The cost of cookies - Why a cookieless strategy matters more than ever
Is anyone else concerned that the cookieless future we were promised is something that will remain in the future? We’ve seen constant delays to the rollout, and recent reports state that cookie deprecation will finally take effect in the later months of 2024. This marks the third pushback of cookie deprecation in as many years. It’s beginning to feel like it may never happen. So why should you care?
There have been some big policy changes and tumultuous happenings in the MAdTech space over the last few months.
The Evolving Cost of Cookies in the Age of Advertising Privacy Policies
From the California Consumer Privacy Act (CCPA) (and its predecessor; the California Privacy Rights Act (CPRA)), to the Children’s Online Privacy Protection Act in the States, to the Digital Marketing Act (DMA), the Digital Services Act (DSA), and the General Data Protection Regulation (GDPR) in the EU, to name a few; advertisers have had to (and need to continue to) be hypervigilant against breaking local and global advertising privacy laws. It seems that while our industry delays making regulatory changes to benefit consumer privacy, governmental bodies are deciding the fate of advertising standards by mandating and enforcing (new and existing) laws and policies. This can prove to be catastrophic for advertisers.
In fact, a myriad of large advertisers and AdTech players such as Meta, Instagram, Sephora, Microsoft, and Epic Games have all been hit with fines totalling a whopping $1.43 billion US dollars over the last year by several different regulatory bodies across the US and the EU (including the FTC, Irish DPC, California’s AG, and France’s CNIL). Further, several investigations have also been launched against major AdTech players and big advertisers alike.
These fines and rapidly evolving policy changes should be a big red flag or wake-up call for any and all entities engaging in digital advertising. Leveraging cookie alternatives is imperative not only for performance, but it's now a matter of breaking the law and incurring huge fines.
Precarious Times Ahead for Leading AdTech Platform
The state of digital advertising as we know it is further compromised by big challenges that AdTech frontrunners have faced in recent times.
The Twitter Saga
Following Elon Musk’s acquisition of Twitter and subsequent challenges that the organization has faced since (including mass layoffs, ever-evolving platform functionality, a drop in their stock prices, concerns around fake news and hate speech, and an attempt at introducing a paid version of the platform), brands have started to pull out big advertising bucks from the ad platform. According to Marketing Dive, “the total number of brands running media on Twitter dropped from 3,900 in May to 2,300 in August, before ticking back up slightly to 2,900 in September”.
The general consensus is that Twitter is not currently a platform that is safe for brands to advertise on. This is substantiated by expert digital advertising groups such as IPG, advising against running digital media dollars with Twitter. The fate of the platform is yet unknown and it’s being projected that the platform is set to lose more than 30 million users over the next two years as a result of some of the aforementioned issues. In an attempt to recoup some of the ad revenue loss, Twitter has recently been offering advertisers a $250,000 credit for spending the same amount in platform, (and $500,000 in December, with a $1 million limit). They have also allowed political ads back on the platform after it was banned (a similar ban had been implemented by Meta) in 2019.
TikTok’s Troubles
TikTok, the most downloaded app in the world, the app responsible for changing the state of the internet as we knew it, was nearly banned by the US government in 2020 over potential privacy breaches. Though it wasn’t banned then, recently, US officials have decided to ban the app from government issued devices in at least 19 states to date. This mandate is as recent as December 2022. In addition, about a dozen universities across the US have recently implemented bans blocking TikTok from their campus networks (with some simply recommending that students remove the app from their personal devices citing privacy concerns, and some demanding that employees delete the app from university issued devices). The app was also banned in India (and it’s not available in China).
In just a few short years, TikTok has reached the same level as other players such as Netflix and YouTube in terms of viewership, user base, and advertising revenue. In fact, TikTok has been projected to earn $18.04 billion advertising revenue this year which is up 55% from last year. It’s also generally more cost efficient for small brands and advertisers to spend with TikTok than it is to spend with Meta. In addition, its advanced search function has some comparing it to Google search, with users’ increasing interest and trust in visual reviews of products and services, and trust in influencer and user generated content.
