The cookie-less world

What is data privatization?

And how it will change digital marketing?

By: Antonella Frustaci, Director of Connections

By now, you’ve probably heard the news: the cookie’s days are numbered. I’m talking about third-party cookies, those little pieces of data that are stored in small text files on your browser whenever you visit a website.

Yup, sometime in 2022, they will visit the great server in the sky.

Since their introduction in 1994, cookies have become a widely used tool for remembering online user information: what items are in your shopping cart, login info such as passwords and usernames, stuff you might enter into form fields and so on. Most websites you visit have them, but they’re transparent and work in the background, so most of us never notice them.

When we talk about cookies, we’re primarily talking about third-party cookies—cookies that are set by a website other than the one you’re currently on. So, for example, if you go online and read an article about “Top beach vacation destinations,” that action creates a third-party cookie that stores basic information about your online visit in your browser. Then, when you log on to Facebook, for example, Facebook could access that information to see which websites you visited and then serve up targeted ads from airlines, hotels, swimsuit retailers, etc., based on that information.

In the marketing and advertising world, third-party cookies are the primary way we track and remember users’ browser activity. They help us build profiles of users: what pages they’re spending time on, what their interests are, what messages they’re responding to, etc. Simply put, cookies help us get messages to the right people, at the right time, in the right way.

So, if they’re so useful, why are we getting rid of them? What will replace them? And how will that change marketing? There’s certainly been a lot of talk about all these questions. So, we thought that now might be a great time to provide some clarity on this sometimes-complex topic.

Data privacy and what it means to you

The core argument for data privacy is the idea that data about you belongs to you, not the companies that run the browsers, the search engines, the apps, or the websites we visit. Over the past several years, data privacy has become a pretty heated topic and it centres around a perceived breach of consumer trust: big technology companies have made billions by using and selling our personal data without our explicit and informed consent.

Now, that’s not technically true—we all agree to the rules and regulations when we download an app, for example. But really, have those rules ever really been clearly outlined to us in plain language? Do we really know what we’re agreeing to when we press the accept button? Given the way online ecosystems are currently designed, do we really even have much of a choice? Let’s just say there’s some grey area here.

The idea behind data privatization is to give us, the users, the ability to block tech companies from collecting and selling our data without our expressed informed consent.

Change starts in Silicon Valley

Apple was the first major tech brand to latch on to the idea. When they come out and told consumers they were going “all in” on user privacy, the move was praised and applauded by privacy advocates, consumer groups and even the U.S. government. Apple became the heroes of Silicon Valley and other companies such as Google and Facebook became the villains. Seeing how positively the move was received, other tech brands followed quickly.

Apple’s initiative didn’t make a big impact to start—privacy changes were initially rolled out to the Safari browser, with Mozilla’s Firefox following soon after. But there simply weren’t a lot of people using  those at the time to make much of a difference. That’s about to change.

With the recent release of iOS14.5.1, Apple has automatically opted all iPhone users out of mobile tracking—the process that enables advertisers to understand where a user’s phone is, what the user is doing, what websites they’re interacting with (and how) and so on. Sure, users can opt in to re-enable tracking if they really want to, but early estimates out of the US indicate that a mere 5% of iOS 14.5.1 users have chosen to opt back in. So yeah, it looks like this change going to make an impact. Keep in mind that at time of writing, just over half of all Canadians use iPhones, so it’s probably fair to say the impact will be similar here at home.

Then, in 2022, Google’s Chrome browser will eliminate third-party cookies entirely. Considering that the majority of global Internet users use Chrome to access the web, that means the age of the third-party cookie will be effectively over.

What it means for digital advertising

For advertisers like us, this is a massive change. Mobile ad identifiers and third-party cookies are the engine of digital advertising—it’s what makes digital advertising so attractive and so effective. Taking them away affects, well, pretty much everything. Such as:

Targeting and activation

Without a formalized method that allows us to identify the needs and concerns of certain users—or build geographic, demographic, behavioural and psychographic profiles—how can advertisers serve specific ad content to those users? How can we retarget ads or show users relevant content when they visit other sites? How can we build lookalike profiles that spots users exhibiting similar behaviour? How can we frequency cap, where we set a limit for each time a user sees an ad?

Reporting and measurement

Without the ability to see how users are responding to campaigns, or content, or other marketing efforts, how will advertisers be able to tell whether the money spent on advertising actually went to where it was supposed to go?

Without the hard data to prove what users did when they visited a certain website, or viewed a certain ad, how will advertisers understand whether the campaign achieved its desired goals? Or how we can optimize our campaigns based on user response?

What’s the solution?

OK, so third-party cookies are going to the big browser in the sky. But what will they be replaced with? At the time I’m writing this (May 2021), the answer to that question is still a little unclear. But two possible solutions seem to be bubbling up to the surface:

Project ReArc

Proposed by the International Advertising Bureau, the goal of this project is to re-architect digital marketing so we can have

personalization and community without sacrificing privacy. To do that, the project has focused on creating Unified ID 2.0, using hashed and encrypted email-based IDs.

