Life After Cookies: Part One—The Industry Rallies to Find Replacements

For most consumers, as well as brands and publishers, third-party cookies have long been a fact of life. For consumers, clicking “yes” when a notice on a website they’re visiting asks if it’s ok to follow them with cookies is almost a reflex action. Those who use the data the cookies generate have been equally complacent. As Garrett McGrath, vice president of product management at Magnite, an independent sell-side ad platform, notes, “for the past 15 years, if you were to get a bunch of buyers, sellers, and platform people in a room and ask them if cookies were a good vehicle for identity almost everyone would say, ‘No,’ and then they’d go home and do nothing different.”

And that’s because, notes John Goulding, head of strategy, US, at MiQ, a programmatic media company, despite their limitations, such as a short shelf life, third-party cookies have served as “a tremendously sophisticated marketing tool where we have highly addressable advertising that’s incredibly accountable. You can measure it. You can optimize it in flight. You can deliver campaigns to just the audiences you want to reach. From an industry perspective, there’s been a laser focus on those outcomes without thinking as deeply as we could have about what this means for the consumer.”

Recently, however, consumers have been thinking about it, wondering, for example, why it is that the shoes they looked at on one site keep following them everywhere they go.

Moreover, notes Tom Richards, global product director at MiQ, the growing concern about privacy, fostered not only by those ubiquitous shoes but by a few high-profile cases and the development of some high-profile laws has put cookies in the spotlight. “Even if these examples are not strictly tied to third-party cookies from a technical perspective,” says Richards, “they’re very much in the forefront of consumers’ minds.”

A Growing Focus on the “Data Subjects”

That concern has helped fuel a series of laws, starting with the European Union’s GDPR, that put the consumer first and foremost when it comes to data ownership.

“GDPR was, to date, the most comprehensive privacy regulation that the industry had ever seen,” says Lauren McDermott, vice president and counsel for global privacy and compliance at MiQ. “It’s brought with it a move away from what was happening before, which was allowing the industry to self-regulate, and instead is moving it toward a more prescriptive list of requirements and consumer rights.” This, she adds, created the idea that the data belongs to the “data subjects”—the individuals whose data is being processed—and companies have to develop mechanisms to provide those rights.

While GDPR only governed EU markets, it set the stage, McDermott notes, for copycat laws, such as California’s CCPA. Plus, any company doing business in Europe had to comply with GDPR. As Richards puts it, “as a global company, we had to put some global principles around how we adapt our processes to be more compliant with GDPR in every market, not just in one.”

But if GDPR started the ball rolling, it was an announcement by Google in January 2020 that their browser, Chrome, would stop supporting third-party cookies in about two years that forced the industry to sit up and take notice.

“We probably should have seen this coming,” says Richards. “I don’t think anyone was super surprised. The writing was on the wall.”

Surprisingly enough, Google’s decision seems to have resulted in very little handwringing, anywhere in the industry. For one thing, the deadline was not only vague, but two years out. “Given the pace with which this industry moves,” notes Richards, “two years may seem like a fairly long time, but the scale of the challenge is pretty significant.”

“Given the pace with which this industry moves, two years may seem like a fairly long time, but the scale of the challenge is pretty significant.”

The Industry Pulls Together

That challenge, Richards adds, requires that the industry “re-architect a world that ultimately is more privacy first, more focused on consumers, and more sustainable on the whole. The opportunity is massive in terms of a more future-proofed web for the industry to operate within. I think everyone is moving toward that goal collectively.”

As the industry moves toward a cookie-less world, collective action is proving to be the key to finding a solution. “The consortium of players who are thinking about this in smart ways are looking to make it better than it used to be,” says Goulding. Moreover, adds Richards, “there isn’t just going to be one solution to the problem. We’re not just going to be able to say, ‘Oh, that was the third-party cookie; this is the alternative.’ There is going to be a handful of ways in which we deliver addressable media and measure the returns on it. There will be a lot of different identity spaces or mechanisms in which that can take place.”

“There isn’t just going to be one solution. There is going to be a handful of ways in which we deliver addressable media and measure the returns on it.”

Stewards of the Data

Critical to making this work, says McDermott, is making sure that the companies that are providing services to users online—and profiting from them—are serving as “stewards of the data. There is a desire to balance the need to monetize the web so that you can provide content with the increasing call for consumer protection and transparency.”

Between now and the day when Chrome crumbles the cookies, there’s a lot of work to be done. One key to getting it done right, suggests Richards, is “’decoupling the short-term requirements where brands are still going to be pushing for ROI and metrics with long-term planning that acknowledges that the foundations of everything we built are probably going to change. That’s a balancing act for people to consider.” And it requires, he says, making sure that a portion of today’s budgets are tied to thinking about what they’ll be doing when cookies go away.

Notably, as we’ll explore in future installments of this series, all the players are demonstrating a commitment to getting this right. “What you’re seeing,” says McDermott, “is really an openness from the industry to say, ‘If we’re going to commit to these technological changes, how can we be part of the conversation and make sure the changes are not gutting the industry. It’s important to make sure that the solutions are still allowing advertising to be effective.”

After all, as McGrath points out, “Advertisers invest a ton of time and money trying to cultivate and build brand loyalty.  Programmatic is a fantastic way to help do that, and to help measure the results. If we take this opportunity to bring buyers and sellers much closer together and do it with our eyes wide open, there’s a massive improvement to be made not only for the industry but for the internet at large.”

Read part two of Life After Cookies, next here.