We live in a world where our every digital interaction is recorded, sometimes with our consent and other times without our knowledge.
Over the last few years, tech behemoths like Facebook and Twitter have come under increasing scrutiny from regulators, pushing them to strengthen their security and privacy controls and be more transparent about how they handle customer data. Legislation, such as GDPR and CCPA, have emerged to protect customer data and give consumers control and transparency over how companies store and use their information. The rise of customer data regulations in turn resulted in the deprecation of third party cookies by Firefox, Safari and soon Google, followed more recently by Apple’s announcement that apps can no longer capture a customer’s device identity without the customer’s explicit consent.
These are all steps in the right direction. But what comes next for the industry?
The Open Internet
Let’s first take a step back to understand why companies were collecting this data in the first place and see if there's a different path available to the industry as a whole.
You and I surf the internet looking for useful knowledge and content and use various "free" services such as YouTube, Gmail, Facebook, etc. But as we all know, nothing in the world is free. The reason the internet is mostly free is because there is a silent exchange of value that happens that most of us don’t even think about.We are offering our time and attention to ads in exchange for "free" information, entertainment, content and services. We see relevant content when we browse Facebook or search for something on Google because they know who we are, where we are, our previous history, as well as our intent. Without this exchange of value, the open internet would no longer be economically viable and publishers and content producers would no longer have any incentive to provide quality content. Let’s come back to this thought in a bit.
Related Article: How Marketers Can Break Their Third-Party Data Habit
Who Are the Winners and Losers?
To have a meaningful conversation about where we go from here, we must understand who is collecting our data, what data they are collecting and how it is being monetized.
The Tech Giants
We all know the usual suspects — Google, Facebook, Amazon, Pinterest, Twitter, Spotify, etc. These companies have a monstrous user base that they are able to provide highly precise and targeted content and ads to. They do so by directly collecting your data on their web properties and mobile applications through the use of first- and third-party cookies (soon to be deprecated in all browsers including Google Chrome) as well as device identifiers i.e IDFA/AID.
The laws and policies around IDFA and AID from iOS and Android will definitely hurt digital advertising revenues on social media platforms, as much as 50% loss in revenue as per Facebook. This has resulted in some kerfuffle between Facebook and Apple over the last few months.
For years, brands have tracked their site visitors and mobile app users through the internet by allowing ad networks and adtech companies to place tracking cookies (or a third party cookie) on their own websites, as well as capturing customer’s mobile identifiers in order to target personalized ads at them wherever they go. With all major browsers announcing the imminent deprecation of the third party cookie and Apple (and Google) announcing the restrictions around tracking mobile identifiers, the effectiveness of these ads will be severely affected thereby limiting brands’ ability to acquire and convert customers through digital advertising.
Related Article: We're All Stuck in the Privacy and Brand Safety Tangle
To compensate content creators, most publishers rely to a certain extent on ad revenue generated when readers view and click on ads placed on their properties. Google estimates that publishers’ digital ad revenue would be reduced by 52% on average without third-party cookies. This will undoubtedly have an impact on the quality of content produced by publishers as well as the relevance of ads you see on publisher domains, which might push publishers to use paywalls to compensate for the loss in ad revenue.
The real losers in all of this are small and mid-size ecommerce brands and publishers and to some extent, even the consumer. The directions taken by the Apples and Googles of the world will have consequences that inadvertently impact all of us, the customer, our beloved brands who advertise on social networks like Facebook and Pinterest and the publishers who rely heavily on open exchanges for their programmatic ad revenue.
Accept the Consequences or Find Another Way
So now that we've established the widespread impact of privacy laws and trends in digital marketing, it's time to assess where we stand today, where we are going and what our choices are. Coming back to the thread around the necessity to keep the internet open and "free," is there a practical way forward?
Educating the Consumer
Most of us take the internet for granted. We pay our monthly dues for an internet connection and feel that access to content, services like email and YouTube, news and more should be covered under those fees.
We, as an industry, need to do a better job educating the consumer on the value exchange of our attention to ads with the content that we consume. If the consumer understands the value they get from the internet, they’d be more willing to work with the industry to find ways to support publishers and brands in their struggle to stay relevant in the open internet rather than letting the tech giants dictate the rules of the game. I, myself, always feeling guilty about how much I buy from Amazon as compared to small businesses around me and I’m sure many of you feel the same way.
Related Article: Marketers, Data Collection and the E-Word: Ethics
Giving Even More Control to the Walled Gardens?
Google is keeping a relatively low profile around Apple’s announcement because it is less exposed to the ongoing privacy debate and upcoming Apple privacy changes than Facebook. Why? While Apple’s privacy changes damage both Facebook and Google’s ability to track people across the internet and target their advertising on other domains, Google’s logged-in user base is much larger than Facebook's. Facebook has almost 1.8 billion daily active users and Google’s search engine market share alone is more than 90% with over 4 billion active users in the world.
