This article is part of our Future of Addressability series. Contributors are industry leaders invited to share their perspectives on how marketers can successfully navigate changes brought on by the deprecation of third-party cookies.
The demise of the cookie can be attributed to two distinct, yet intrinsically tied events: 1) the cookie’s precipitous decline and 2) the change in consumer privacy laws (GDPR, CCPA, etc.). Rather than focusing on finding alternatives to the cookie, brands and publishers need to fix consumer privacy first. This process is a multifaceted undertaking, as we uncovered in our conversation with Jeremy Hlavacek, Chief Revenue Officer for IBM Watson Advertising.
CCPA and GDPR are in effect. How has this changed consumers’ lives?
The most immediate item that consumers noticed with this new regulation is an increase in pop-up units that ask them to accept or acknowledge cookies and/or other tracking mechanisms. It’s good that we are taking steps to be more transparent with consumers, but there’s a lot of work to do in order to find the right value exchange in digital advertising that better explains how the ad-supported open internet works.
Most consumers just hit “accept” without understanding what is happening on the back end and instead see the action as a nuisance—yet another pop-up interstitial standing between them and the content they’re trying to read. We need to find a better consumer experience that captures consent and is transparent about data usage.
Along those lines, how are brands and publishers operating differently in a post-GDPR and CCPA world?
The publishing side of our business has done a tremendous amount of work to comply with the latest privacy regulations. At IBM, privacy, trust, and transparency are critical, so these areas continue to be a top priority. Consumer trust increasingly became a focal point as COVID-19 progressed. Trust comes in many forms, namely creative messaging (what brands say), social responsibility and brand purpose (what brands do), and the partners brands choose to align with (who brands trust). Now more than ever, our partners across the financial services, CPG, retail, restaurant, and travel sectors are experiencing an increased need for trust and transparency with consumers. When it comes to consumers, trust must be the first priority.
What are brands and publishers doing now to marry their consumer privacy strategies with weathering the demise of the cookie?
These two issues go hand-in-hand, although consumer trust must still be the primary focus for the entire industry. The cookie has been on the decline for years. It also did not do a good job at matching data across digital environments, which is what the industry needs to function. It’s common for cookie-based match rates to be in the 30-60% range, which leads to a major decline in scale as data gets passed from one environment to another. Even if consumer privacy regulations had never passed, we would be still discussing a replacement for the cookie.
Consumers continue to be vocal about their desire for a better digital ad experience that protects their data, so we must tackle that problem first. If we focus on trust as a core value, we can then find ways to use data and AI with permission to improve ad experiences.
The industry needs more targeting research to better understand the sweet spot for marketers and consumers. How tight do targets really need to be to drive ROI? What is the level of frequency and precision that makes consumers think ads are “creepy?” We can better understand the answers to these questions through research.
We have never had more targeting data at our fingertips than we do now, but the skills to use that resource in an effective and efficient manner are still very nascent across the industry. I would love to see marketers double down on research and training in this area in order to get smarter about the balance between precision, performance, and annoyance.
How do we build a consumer-first technical foundation for marketers that respects consumer privacy?
That’s the $1T question!
We are experimenting with how to capture consumer consent to use data for digital advertising. A number of players already have a seat at the table for this exercise, including agencies, publishers, ad tech companies, and browser and device manufacturers. There are more cooks in the kitchen than usual when you include the browser and device teams, so the task seems to be going a little slower than expected. However, if we can help educate people outside of the digital advertising ecosystem about how the business works and how it helps keep the internet free and open, that will be a win.
We also see an increasing role for AI and probabilistic data as tools to solve the identifier problem. With the changes coming to cookies and IDFAs, it’s clear that legacy data infrastructure is being torn down right now. We think there is a way to solve this problem with fewer identifiers and more AI capabilities that recognize patterns, make predictions, and offer insights from signals. There is the potential to develop faster, smarter, and more nimble insights around consumer intent. We think AI is going to transform the advertising industry.
Either way, whether it’s deterministic consent or probabilistic AI solutions, consumer trust is absolutely critical to success. That’s why we must be ready to listen and iterate on consumer feedback. Up to this point, the industry has been too slow to respond to feedback from consumers on digital advertising. That has to change.
How is the deprecation of cookies opening the door to new relationships between publishers and brands?
Now that 2021 is nearing, we are seeing overdue innovations starting to take hold. There is stronger interest from marketers in using event-based data like weather targeting and advanced AI solutions in place of cookies. We welcome this change, as it will lead to better experiences for consumers and stronger results for marketers.
We live in an interesting time—people are spending a lot more hours online and consuming more publisher content than ever before. How does this trend align with the ways in which brands and publishers can establish closer ties?
There are many things to be concerned about in today’s world, but we should recognize the shift in consumer behavior and digital media consumption as opportunities. COVID-19 accelerated existing trends and forced us to live more of our lives online. However, it’s too early to know which behaviors are here to stay.
Once we are able to socialize freely in the future, we may see some pullback on digital activities. For example, if we estimate that we lived 30-40% of our lives online pre-crisis, and we now spend 80%+ of our time online, expect that number to fall back to something like 60% when the crisis is over. There will still be a lot of non-digital activities in the future—data and AI will be tremendous tools to help connect the dots both online and offline.
Is there a danger of publishers becoming mini walled gardens and repeating some of the missteps of their larger counterparts?
There is a danger of too many individual point solutions entering the market on the media owner side. Marketers already have a great deal of frustration with the walled gardens because they lose control of total consumer frequency caps and the ability to measure results in kind. We should try to fix that problem, not make it worse. If the industry ignores these issues and barrels ahead, marketers will speak with their wallets and force the sell side to solve this problem. It’s better to get ahead of it now, before it’s too late.