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    How prepared is the ad industry for a cookieless future?

    More than two years ago, Google fired the starting gun in the ad industry’s race towards a cookieless future. While some progress has been made in advance of the impending sea change in digital targeting, measurement and attribution, a clear picture remains out of focus due to the proliferation of alternative identifiers and ongoing changes to Google’s timeline and privacy proposals. But there are still steps marketers can and should be taking now to get ready.

    Industry trade groups have sounded the alarm about the cost of not properly preparing for the future of targeting and measurement. Up to $10 billion of annual sell-side revenue is in jeopardy, according to February’s State of Data report from the Interactive Advertising Bureau (IAB), which warned of a “measurement blackout” if the industry doesn’t act soon. With that in mind, there are some encouraging signs that the ad industry is getting its house in order, with many advertisers calling the preparation for a cookieless future a top priority for the rest of the year and some already beginning to shift tactics and budgets away from third-party cookies and towards first-party data and other tactics.

    Yet amid these stark warnings and shifts in advertiser priorities, it is still unclear how the deprecation of third-party cookies — alongside privacy regulations like the EU’s General Data Protection Regulation and changes to several key mobile identifiers — will affect the ad industry and how it will react, even as Google’s latest privacy proposal enters small-scale testing, mostly by ad-tech companies.

    “Most brands and agencies are still not familiar with the various components of Privacy Sandbox,” said Angelina Eng, vice president of measurement and attribution at IAB. “It’s a little bit frustrating that these tech companies aren’t sitting down with their advertisers and saying, ‘What’s important to you? What’s not important to you? What are your tolerance levels in terms of these findings?'”

    Advertisers ready, solutions less clear

    While knowledge gaps abound, several recent studies show that brands, agencies and publishers recognize that changes to how they target, measure and attribute must change, sooner than later.

    Six in ten ad industry professionals said that preparing for the cookieless future was either their top (8%) or among their top priorities (52%), with 18% planning to deal with the issue in 2022 and only 4% waiting until Google deprecates third-party cookies in 2023, per a 2022 North America Quantcast State-of-the-Industry Report that surveyed more than 600 advertising and publishing professionals. Still, there is not a consensus view on which tactics will be best when crafting cookieless solutions. While more than half (57%) of respondents think first-party data will be “foundational” and 38% say contextual approach will comprise the best solution, more than a third (36%) think the solution will be a combination of first-party data, contextual, industry IDs and cohorts. Such a combination of techniques is almost a certainty, with the real work in figuring out the right formula, according to Quantcast CEO Konrad Feldman.

    “How do you combine those techniques? The mechanisms used to combine them are going to have to have flexibility, because the prevalence, availability, sophistication and failure cases of these different types of approaches will be different,” he said. “There needs to be flexibility… because they’re going to change, their efficacy is going to change and they’ll have different characteristics over time.”

    One part of the combination is likely to be the proposals that emerge from Google’s Privacy Sandbox. The company’s latest proposal is Topics, which utilizes a user’s browser to determine a handful of topics that correspond to the user’s top interests, rather than putting anonymized users in cohorts based on interests, as the short-lived Federated Learning of Cohorts proposal did. But like the proposals before it, the inner workings of Topics — which is now in the Origin Trials phase of testing — is often too technical, even for ad industry figures. Beyond that, testing is mainly handled by ad-tech companies, not publishers or marketers themselves, creating information gaps, IAB’s Eng explained.

    “I think ad tech companies need to articulate back to their clients and customers, be it brands, agencies or publishers, how they view this changing and impacting their business,” she said. “Have a checklist of the things that you’re currently doing: This is what’s going to change, here are the use-cases it’s not going to support, here are the ones that they are, and this is what we’re doing about it.”

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