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Digital world breathes easy as Google defers third-party cookie phase-out

Experts say Google’s decision will enable the digital ecosystem, including publishers, advertisers and agencies, to speed up the drive towards first-party data

Search giant Google recently announced that its Privacy Sandbox initiative, which aims to create web technologies that both protect people’s privacy online and give companies and developers the tools to build thriving digital businesses to keep the web open and accessible to everyone, will  be delayed.

Earlier in January 2020, Google had announced that it will phase out supporting third-party cookies.

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Third-party cookies are used to track a visitor’s web activity, which helps any website showcase relevant ads according to the person’s web behaviour.

Although most of the industry had already started preparing themselves for a cookie-less world and focus on alternatives catering towards the first-party data, the almost two-year gap has given the industry some relief.

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We speak to industry experts to understand what this gap means for the industry.

Pradeep Gairola

According to Pradeep Gairola, VP and Business Head, Digital, The Hindu Group, most publishers will be happy with this decision. “Currently the Hindu is among the rare publishers that have been able to develop alternative sources of revenue and we have 50% dependence on advertising. So that revenue would have been impacted if Google had implemented this.”

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Gairola said small advertisers would have been impacted the most as their ability to target the right audience would have been disrupted and their dependency on giants such as Facebook and Google, which have most of the data, would increase. “As a publisher, our biggest concern was that what if they implemented it. In the meantime, there was no solution in the market, so our dependencies on the big tech would have increased, or our ability to make revenue from advertising would be impacted. That is the reason we as a company are quite happy that they have decided to extend it. We feel our entire ecosystem will now get more time to find better solutions,” he added.

Criteo, a tech company, welcomed the announcement but said it would not impact their timeline. “Today’s announcement is welcome news for people who rely on a vibrant and healthy open internet. We appreciate Google’s decision to create more time for the industry to prepare but the extended deadline does not in any way change or impact Criteo’s strategy. We continue to build products that will enable our customers to reach and engage their audiences without third-party identifiers. This includes investment in our first-party media network, cohort-based targeting, initiatives in Google’s Privacy Sandbox, and contextual advertising, all of which allow marketers to effectively engage with their customers in a privacy-safe and consented manner.”

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Sameer Makani

Sameer Makani, Co-Founder and Managing Director, Makani Creatives, said several brands had begun to develop their data infrastructure to maximise the utilisation of first-party data. Google’s smart move will help in formalising the privacy norms and maintain autonomy, he said. However, he also said the phase-out will increase chances of ad fraud.

“The elimination of third-party cookies and other identifiers makes it much easier for ad fraud to masquerade as legitimate human traffic, which can cost companies that believe in ads a lot of money. Ad fraud will almost certainly thrive with less accountability, exacerbating already-existing attribution and optimisation issues,” he said.

Makani suggested everyone should now be ready to take direct control over first-party data as much as possible to be independent of the dependency on distribution platforms such as Google, Facebook, etc.

Preetika Ghosh

Preetika Ghosh, Media Director, FoxyMoron, said for now everyone can breathe an interim sigh of relief as advertisers will have some more time to build their first-party data. Cookie advertising companies on the other hand will also have an extended two years in the ad space ecosystem. The one thing that remains true is that advertisers cannot lose/shift focus from building their data mine.

“Digital is constantly evolving, it is a continual process. While the larger advertisers will have a first-mover advantage, other advertisers will follow suit. While the evolution is going to be gradual, the shift will need to happen within the two years and advertisers need to best prepare themselves for it,” she added.

Gautam Mehra

According to Gautam Mehra, Chief Data & Product Officer, dentsu Asia Pacific (APAC) & CEO, dentsu Programmatic, South Asia, two years is sufficient time for the ecosystem to evolve. At dentsu, they have invested heavily to create 100% cookie-less insights to activation solution (named Dentsu Marketing Cloud). “While we are quite ahead of the curve, I feel two years is sufficient time for various players in the ecosystem to come together for a cohesive and reliable solution. However, it’s not just about cookies, but privacy as a whole needs to be considered and how that impacts business models that today rely on just ad revenue via traditional traffic sources.”

“First party data strategy is critical and if brands/publishers don't get that right, they will have a massive disadvantage against competitors. Additionally, contextual advertising within text, audio and video will continue to rise and evolve, delivering ROI and filling the void of audience-based buys in the cookie-less future,” he explains.

Sahil Shah

Sahil Shah, Chief Business Officer, WATConsult, said third-party cookies have to go eventually and digital agencies that have already started harnessing the power of first-party data will come out of this much stronger than others. “Safari, Firefox have already made huge inroads. In my opinion, Google’s late to the party and had to delay this even further. But because it’s the most used browser, with that scale and complexities, it’s taking longer than planned. Any tectonic shift requires time and constant rigour. But I think a two-year window is good enough to do this,” he said.

How are players preparing themselves?

Google Chrome in its blog post suggested the phase-out shall happen in three phases, including discussion, testing and implementation. People’s concerns around privacy have increased and businesses are trying to be transparent and innovate their data practices.

“I suggest organisations think of this as an evolution. As things accelerate, I think innovation and experimentation are the way forward with the measurement being fundamental in delivering success. We are educating ourselves to make it easy and clear to understand the changes for clients as well as encouraging brands to strengthen their first-party data. There must be chaos out there and very little guidance, so we should be focusing on the guidance part of it and partnering with important players of the market to raise awareness. Also, we are asking clients build on their first-party data, which is going to be crucial and fundamental in providing relevant, contextual advertising in ways that ultimately improve the consumer experience,” Makani said.

Ghosh said we need to start building our 1P data and DMPs which will help in reaching audiences in the future. Tech providers/platforms in the industry have already taken steps towards searching for alternatives and we will get to know more about these in the coming months.According to Shah, agencies and publishers have to be aware of the major changes that are going to come their way. Right from targeting possibilities (like FLoC) to embracing emerging platforms and technologies to building a robust plan for collecting, storing, refining and activating of FP data will be key. “We at WATConsult fortunately took an early decision to go 100% programmatic that allows us cookie-less solutions such as FP data LAs, context/placement advertising with FLoC targeting, DMP-led addressable audience advertising, universal IDs and so on. This has only helped our clients and us to stay ahead of the competition and embrace a new cookie-less world.”

On the other hand, Gairola said this is the time when all stakeholders, including publishers, advertisers and tech companies should have continued dialogue around the possible solutions. “There is a publisher, there is an advertiser, there is the consumer, and albeit there are data companies. So if all these companies started a dialogue to figure out how everybody took care of this, we will be able to develop some alternative solutions. We need to ensure the advertisers get their ROI from the money they're spending on digital. We need to ensure that the publishers can give the right audience what they care about, and in the process, everybody should benefit,” he said.

Gairola suggested that for the publishing world, and especially for smaller publishers, a common ID will be a solution. “As an industry, I feel common bodies will start coming in. Today, there are not too many bodies working in the digital space. IAMAI and DNPA are completely different. At some point in time, when all these industry bodies start talking to each other, maybe there would have been solutions such as an universal ID. He said for small publishers there could be two solutions—universal ID and the second would be a limited ID, where a middleman comes in between and groups a limited number of publishers.

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