30-second summary:
The digital advertising ecosystem is crumbling under Google’s third-party cookie death announcement
Advertisers and publishers need to break away from the cookie addiction and devise a proactive strategy before 2023
IBM Watson Advertising’s Head of Revenue discusses potential reasons and solutions that the industry can collectively work towards
Digital advertising is in the midst of a major disruption that’s being led by the walled gardens and governments. One big tech announcement can whipsaw revenue projections and valuations, while renewed legislative scrutiny on how consumer data is being collected is working its way through the halls of Congress right now. The growing demand for transparency and our industry’s call for a common voice amongst the open web is reverberating in every conversation. This is why Google’s recent announcement, that it would continue to support the third-party cookie in Chrome until 2023, was met with relief in some quarters. Investors in ad tech stocks, among others were very pleased by the announcement.
Google said its decision to delay is due to ongoing discussions with the UK’s Competition and Markets Authority about what, exactly, will replace the third-party cookie in digital advertising.
It’s a very good question. For more than two decades, advertisers have relied on third-party cookies to track and measure their advertising, and understandably many are concerned about what comes next after this technology is finally phased out. So far, Google’s proposed replacement, ‘Federated Learning of Cohorts’ or FLoC, has some good ideas but has also not yet won the debate as it continues to be developed.
But the fact that the industry has relied on third-party cookies so long has lulled it into complacency, and for that reason, it’s easy to understand why marketers and publishers might view Google’s delay as a signal to maintain the status quo (and perhaps even hope that support for cookies may continue longer).
Here’s my message to the ad industry: don’t give in to complacency
Over the past year, we’ve seen walled gardens upend the ad industry and demonstrate the command they have over a $600B industry. They’ve effectively said the way companies operate will change based on their unilateral decisions.
This should serve as a wake-up call, and advertisers and publishers need to get proactive about building the post-cookie ad ecosystem because cookies are not the right solution from both a technology and consumer experience perspective. Simply put, we need to keep our collective feet on the gas pedal.
Building the next foundation for digital advertising
The good news is that there are better ways to reach and target audiences.
We believe AI can be the transformative technology advertising needs. In fact, we’ve found that advertising campaigns that use AI can outperform the very same campaigns that use Third-Party Cookies.
Because AI is predictive, whereas cookies measure past consumer behavior, our industry is increasingly recognizing AI as the technology we need to get through this period of disruption. And that’s not to simply replace the cookie but also to build a more sustainable and scalable future for the open web.
On our own platform, we used AI to see if we could predict the best messages to compel the ‘Weather.com’ app subscriptions. We have been blown away by the results and have expanded that tech to open web publishers, SSPs and DSPs so that brands and agencies have full access to start using it.
Our open call for a more sustainable future
There are varying levels of acceptance about what’s happening. Some in the industry are chomping at the bit – pushing for transformative tech solutions. Some are in the middle and adopting what is put out there to bridge the cookie gap. And some are just trying to keep their heads above water, breathing a sigh of relief that they have more time before the cookie goes away.
What we need to understand and be clear on is that the entire industry is being disrupted. The way we operate and the tech is going to have to be completely reinvented.
I counsel clients to test more than ever as they look for alternative ways to reach consumers. I encourage them to question the old ways of doing things and look at new technology/solutions that give consumers the privacy they are looking for while being measurable and attributable.
The urgency is there – the foundation of the industry is crumbling so it’s time to adopt a foundational technology we can use.
Breaking our addiction
Many of us in the industry know it, but we need to say it: it’s time to break our addiction to cookies – today!
Instead of holding onto a useful but soon-to-be-obsolete technology for just a little longer, let us use this opportunity to take control of our own destinies and build a future that’s better for companies, advertisers, and consumers.
Let’s toss third-party cookies into the dustbin as soon as possible, and embrace AI to build a better, and more consumer-friendly ad industry.
Jeremy Hlavacek is Head of Revenue at IBM Watson Advertising.
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