Unintended consequences of the shift from third-party to first-party cookies

The third-party cookie is crumbling. That’s a narrative that’s been around since the rise of mobile device usage and marketing, but it’s only now that the trend has a sense of real urgency attached to it.

Publishers, ad tech vendors, and agencies are all scrambling to figure out how to leverage first-party cookie-based models which can seriously reduce their reliance on the third-party cookie — a future that’s now critical to future survival thanks to data-privacy regulatory pressures and the anti-tracking path taken by the browsers.

As with any major marketwide change, there is fallout, in the short term at least. Here are some of the unintended consequences:

Even more power to the walled gardens
There’s always been a sense of irony around how the European Union’s attempt to curb the dominance of U.S. tech platforms, while also protecting consumer privacy, has resulted in a piece of legislation — the General Data Protection Regulation — that many argue has inadvertently benefited the likes of Google and Facebook further. The same can be said for the scramble to recreate the online ad ecosystem around the first-, not third-, party cookie.

Regulatory scrutiny is one of the pressures propelling the long-talked-about so-called “cookieless” future (meaning third-party cookieless future), although it’s the continuous changes made by the anti-ad-tracking browsers Apple and Firefox that have spurred a real sense of urgency among publishers, ad tech vendors and agencies to find an effective replacement.

Publishers are pushing forward more aggressively than before with first-party data strategies that rely on first-party cookies, but the likes of Google and Facebook remain out in front. “The walled gardens have capitalized on the death of the cookie,” said Oliver Gertz, managing partner of interaction at MediaCom Germany. “They have their own ID, which is high quality because users are always logged in. They’re the winners in this.”

A lot of changes are being made in the name of giving consumers more choice. Google has reorganized its ads business to put privacy at its heart and has appointed its first head of privacy, as reported by AdExchanger. That’s come after Google announced other changes, citing GDPR as its motive, such as its culling of attribution tool DoubleClick IDs in 2018 and adding new consumer-choice ad-tracking features to its Chrome browser.

“Google is making a more balanced approach and moving much more slowly [than Apple],” said Ben Barokas, co-founder of Sourcepoint. “There is so much more scrutiny on Google and for that matter Facebook than Apple. Everything from the privacy and browser controls to anti-trust [regulation and fines] — it’s a knife’s edge. If they clamp down on privacy, it benefits Google and brings more power to their walled garden ecosystem,” he added.

Pressure on log-in strategies and alliances
Publishers furthest along the path of developing log-in strategies are in a good position. Granted, individual publisher log-in strategies may have been established more for the purpose of building future subscriptions rather than building non-third-party cookie-reliant models. While media companies with massive portfolios of titles, may have even believed them to be critical to competing with the logged-in audiences of Google and Facebook — same goes for log-in alliances. There are numerous log-in alliances in Germany, including NetID which have publishers, broadcasters and ISPs.

But they will now be under increasing pressure to deliver on their promise. “Publishers realize they need to get their acts together or die a slow death,” said Gertz. “But these log-in consortiums are not getting a large amount of traction.” One of the core issues, is that although they have been touted as at-scale log-in, it’s difficult to entice consumers to stay logged-in given the value exchange to consumers isn’t quite as clear cut as it from using a product like Gmail or Facebook, he added.

A cottage industry of quasi-ID tech vendors
Independent ad tech businesses are, in general, optimistic about the future in which third-party cookies are no more. They kind of have to be if they’re to survive and successfully help transition a digital ad trading ecosystem that relies on them as the core currency for measurement and ad targeting. Shared identity solutions have been around for a few years but have only stirred moderate interest from publishers who had far greater fires to put out. But thanks to the anti-tracking changes at the browsers, and the regulatory scrutiny on real-time bidding, shared ID solutions are now enjoying a much-welcomed return to the spotlight. But while there are some genuinely good ID vendors and consortiums out there, there is a load of rubbish being touted too. Publishers will have to ensure an influx of sales pitches from quasi ID-solution ad tech vendors, which have already been spawned and consist of no more than some opportunistic bravado and imaginary tech promises. “There is so much noise out there,” said Jakob Bak, co-founder and CTO of ad tech vendor Adform and member of ID consortium DigiTrust. “There is a load of ad tech companies talking about identity, but it’s all a lot of hot air — there is very little tech behind it.”

Short-term pain for publishers
Publishers are used to taking serious body blows. They’ve been taking them since they lost the ability to monetize Safari users thanks to Apple’s anti-tracking changes, which began in 2017. They continue to take them in markets like Germany where Firefox is a popular browser, and long before. In the long term, the triumph of the first-party cookie will be the long-awaited boon publishers have needed to put them back well in control of their monetization both on a subscriptions and advertising front and everything in between. But in the short term, there may be some walls to scale. There are no market-ready shared ID solutions, yet that have the buy-in of all publishers, and meanwhile, they’ll be beholden to any further changes made by any of the browsers, in the name of consumer privacy.


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