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A new era for digital advertising

by Albert Nieto Riera

8 July 2020 15:15pm

It was a rumor but it finally happened. On Tuesday January 14th 2020, Google announced that it will no longer support third-party cookies in Chrome within two years, with trials to start by the end of 2020. While this announcement didn’t come as a surprise for neither advertisers or publishers, this deadline puts all the industry under pressure to understand its implications and adapt everyone’s strategies accordingly.

What does it mean for Brands?

Google’s decision to drop support for 3rd party cookies will heavily change the way advertisers can target consumers in Chrome. It will be impossible for brands to know anything about consumers once they leave their owned channels.

The decision is controversial, as it clearly benefits Google who acts as a judge while being an interested party. By restricting third-party cookies, Google pushes Advertisers toward its own walled garden as advertisers will no longer be able to track impressions at a granular level outside Google.

The big question, though, remains unanswered: If I had to put myself in a CMO shoes, which decisions should I make to be ready for tomorrow’s reality?

- Build a data-driven marketing team and create an in-house data architecture to take advantage of your first party data

- Plan to shift investments to cookieless channels. The most obvious option is contextual targeting but Audio, Connected TV or Digital Out-of-Home will become growing opportunities

- Understand walled-gardens better than anyone. Google ADH (ads data hub) and future versions of ADH for Facebook and Amazon will represent a unique opportunity to benefit from “log level” data

The impact for Publishers

Consequences for Publishers are obvious and are expected to be massive. According to a Google Research report, impression-based revenue might decrease 52% without third-party cookies, with news publishers specifically seeing a 62% revenue decline.

There is already available data on the impact that Safari browser restrictions had on Safari-specific traffic. On average, Publishers suffered a decrease of 38% in bid rate, 45% in revenue and 23% on CPMs. It looks consistent with Google’s report and it is not encouraging given the scale Chrome has.

Trying to understand the impact of these changes while assuming that all other variables will remain the same is fundamentally wrong. The right questions to ask are: why did we get here in the first place? What is the positive angle of this new regulation? What should publishers and brands do to be able to adapt to the new era without suffering important losses?

Opportunities in the new era

Third-party cookies presented many inefficiencies for Publishers (slow-loading times and lack of control of their own data) and for Advertisers (cookie matching between different platforms and lack of data quality standards). Moreover, it’s difficult to dispute that these issues were closely linked to a lack of transparency.

In my opinion, another less frequently discussed issue promoted by third party cookies is the commoditization of advertising. The reliance on cookies made many marketers overfocus on their targeting capabilities such as creating segments, discussing questionable attribution models and embracing standard ad units, but too often they forgot what is at the heart of advertising: create positive emotions in anyone who interacts with your brand.

An advertising world where addressability becomes a challenge will push marketers to think differently and test new strategies to send their messages to customers. My prediction is that creativity will be at the heart of this new strategies. We will see less of 728x90 standard banner ads with a personalized message to you and more beautifully designed ads, heavily integrated into the content and targeted based on easily accessible information such as device, location and, most of all, the kind of content you are currently consuming.

The ability to understand content will therefore be critical for brands and it will become the most flourishing opportunity for advertising technology companies. Machine learning and advanced natural language processing models will provide brands with the most powerful tool to amplify their messages at scale.

Publishers must learn how to collect and use first party data, pushing initiatives to have registered users in their properties. As this is easier said than done, they will need to complement this strategy by partnering with cutting-edge AdTech companies who can provide the necessary knowledge to better monetize their content in a fair way.

If all these changes are going to be for the good of the industry and improve ad effectivity remains unknown. The bar is not too high considering current metrics: 50% of ads unseen, 39% unremembered, 7% remembered in a negative way and only 4% causing a positive impact (David Trott, Campaign). It’s in our hands to turn these statistics around by adapting to this new era in a smart way, and we might very much end up in a beautiful paradox: the restrictions to target a specific person on the web increasing ad efficiency overall by fixing some fundamental problems originally caused by relying on hypertargeting. Let’s hope for the best!

Albert Nieto

CoCeo and CoFounder

seedtag

Tags

Cookies
Google
Digital Advertising
Third-party cookies
Chrome
cookieless
first party data
contextual targeting