‘It’s going to make our jobs harder’: Effects of Google’s third-party cookie fallout compound for marketers

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Google has finally thrown down the gauntlet, making good on its promise to decimate third-party cookies in its Chrome browser by the end of this year. Some marketers have started testing alternatives, taking matters into their own hands as opposed to waiting for the other shoe to drop. But for the most part, marketers seem unfazed given the writing has been on the wall for years. As the fallout continues, however, agency executives expect to see compounding effects on trends like the rise of retail media, streaming and audio ad spend, and the role of display ads.

The signal loss from Google’s data privacy initiative is having a ripple effect within the marketing industry, as the loss of third-party cookies forces marketers to probe their own first-party data and peddle it, giving rise to the retail media networks. Thanks to the cord-cutting trend, ad dollars were already flowing from linear television into streaming. But as the loss of third-party cookies muddies targeted ads, some agencies are seeing the investment in display advertising decline in favor of streaming video and audio. While display ads won’t see the sun set on them anytime soon, media buyers are taking a different approach to the role they play in the media mix, especially as banner blindness and digital fatigue continue.

That’s not to say Google is to blame for these trends, but it is to say the loss of third-party cookies has added fuel to the flames.

“The real opportunity lies not in trying to replicate what’s lost with cookies but rather in seizing the chance to depart from outdated media practices — cookies are 30 years old this year — and investing in channels and formats better suited to the specific objectives brands aim to achieve,” Duncan Smith, U.S. CEO at performance marketing agency Journey Further, said in an email.

Digiday spoke with six agency executives to learn more about what to expect as the fallout from Google persists.

Continued rise of retail media

In the last two years or so, what was a gold rush to build out first-party data sources has mushroomed into a retail media arms race, where everyone from Walmart to Cars.com is auctioning off their audience data to advertisers. Wawa, the gas station with a passionate following, is the latest to launch its own retail media offering, which it did last Tuesday — Goose Media Network, with ads on its website, mobile app and video at the pump.

For Claire Russell, head of media at ad agency Fitzco, the ever-growing list of retail media networks has been the biggest challenge of the phase out of the third-party cookie. “Cookie deprecation was supposed to provide some more equity in the space. It was supposed to protect consumers, et cetera,” she said. “But all that it’s done is it’s made these walled gardens hug their data even tighter and they have no reason to share.”

Russell isn’t alone. Last November, Digiday spoke with several agency executives who were grappling with the influx of retail media networks, which were creating fragmentation in the marketplace and forcing agencies to figure out the best way to divvy up client ad dollars. Thanks to the third-party cookie fallout, don’t expect to see fewer retail media networks anytime soon. At least 42% of brand and retailer professionals said retail media accounts for “the highest portion of their companies’ marketing budgets,” according to Digiday research. And retail media is expected to make up one-fifth of digital ad spend worldwide this year, raking in $140 billion, up from $115 billion last year, according to Insider Intelligence.

“What will happen is, there’s going to be this uproar of all these other platforms from these retailers, from these brands, and they’ll slowly consolidate,” said Ashley Karim-Kincey, vp of media at ad agency Dagger. “Because there is no way that can be fully supported long term.” Meaning, something similar to what’s happening with consolidation in the streaming space may eventually happen with retail media.

Streaming audio and video

Streaming platforms have been siphoning ad dollars away from linear television as cord-cutting has continued. Streaming ads have become the new normal with more players like Amazon Prime and Netflix building out the ad-supported streaming world. (Read about Amazon Prime Video’s pitch deck here.)

Again, Google isn’t to be blamed for the rise of streaming. But with the loss of third-party cookies, agency executives are advising clients to consider spending on things like streaming video and audio as opposed to display ads, where targeting has been marred with the loss of data. Again, it’s a compounding effect.

“It’s already so built into our behavior as consumers, and as digital media consumers, to ignore the [display] ads. Even in its heyday, it was never a great brand driver and it’s only becoming worse,” said José Villa, president at Sensis Agency, a cultural marketing agency. “Those days are gone. If they’re not already gone for some advertisers, they’re going to be gone.”

Streaming stands to be a winner with Google’s loss as a one-to-one ad opportunity. Meaning as opposed to several display ads on a page simultaneously, streaming allows one ad at a time for the most part. Technological advancements have made it possible to measure and target audiences within streaming. But possible doesn’t mean perfect.

In the golden age of digital media, performance marketers were able to get granular both in terms of measurement and targeting. Few media channels have yet to meet that level, albeit strides have been made both in video and audio, but it hasn’t caught up to the likes of social or display ads yet. Fifty-two percent of brands and retailers and 43% of agencies report using ad-supported video streaming platforms, per Digiday research. In comparison, 80% of brands and retailers and 71% of agencies use display ads. According to agency execs, the streaming space still stands as untapped potential with a vast audience.

“Over time, streaming audio, based on its mobile usage, doesn’t always look great in performance models because some data is lost. But that’s the channel that we’re having really interesting conversations with our clients about,” said Patrick Kelly, svp and group director of investment at Havas Media Network. “Because the usage is high. Spend isn’t always tracking along with it.”

Digital fatigue and display ads

Regardless of muddied tracking, targeting and measurement thanks to the crumbling of Google’s cookie, marketers are still very much invested in display advertising. Of the six agency executives Digiday spoke with for this article, only one said they saw a noticeable decrease in display ad spend. Within programmatic buys, spend on display is down 17% year over year for Fitzco clients, said Russell, who added that the decline is expected to continue this year. But the spray-and-pray approach to display advertising may be on its way out. (Read more on why agency clients favor programmatic over direct-sold ads, as confidence — and spending — fall in online display.)

“Gone are the days when a trader logs in to a DSP [demand-side platform] and peruses a massive library of data segments to choose from,” Leah Askew, svp and head of precision media at Digitas North America, said in an email. “Many of our teams are working closely with a smaller set of targeting data relationships.”

That circles us back to first-party data and a more context-based approach, which has yet to offer the scale or measurability that Google’s third-party cookie does.

“To address both consumer and brand challenges, a fundamental reconsideration of the role of display advertising is necessary,” Duncan said. “The decline of cookies should ideally prompt more brands to embrace these progressive methods of connection, rather than inundating current user journeys with ineffective display advertising.”

Now that Google has started to make good on its cookie deprecation promise, agency executives are increasingly advising clients to shift toward first-party data-led strategies in preparation, per Villa. The issue with losing Google’s data is filling the cookie-sized hole it leaves behind. In other words, the hodgepodge of alternative data marketers turn to won’t be as easy to scale, he added.

Still, display ads are one of the most efficient mediums and cheapest ways to get eyeballs, said Karim-Kincey, adding that client dollars will continue to be spent there as Google’s cookie deprecation continues. Overall, it’s been a slow trickle of change as Google dragged its feet in the cookie phase out and marketers dragged their feet in response.

“As more and more clients are starting to utilize programmatic, that’s been the first step in that direction — using programmatic and sources of third-party data to create custom profiles and segments that don’t depend on cookies,” Villa said. “It’s going to make our jobs harder. We’re going to have to piece together data from a variety of different places.”


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