Let’s not forget about Amazon. If small and medium sized businesses have few options left to reach their target audience and acquire new customers in the short term, they will undoubtedly be more reliant on selling through this monstrous marketplace, giving the ecommerce giant even more control over their destiny. Amazon already has close to 50% of the ecommerce market share.
The fact that companies like Apple can rock the entire digital advertising landscape giving other players no meaningful way to appeal leads to the monopolization of the internet — the content that we see, the news that we read, the products that we buy, the views that we hold on political topics, all being manipulated and controlled to benefit the powers that be. I am not much of a conspiracy theorist, but this is something we all need to pay attention to.
A Shared Identifier to Support the Open Internet
Brands, publishers and the tech behemoths are all trying to find a solution for addressability and tracking. They understand that in order for a solution to work, collaboration will be required across the ecosystem. Google launched its own privacy solution, Federated Learning of Cohorts (FLoC), to preserve addressability. FLoC uses machine learning to build cohorts based on behavioral patterns of individuals. This allows browsers to hide the individual identity of the person, but instead assign them to a cohort identifier. This is a step in the right direction, but again, further increases the concerns around walled gardens.
Trade Desk’s open source Unified ID, Neustar’s Fabrick and LiveRamp’s ATS aim to create shared cookieless identity solutions by collaborating with industry partners in the effort to keep the internet open while keeping the privacy of the consumer and the interest of publishers and advertisers at heart. Approaches like Switchboard, Tapad’s latest ID solution, are anticipating this race amongst ID providers to gain internet share and is solving the problem of ID association across the newly developing advertising ecosystem.
Nuances and questions remain about this approach, including how exactly these companies are associating the IDs and how much control does the customer really have over what information each publisher and brand gets through this cross linking. The big question becomes, is this just another third party cookie solution that tracks the consumer across the internet without them really knowing or understanding how? If so, is this right for the consumer and if not, how do we know that it won’t be banned just like third party cookies?
Related Article: That's the Way the Cookie Crumbles
Advertising based on third-party cookies serves ads based on a customer’s past browsing behavior. The ads are usually unrelated to the content where they're delivered. Contextual advertising, on the other hand, is about placing ads based on the content on the page/screen through keyword- and topic-based targeting. For example, if you run a beauty blog, you may want to show ads for specific makeup products that are referenced in the makeup tutorial. In-video, in-game and native advertising are all types of contextual advertising. Google AdSense does this really well by matching the content of the web pages in its network to the keywords and topics that advertisers decide to target.Although on the surface, behavioral targeting may seem more powerful than contextual advertising, showing the right ad in the right context has some clear benefits.
Brands interested in contextual advertising should know: it’s easier to implement because you don’t have to collect behavioral data on your customers, especially if you don’t have the budget or the IT infrastructure to do so; there are no conflicts with privacy laws and legislation because you don’t need to know anything about the customer; publishers don’t have to worry about the ad content not being inline with their brand and content; and you avoid being creepy. One caveat, though: relying only on contextual advertising may limit your reach because your target audience will only ever see your ads if they go to a website with content related to what you are selling.
Customer Trust and the Significance of First-Party Data
Brands can only win a customer’s trust if the customer feels the brand is being transparent about its use of their information and that they have a sense of control. With this trust established, customers are more likely to share their information with a brand. This first-party data is what brands capture about customers on their own properties and domains. The customer has full knowledge about and has granted permission for the data to be collected.
First-party data may be the saving grace for brands in the post-third-party cookie and tracking world. Customer data platforms (CDPs) allow brands to collect data across various first-party data sources and channels such as CRMs, customer service, onsite behavioral activity data, surveys, privacy preferences and create a unified customer profile that can be shared across the marketing tech stack.
CDPs that are GDPR and CCPA compliant have the ability to collect user’s opt-in and privacy preferences and only allow access to customer data based on these settings. They also allow organizations to destroy a customer record if that is what the customer wants to do, further building on the customer’s trust.
Brands should start thinking about how they can utilize the knowledge about their customers to not only personalize their experience on their own web properties, but to acquire more customers similar to their own by using look-alike and act-alike audiences features on social media channels like Facebook, Google, Pinterest, Tiktok, etc. This keeps the brand in control of their own data and puts that data to use to hyper-focus their marketing efforts, reducing wasted media spend. They should also be re-focusing their marketing budgets to have a heavier focus on owned channels like email and SMS to nurture and upsell to their current customers.
With increased awareness of consumer privacy, brands who succeed in the post cookie and tracking world will be those that gain trust of their customers by providing complete transparency and control over what personal information they provide, how it is used and with whom it is shared. Brands will need to find ways to get to know their customers and show respect by only using the information they have collected with a very fair and transparent value exchange.