The world of online advertising is drastically changing with the end of third-party (3P) cookies. The move by Google to remove 3P cookies on their Chrome browser is the result of an increasing need for privacy of users.
In general, users are quite unaware of how their data is used by major tech companies, who are also sharing this data to third parties for advertising purposes. The online advertising industry is extremely dependent on the availability of this data, as companies mostly leverage third-party data and have little or no first-party data (Brodherson, Broitman, Macdonald, & Royaux, 2021). This means that advertising companies are left in the dark on the demographic and behavioral insights which they use to create segments and to target audiences on an individual level (Fou, 2021). However, to what extent is targeting down to the individual level actually worth it for marketers? The data quality at individual level is usually quite low and Dr. Augustine Fou (2020) even shows that adding more targeting parameters results in a significantly lower accuracy.
Although this move by Google has severe implications for several companies and online advertising agencies, they now need to focus on redesigning their data solutions to create their own ecosystem of first-party data, which will become a key element in their future digital strategies (Brodherson et al., 2021). This will also bring a lot of opportunities to companies and brands that value their customer privacy and focus on building customer relationships (Struik, n.d.). The companies can make meaningful, individual connections on a human level with their customer, by building trust and correctly managing the customer identities. Moreover, this will also elevate the customer experience at every touch point (Struik, n.d.).
Despite the challenges ahead for companies and advertising agencies that depend on third-party data, it is time for them to start looking forward and reap the opportunities that appear in this disruption. When done well, these companies will actually be better off with their own ecosystem of first-party data, while it simultaneously brings more power to the user regarding their own data and privacy.
References
Brodherson, M., Broitman, A., Macdonald, C., & Royaux, S. (2021, April 12). The demise of third-party cookies and identifiers | McKinsey. Retrieved from www.mckinsey.com website: https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/the-demise-of-third-party-cookies-and-identifiers
Fou, A. (2021, March 27). The “Cookieless Future” And What It Means For Marketers. Retrieved October 15, 2022, from Forbes website: https://www.forbes.com/sites/augustinefou/2021/03/27/the-cookieless-future-and-what-it-means-for-marketers/?sh=7c1d06526808
Fou, D. A. (2020, September 10). How Accurate Is Programmatic Ad Targeting? Retrieved October 15, 2022, from Forbes website: https://www.forbes.com/sites/augustinefou/2020/09/10/how-accurate-is-programmatic-ad-targeting/?sh=140ab4ca2523
Struik, N. (n.d.). First-party data is key in a new era for digital advertising | Customer & Marketing. Retrieved from Deloitte Netherlands website: https://www2.deloitte.com/nl/nl/pages/customer-and-marketing/articles/first-party-data-is-key-in-a-new-era-for-digital-advertising-c.html
The reason I ended up on your blog post is the catching title which surprised me. If someone were to mention that Google was disabling its cookies from one of its main services, Chrome, I would most likely strongly disagree and give all the reasons why cookies are so vital for their platform. However, on the other hand, I do believe this first move into disabling cookies will give them the first mover advantage and allows them to pave the way in how companies can work without aggregating such large amounts of data. Like you mention, Google will need to completely redesign the way they create value from first-party data and learn to incorporate it into their own ecosystem. I believe that the opportunities that can be derived for the customer, as for Google are immense. The fact mentioned regarding trust and the assembling of customers valuing privacy enables a completely new customer base to be acquired and explored. What I’ve read in other blog posts and also some other articles, is that people mistrusting the internet and other digital technologies, have not yet been in touch with the opportunities they provide and many products and services will likely be of relevance to them.
I am however curious to hear about your opinion on whether large advertising companies will be able to survive without having access to the information they buy from companies from Google or not? Do you think that such companies are looking into changing their business model and value proposition in order to enable them to acquire their own data?