By Greg Paull
Google’s plan to eliminate third-party cookies by 2022 might be causing some agitation in the digital advertising industry, but hindsight tells us that the third-party cookie has been crumbling for some time. The writing was on the wall with the arrival of smartphone apps (where cookies never worked to begin with) and consumers started to move away from a 1-to-1 browser to device environment.
Then came GDPR and its emphasis on informed and active consent for collection of consumer data and tracking of consumer behavior. Companies scrambled to meet deadlines for compliance, with the average Fortune 500 firm spending $16 million on resources such as data compliance officers, legal teams and software.
The end accelerated when Apple, a company with little stake in digital advertising and a strong focus on privacy as a differentiator, completely blocked the third-party cookie on its Safari browser and closed all loopholes in 2019.
What does all this mean for the digital advertising industry?
Now that the plan for a cookie-free world is in motion, each player in the industry is going to have to maneuver this new ecosystem in its own way.
For advertisers, this is a wake-up call
The ability to track consumer action without explicit or informed consent has long been taken for granted. As consumers demand privacy, regulators have responded by implementing laws like GDPR and CCPA. Advertisers need to fundamentally rethink their approach to data collection, ad tracking and targeting in order not to run afoul of laws and public opinion.
For publishers, this is a window of opportunity
Media needs to step up the first-party data game. The publishers that do this well will come out on top and find themselves in a better position in the advertising food chain than they were in a cookie-based landscape.
Some publishers might also make the shift from an ad-supported model to a subscription-based model of revenue. More and more news publishers are reporting that their subscription revenues, boosted by digital growth, have displaced advertising as their most significant revenue stream. OTT video platforms are also following a strong subscription-based model, with Netflix categorically stating that it will never offer an ad-supported option for its consumers.
