliant, brand-safe way that does not compromise the user experience. There are three main options available to do this: matched first-party data (e.g. email addresses from a publisher’s logged in audience), universal identifiers, and browser-based audiences. Brands and publishers need to understand and weigh up the benefits and drawbacks of each solution.

Matched first-party data is the most robust way of identifying consumers and creating addressable audiences because there is a unique, persistent identifier that exists between two (or more) websites. This enables, for example, an online retailer to retarget a basket abandoner on a premium publisher if the consumer logs into both sites using the same email address. Additionally, publishers and advertisers know how ads perform in terms of yield and ROI, creating a feedback loop for optimisation.

While this approach offers near-optimal audience addressability, for smaller advertisers and publishers it may be impossible to set up and manage the number of partnerships and data integrations that would be required to achieve viable scale.

Independently created universal identifiers facilitate audience addressability for brands and publishers at scale but lack the accuracy of matched first-party data. For mid-sized companies, universal IDs are likely to be the addressability solution of choice due to the combined offering of scale and precision. Larger companies will likely use universal IDs too, but as a back-up rather than a preferred solution.

The final option, which is still being defined, uses browsers’ audience segments. This approach is highly scalable but will lack transparency. The net result is not dissimilar to the old network model and blind buys on unsold inventory. For publishers and brands this poses a threat to brand safety and the lack of visibility into placements seriously throttles performance and yield optimisation potential.

How to prepare for 2022

In order to not just survive, but thrive, brands and publishers should follow these five steps:

1. Set overarching business goals

2. Ensure first-party data can be measured against your business goals – if not adjust your data collection/partnership strategy

3. Evaluate current performance

4. Make strategic, data-driven decisions

5. Share learnings, optimise, and evolve

You can’t discount how third-party cookies have shaped the powerful, performance-driven ecosystem we find ourselves in today. Equally, the industry can’t deny that it should have addressed privacy concerns sooner. Today, we have an opportunity to create more sophisticated targeting by thinking beyond the cookie and plug-and-play solutions.

There’s no doubt that we need more neutral views and actions and that collaboration will be key to supporting the open web preventing further dominance bythe walled gardens. Shifting to a first-party data-driven approach will give brands and publishers the transparency and control required to create seamless user experiences, while optimising revenue for both sides.

The pace of change will vary across sectors – brands are in a good position to move quickly as they already sit on a wealth of first-party data. Some publishers will need to play catch up and create a logged-in audience database upon which to build addressable audiences to meet advertisers’ needs. The ad tech industry may waiver on the cusp of hard developments for a while longer.

However, this time can be put to great use by creating collaborative working groups and developing solutions that won’t enable the walled gardens to dictate the future.

Emma Newman is CRO, EMEA at PubMatic

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