You Don’t Need Cookies If You’re Measuring Quality

June 3, 2021

By Shailin Dhar

Bakhtiar Zein/Shutterstock.com

I have been asked questions by clients, investors, prospects, industry committee members, and friends on a daily basis for the past six months about what happens to advertising and the internet once “cookies go away.” The number of different understandings of what is actually happening in 2022 is too damn high! Not surprising, given the variety of interpretations in the trade press and wider technology reporting.

Macro-targeting of audiences is still effective, and has proven to be for decades with magazines, newspapers, and TV channels. The obsession with micro-targeting only fueled surveillance behaviors and is a good thing to phase out.

There are a few fundamental misunderstandings that I’ve seen:

  1. All cookies are going away.
  2. Cookies have been the “foundation” of targeted advertising and are the crux of digital efficiency.
  3. Frequency caps will be impossible.
  4. Ad budgets are going to shift off-line.
  5. The responsibility to find and create new identity solutions will be on advertisers and publishers.
  6. Google is deciding exactly what happens next.

Corrections:

  1. Third party cookies are being phased out of Google Chrome (80 percent of users).
  2. Cookies helped support more targeted advertising but are not at all a perfect tool for precision in online advertising.
  3. There are emerging solutions to do frequency caps per publisher or supply source (first party data is still able to be used). This is as much as was really possible all along.
  4. Come on, ad budgets go where the eyes and ears are, and that is still increasingly online.
  5. The ad-tech tax is 55 percent! Let ad-tech earn its keep.
  6. Chrome is run by a different team within Google, and the Ads team is still proposing alternative solutions to targeting without third party data usage.

“The cookie is crumbling” is likely to be the most overused line of 2021, but neither advertisers nor publishers need to fear the changes. This is going to be a strategic shift just like many of the others in the past five years, like Safari stopping third party tracking, and will be addressed. The particular shift that the industry is going through right now is a fantastic opportunity for advertisers to reevaluate how cookies and individual identifiers are used in their ad strategy. It is also a great opportunity for publishers to realize again the true value of their audience, rather than the auxiliary targeting technologies that chipped away at publisher revenue.

For any people saying that cookies and device identifiers were the key to advertising effectiveness, please remember that the industry-wide click-through-rate was 0.01 percent (1 out of 10,000), which is a metric that includes bot traffic that amplifies click activity. Not to say that clicks are the holy grail of effectiveness, but it is one of the primary metrics used by advertisers and agencies. As auditor consultants from 2016-2018, I analyzed the log level data (receipts) of over a dozen large advertisers and holding company agencies, and found that even with the unique identifiers designated by the bidding technologies, true ad-delivery was twenty to thirty times the designated frequency cap.

There’s no need to stress about third party cookies not being usable, if you don’t really rely on them to begin with.

Speculations:

  1. Publishers fear that their RPMs are going to drop.
  2. “Workarounds” are still unclear, as are Privacy Sandbox specifics
  3. Google and Apple changes are punitive towards the advertising industry
  4. Ads will not be relevant to the user, negatively impacting experience

Realizations:

  1. Ad-budgets will remain online, and this is an opportunity for RPMs to increase with less middle-man fees.
  2. There are several pending legal challenges and government regulatory processes that can significantly change the roll out and direction of these policies.
  3. This is very far from the truth. Advertisers are the primary customers of Google, and a big consideration for Apple. But these policies are about the user, not advertisers or publishers.
  4. Do you have a different internet than me? Our perception of “relevant” is key. When you are on a food blog and an ad for a product that could be used for the recipe is shown. Is that relevant? Yes and actually it is a contextual scenario. When you leave a site and are served a banner for a product 18 times in a row after going to a site. Is this relevant? One could argue yes, but then add, "annoying" — and that annoying has led us to privacy issues.

Proper ad-measurement, at a 100 percent scale, can assuage a lot of the concerns about what the effect of this will be. Being able to keep track of what ads get served where, and through what paths, are the key to maintaining effectiveness.

At MMI, we created our product as GDPR was being rolled out, and this motivated us to keep user privacy top of mind as we created our data pipeline. I am proud that we are not scrambling in the face of these changes to stay compliant with both regulatory and industry standards, as well as our internal and client standards around protecting user information.

Overall, my earnest advice to advertisers is to request a half-day with their agency or in-house teams to review how much of their advertising operation relies on third party cookies and device identifiers like IDFA or AID. This is the first step in formulating your strategy, not a workaround, on how to evolve past these changes while maintaining your online advertising objectives. 90 percent of marketers will be surprised how little reliance there is on cookies or user identifiers for their companies’ ad strategy. If your organization is leaning towards using a workaround that replaces cookies as a unique user identifier, you are not going to have a good time, both in the short term and long.

You don’t need cookies if you are measuring and validating the quality of transactions rather than users.

Shailin Dhar is CEO at Method Media Intelligence.


The views and opinions expressed in Marketing Maestros are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.


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