The large and growing user base and expanding service offerings around influencer marketing and advertising functionality primes TikTok to be the top dog in this space. It’s no surprise that experts are expecting that TikTok will outpace other AdTech giants such as Alphabet (Google, YouTube), Netflix, and Meta in the next 4-5 years. That is unless they get banned by US and other governments over continuing concerns around privacy violations, censorship and propaganda, and a nefarious algorithm, not to mention the implications around the weaponization of data by governments. Should that happen, this would be a big blow to users and advertisers alike.
Meta’s Murky Muddle
2022 marks the first year in Meta’s history where its shares dropped significantly; by 70% to be exact. They also experienced massive layoffs, a major slow down in advertising revenue, and unprecedented competition by industry peers such as TikTok, Google, and Apple. Much of this is fueled by Apple’s release of iOS 14 back in 2021 which greatly limited Meta’s ability to track and target users with personalized advertising, affecting performance and efficiency and has led some advertisers to pull away from Meta in favour of other platforms such as Google and TikTok. Meta has also rolled out several restrictive policy changes for a period of time (and some remained in effect permanently) aiming to make the platform more brand safe and equitable for users. They have also removed many targeting parameters for some of the same reasoning. Recently, brands and advertisers have noted several big glitches on the ad platform leading to decreased performance.
Not to mention the aforementioned investigations launched by regulatory bodies against Meta and subsequent fines in both North American and European Markets. This growing list of issues and risk factors make Meta’s ad offering a hard sell for many brands and advertisers. Meta’s growing investment into the Metaverse could prove to be a turning point for the AdTech giant, though the general public has yet to embrace VR/AR technologies enough for this project to be a success story. By all accounts, the project is years away from being functional enough for its infrastructure to support ad serving.
How Can you Avoid Costly Cookies and Platform Risks?
Although there are looming and existing policy changes and ever-present risks and challenges being faced by major AdTech players, the ever-evolving nature of this industry makes room for creative thinkers to accelerate innovation and reinvent how things operate. There are a plethora of cookieless solutions put forward by AdTech vendors that have proven to be lucrative. Leveraging some of these solutions will enable advertisers and brands to 1) diversify their channel mix allowing them to expand their reach and tap into new and incremental audiences, and 2) preemptively explore alternative cookie-safe options in an attempt to sustain performance long term.
Contextual Targeting
Contextual targeting is a method by which data partners and AdTech platforms (like DSPs) help advertisers target users across the IoT. Depending on the platform, these vendors will use machine learning, human trained AI, or web crawlers/Meta tags to determine what content users are browsing to serve pertinent ads next to said content. This is a very high intent tactic because if users are reading up about a topic or keyword, and an ad about that same (or related) topic or keyword is placed next to the content, the likelihood that the user will click and even convert via that ad increases significantly. In essence, contextual is the display equivalent of search; it is driven by user intent and state of mind.
Advertisers are able to use this tactic in Google ads; however, ads will only appear on Google’s Display Network and other Google-Owned and partnered properties such as Youtube, NYT, and Blogger to name a few. Because Google Ad’s inventory does not span across the entire open internet, using this tactic may limit reach and scale. In addition, because Google analyses page content by using keywords (as opposed to human trained AI, machine learning, or even Metadata), user intent is not always precise or even brand-safe.
For a much wider reach (and arguably better performance) advertisers can leverage DSPs (Demand Side Platforms) like GumGum and StackAdapt among others (Google has their own DSP, and The Trade Desk is known as one of the top DSPs around) to implement contextual targeting.
Most DSPs carry a high cost and skillset barrier for some advertisers and brands. Collaborating with an agency will ensure that campaigns are activated in a cost-efficient manner that employs best practices. Further, working with agencies allows brands and advertisers to unlock the often heavily discounted or preferred rates agencies tend to secure with Adtech Partners and platforms.
