Digital Advertising In A Cookieless World

In 1994, Lou Montulli, a computer programmer working for Netscape Communication, encountered a unique challenge. While designing an early ecommerce website, Montulli needed to create a virtual shopping cart wherein the webserver remembers past shopping cart activities of the user. He solved this problem by storing this information in the form of small text files on the user’s local browser. That was the first use of HTTP cookies (or just cookies as we know them) on web browsers. Later in 1995, Microsoft launched Internet Explorer v2 with support for cookies. Since then, cookies have come a long way to become the bedrock of digital advertising.

Privacy concerns have been associated with the use of cookies, especially third-party cookies, which track user behaviour across multiple websites. Advancements in cybercrime techniques such as cookie theft, network eavesdropping, publishing false subdomains, etc. further strengthened the case against the usage of cookies. In 2018, Apple started blocking third-party cookies on their Safari browser. Shortly thereafter, Mozilla followed suit by blocking third-party cookies on the Firefox browser. After some procrastination, Google finally announced its plan to deprecate third-party cookies on the Chrome browser by Q4 2024. Given that Google Chrome commands nearly two-thirds of the browser market, this decision by Google certainly appears to be the death sentence for the usage of third-party cookies.

The Different Perspectives

Many argue that this deprecation of third-party cookies is the Y2K moment for digital advertising. In the absence of cookies, marketers will lose the ability to understand customer behaviour across websites, cap the frequency of digital ads, personalise content and remarket to audiences based on past browsing behaviour. These limitations will lead to inefficiencies in digital media spend and poorer rates of conversion across the marketing funnel, thereby diminishing returns on marketing investments.

 At the same time, a contrarian perspective is emerging. Proponents of this view believe the supposedly adverse impact on digital advertising due to the deprecation of cookies is merely hype created by adtech businesses. They base their argument on several facts, such as:

a) One-third of the browser market has already deprecated cookies (thanks to Apple and Mozilla).

b) 32 per cent of internet users use an ad- blocker to stop cookie-based advertising.

c) India is primarily a mobile-first market where browsers and, by extension, cookies don’t play a vital role, and lastly.

d) The reliability and accuracy of cookie-based advertising are questionable anyway.

What Is In For Marketers?

Is the deprecation of cookies indeed a doomsday event for digital advertising, or is it merely hype? As we see often, the truth in this case also lies somewhere in between these two extreme points of view. In reality, the core strategy for digital marketing remains unchanged. However, the tactics to realise the strategy get impacted by the deprecation of third-party cookies.

Marketers will continue to seek ways to understand their target audience, explore their topics of interest, and, using that information, personalise their experiences and communications to target audiences. While doing so, marketers will try to maximise returns on ad spend.

In the cookieless era, brands will explore alternate ways to achieve the same outcome without relying on third-party cookies. For example, when it comes to understanding your core audiences, brands will lean more toward collecting and nurturing zero-party, first-party data. Google’s Privacy Sandbox technology (especially the Topics API and Protected Audience API) is emerging as a strong alternative to deliver relevant ads in a privacy-safe environment. For tracking audience activities across multiple websites, some adtech platforms have started offering audience IDs as a service. Further, when it comes to personalising advertisements, contextual ads are emerging as a strong alternative.

What does it all mean for marketers and brand leaders? While a knee-jerk reaction is uncalled for, not responding to cookie deprecation is not an option either. Marketers need a well-thought-through approach to de-risk their businesses. As we see above, several alternate solution options exist. Depending on the maturity of respective brands, marketers must pick areas to invest in. Whether we recognise it or not, digital advertising is already deeply intertwined with most businesses. Therefore, strategic bets to own core marketing technologies such as investment in zero, first-party data, API-based integration with the online and offline worlds, etc. will de-risk businesses in the long run.

Lastly, every crisis presents an opportunity to introduce long-term change. For long, marketers, supported by big-tech firms, have conveniently sacrificed user privacy on the altar of digital advertising. As digital becomes more and more integrated into our daily lives, privacy can’t just remain an afterthought. The deprecation of cookies presents an opportunity for marketers and ad-tech providers to take long-term steps towards privacy-safe digital advertising.

(The author is Lalatendu Das, CEO, Performics India)