This article is the third in our “Everything you need to know about the post-cookie apocalypse” series. In this article, we discuss the impact on publishers revenues of these disruptive industry-wide events.
The global digital advertising industry relies upon a huge and complex ad-tech ecosystem that includes supply-side networks, demand-side networks, data management companies, retargeting companies, and major ad companies like Facebook and Google that auction ads in real-time for serving millions of websites and apps. The world's leading publishers depend on data retention about their site visitors to sell targeted ads.
When Apple or Google change data collection rules it directly affects those very publishers who provide the content that funds this global programmatic ecosystem. There are plenty of publishers that claim free content is only available because of this global programmatic ecosystem and, without it, free media and services for consumers are at risk.
Earlier this year Orchid Richardson, senior VP, programmatic and data centre at Interactive Advertising Bureau (IAB) claimed that “Publisher revenue is really in jeopardy. We’re forecasting that publishers are liable to lose up to $10 billion in revenue because we will be unable to do audience targeting and leveraging third-party data. Advertisers are the most unprepared. They appear to have a wait-and-see approach like it is someone else’s problem to solve.”
As Apple and Google restrict consumer data on web browsers and devices, personalization becomes more difficult. With the deprecation of third-party cookies, both publishers and advertisers will need to find new digital marketing tactics.
The IAB has become the most vocal body within digital advertising, lobbying for cooperation among the major stakeholders to create new identity programs to replace the older methods. A recent IAB report sought to quantify how much money the online publishing world could lose as both Apple and Google end data-sharing practices that have powered the open web and advertising for years.
Google announced that when it moves away from third-party cookies, it would not replace them with IDs that rely on similar levels of personal information. Instead, it is moving to “cohorts,” which is a method of targeting and measuring ad campaigns based on pools of users who are not individually identifiable. Apple has already restricted tracking on its Safari web browser, and it is about to release its latest iPhone iOS 14.5 software that will set up more barriers for marketers to match users through their devices.
Publishers have relied on this data-sharing to fill their ad inventories, and brands use data to target and measure ad performance. IAB is working on several different solutions that would develop “unified IDs” that publishers and brands could adopt. However, many regulators have aired their concerns about this self-fulfilling approach.
Tom Kershaw, chief technology officer at Magnite claimed “You will be able to take first-party data and use it securely to create segments and create audiences and address those audiences in ways we never thought possible." Nicole Lesko, Meredith’s senior VP of data, ad products and monetization issued a response to Google’s cookie changes stating “The only surprise about Google's announcement is the industry's response. Google has indicated that this is their direction for the past 15 months. Publishers are wary of solutions that rely on a hashed email address to replace the third-party cookie in the open programmatic space." Lesko added "Scale issues aside, an email is deterministic and is not easily controlled once it is shared universally, regardless of purported anonymity." referring to concerns about any ID products that rely on personally identifiable information like emails, which many publishers have access to through signed-in users. "As publishers and guardians of that email address, a consumer trusts us to keep it safe in exchange for utility such as personalized content, experiences and marketing on our properties." Kershaw had a similar opinion. “The moves by Apple and [Google] Chrome didn’t just come out of their own, it was consumers concern that led to a different situation, and we are in control to reinvent it.”
Leading publishers that invest in first-party data and use it appropriately will readily fill the lost revenue gap caused by third-party cookie deprecation.
To survive this industry-wide disruption, publishers need to adjust by making the most of their first-party data. They can’t rely on the murky and opaque underside of programmatic advertising to better target audiences. Smart advertisers are shifting to a greater reliance on walled gardens and to leveraging publishers first-party to reach their target audience. The big question for both publishers and advertisers is how to improve first-party data and what type of partner do I need to achieve this.