To break this down further, CTV is a subset of OTT; OTT refers to any internet connected device such as tablets, mobile devices, and even gaming consoles that stream online content whereas CTV refers to internet connected TVs or smart TVs used for streaming content.
In these formats, ads are not purchased like linear TV advertising spots would be; instead, advertisers are able to reach users on various devices with no time restrictions as streamed content is time-agnostic and often not live. This also means that ads can be more targeted and efficient.
Because these ads are delivered in this manner, they are immensely more measurable and impactful than linear TV ads as users can complete actions such as site visits and even conversions on those same devices - actions that can be tracked and attributed to campaigns. Contextual and demographical data is available for targeting which means advertisers can serve ads based on who consumers are and what they’re watching, making it even more personalised than linear TV.
In addition, CTV doesn’t rely on cookies to serve and track ads and ad measurement. CTV advertising employs ‘CTV Device IDs’ which are strings of IP addresses used to track and target audiences. Advertisers can buy CTV through previously mentioned DSPs such as DV360 (Google’s DSP), TTD, and even Samsung and Roku. Once again, partnering with an ad agency to buy this type of media is hugely advantageous from cost and performance perspectives.
Bring Your Own Data: First Party Edition
The best kind of data is the kind you own. First party data will reign supreme in a post cookie world. Not only will you be able to retarget users you’ve already paid to acquire, maximising your ad spend, you’ll be able to leverage look-alike modelling to target and convert audiences that look like your seed audiences.
Retargeting and look-alike audiences are often amongst the most cost-efficient tactics marketers and advertisers can take advantage of across many channels. As such, taking steps to grow and bolster the amount and quality of your first party data should become a top priority.
Strategies to bolster your first party data can include:
Onboarding a DMP or CRM to better organize, merge and maintain data
Integrating data from brick and mortars into digital campaigns, such as POS and beacons
Repurposing email/SMS data for digital campaigns
Offer value in exchange for data (ie. a special promotion, a subscription model, a gift with purchase or in exchange for data, an app deployment...)
Launch ‘data’ acquisition campaigns (data here is a placeholder for the actual data point you’re seeking to gather such as emails, phone numbers, or any other data point that is of value for your business or client)
Launch Lead Generation Campaigns via Facebook, Google, and even DSPs
However you slice it, 1P is here to stay. If data is gold, 1P data is palladium. Brands and advertisers would be smart to invest in 1P expeditiously! There is however one small caveat - expansion. If your 1P data pools are limited, how do you expand your reach efficiently? Even if your pools aren’t limited, mathematically, it’s very likely that you will exhaust your 1P and LAL (look-alike) audiences faster than you can build them. As such, looking to integrate robust and ethical 3P (3rd party) data into your strategy to expand your reach (which would by de facto help to grow your 1P retargeting pools), while simultaneously bolstering your 1P data will lead to a winning combination.
Cookies Can Save the Day After All
In the midst of existing and emerging privacy policies and laws as well as the industry shakeups caused by big challenges faced by key AdTech players such as Meta, TikTok, and Twitter, things can look quite grim for brands and advertisers.
However, deploying a cookieless strategy and leveraging proven tactics such as contextual targeting, connected TV campaigns, and investing in 1P data can offer a winning combination to prevent your brand or clients from violating privacy laws and being over-reliant on any one platform during the precarious times ahead. Further, employing such tactics can prevent a huge downturn in performance once more restrictive policies and/or platform changes are enacted, and of course, once cookies are finally deprecated.
Join us in the next and final instalment of our three part series to learn about how 3P data can further inoculate your brand or clients against the adverse effects of cookie deprecation, and over-reliance on 1P data. If you missed part one of our series and you’d like to learn more about the road to cookie depreciation thus far, see here for part one.
