Is the online advertising industry on the cusp of a complete upheaval? I think it is.
For the best part of the last three decades, the industry has called on programmatic advertising, underpinned by the third-party cookie, for all kinds of data-driven advertising.
By 2022, however, the way the industry targets online users is set to dramatically change, particularly with Google’s decision to phase out support for third-party cookies in its Chrome browser. This has led to questions around whether there is indeed a future for programmatic advertising, and if so, what it may look like? Is this the death of data-driven advertising? Or can there be a more balanced way forward for programmatic advertising that acknowledges the new era of privacy marshalled in by the phasing out of cookies?
Before getting out our crystal balls and looking at what a new deal for programmatic advertising might entail, let’s quickly rewind and trace back how we arrived at where we are now.
What is programmatic advertising?
Most of the ads that currently appear next to online content are sold through an automated auction system known as programmatic advertising.
Put simply, advertisers usually don’t directly choose the site or app where their ads will run. Rather, they bid to display their ads to users who fit particular profiles based on their internet browsing history. The cornerstone of this process has been third-party cookies. Cookies are essentially dropped into a users’ browser by webpages and a profile of users’ browsing behaviour is created and sent back to publishers’ advertising partners. This then gives advertisers the ability to display their ads to the most relevant audience.
Oh Crumbs: What happened to the third-party cookie?
If you haven’t heard already (if not, where have you been?!), third-party cookies are already missing from several platforms – including Safari and Firefox – and they will be completely ineffective in less than two years on Google Chrome.
This gradual phasing out of third-party cookies adds to the new standard for data privacy ushered in by the European Union’s General Data Protection Regulation (GDPR) in 2016, as well as the California Consumer Privacy Act (CCPA) in 2018.
Although cookies aren’t the only way to collect users’ data, their short future sets a clear signal. What these decisions around increased data regulation and the crumbling of the third-party cookie have in common are that they have laid the foundations for remodelling the future of privacy on the web and, most likely, the future of the online advertising industry as well.
A consumer–driven change
While GDPR and CCPA, as well as the actions of Google and other browsers, have affected the shift towards a more privacy-focused web ecosystem, these changes have not come out of the blue.
Rising public understanding of how people’s private information is shared for advertising purposes, following Cambridge Analytica, as well as the considerable increase in ad-blocking users over the last few years are testaments to the frustration users have felt with the growing frequency of intrusive adverts and more visible tracking mechanisms.
Users, although understanding of the need for advertising for a profitable web, are now demanding greater privacy – including transparency, choice and control over how their data is being used – Google and co have simply responded.
The Great New Deal
Is there a future for programmatic advertising? And if so, what should it look like?
This is the question everyone in the industry is now asking. In fact, many have wondered whether the downfall of the third-party cookie could in fact be the start of the end for digital advertising. For us at eyeo, however, we do see a bright future for programmatic advertising … but only if it embraces the need for transparency. This is because, taking all the factors that have driven us to where we are now, we see an opportunity for the industry to create a new standard and technology for online targeting, which not only respects user privacy and choice, but is also compatible with programmatic bidding.
As such, rather than killing digital advertising, this new privacy-first epoch actually presents an opportunity for industry-wide collaboration to create a New Deal that powers data-driven advertising in a transparent manner for the benefit of all its participants, fulfilling the spirit of privacy legislation and allowing users to control how their data is being collected and used.