At Wasserman, our Connections team has taken a good look at this, and we agree that this could be a viable solution—users are already pretty familiar with how log-ins work already. But scale matters: to succeed, the initiative should involve cross-industry collaboration so that it becomes the standard for viewing online content. However, this might be tough to achieve. Will consumers be willing to provide their email addresses? We’ll see.

In response to consumer concerns, the IAB is also working on creating an accountability platform: essentially a collection of rules and best practices that would ensure the industry is adhering to the users’ preference and the information is secure and protected. We’ll see what this looks like when it’s introduced a little later in the year.

Chrome’s Privacy Sandbox

Given what’s at stake for Google (the push for privacy threatens their advertising-based business model), you’d expect them to come up with something to replace third-party cookies. The Privacy Sandbox initiative aims to create a web ecosystem that’s respectful of users and private by default. Google has encouraged cross-industry participation in discussing and developing this solution and has invited industry partners to participate in various components of the initiative. These include:

Federated Learning of Cohorts (FLoC)

This initiative creates a Cohort ID based on a user’s web activity. The ID is not unique to an individual—it identifies other users that sort of like hiding individuals within a crowd. Google has tested campaigns targeting Cohort IDs and claims that results were just as strong as results from cookie-based advertising. Cohorts will be made available for brands to start testing.

First Locally-Executed Decisions Over Groups Experiment (FLEDGE)

This is Google’s new solution for retargeting. It’s more than a little technical, but the basic idea centres on protecting user privacy by limiting the amount of data flowing around ad systems and bidstreams and making digital ad auction decisions in the browser itself, rather than at the level of the ad server. Google has announced that trials for FLEDGE have been delayed—we likely won’t see it fully tested until the end of the year.

Conversion measurement

This comprises a number of proposed technologies that would allow advertisers to measure important user actions without the use of third-party cookies. Testing solutions that will allow us to report click and view-through conversions, determining reach and attribution.

Ad fraud prevention

This involves testing the Trust Token API to help verify authentic traffic, while protecting the user’s privacy. The basic idea would be that trust tokens would not be able to track users across websites, but they could still be the proof that actual users (rather than bots) visited a website or actually clicked on an ad.

How can we prepare?

Because nobody has come up with a single, agreed-upon replacement for the third-party cookie yet, it’s difficult for advertisers to know exactly what to do. Given the uncertainty and the constantly-changing environment, there are a number of things we’ll be doing at Wasserman in order to make sure our clients are prepared for whatever comes next:

1. Continue to educate ourselves

This is a dynamic topic: there are plenty of moving parts and plen- ty of new developments on a weekly, or even daily basis. Thankfully, there are several industry webinars, discussions and online forums happening on a fairly regular basis.

We continue to educate ourselves on the changes and participate in these industry events to learn more about what’s happening, why it’s happening and how we can prepare for it. And we’re committed to getting that info to you as soon as possible.

2. Leverage learnings from our WPI partners

The great thing about being a member of WorldWide Partners (WPI) is the ability to learn a lot from a lot of other independent agencies around the world in a short period of time. We’ll be checking in with our WPI sister agencies over the next several months to gain a better understanding of how they (and their clients) are navigating the above changes.

3. Test different forms of targeting

Over the next several weeks and months, our Connections team will be trying out a number of different ways to conduct targeting for upcoming campaigns. For example, major retailers such as Amazon, Walmart and Loblaws are already starting to monetize their first party data; we anticipate that more and more publishers will expand the use of their first party data for use in retargeting and building lookalike audiences. Data from Canadian polling and market research firm Environics (based on census data) is being integrated by more and more vendors. And we’ll also test FLoC audiences to relevant Cohort audiences once Google rolls it out. In the meantime, we’ll continue to leverage contextual targeting wherever possible.

4. Continue to build your first-party data

It’s probably a very good idea to keep up with changing consumer expectations about consumer privacy. If your organization has offline data such as e-newsletter sign-ups or sales data, for example, there are companies that can take that data and anonymize it, removing all personal information and identifiers from it. That data would then be matched to the new IDs that will replace cookies in the future and be used to build retargeting lists, exclusion lists or lookalike audiences. We’re recommending that all Wasserman clients ramp up this effort now, if they haven’t already.

What it all means for you

No doubt about it: digital advertising without third-party cookies will look very different from the world we’re in today. And it’s difficult to know exactly how it will all turn out.

In the weeks and months to come, the Wasserman team will be engaging our clients in ongoing discussions as a way of staying on top of what these changes mean for their advertising efforts and for their businesses more generally.

In the meantime, if you have questions about something you’ve read above, or something you’ve heard elsewhere, please don’t hesitate to call or email us directly—we’re here to help in any way we can.

< Back to Posts