Cookies stay on menu: What about investments on alternative adtech?

The repercussions from Google’s decision to scrap the depreciation of third-party cookies continue to reverberate across the digital media ecosystem as various stakeholders continue to examine the impact it will have on their own business models and that of the industry at large.

Among those most heavily impacted will be adtech players, a segment which has seen rapid growth in the last few years, especially in the light of Google’s 2020 announcement that it was going to begin depreciating third party cookies. Leading brands and advertisers across the board have been looking to their adtech partners to find alternative means of data collection, meaning large investments in new technologies. exchange4media asked adtech players for their take on what happens to those investments now.

What Now?

Rahul Joshi, National Sales Director – India, Silverpush, asserts that Google's decision to cancel the removal of cookies highlights the dynamic nature of the advertising and marketing industry and emphasizes the need for brands and media agencies to increase their self-awareness. “Brand custodians must have clear objectives for their digital advertising campaigns and collaborate with reliable, accountable, and experienced adtech partners.”

“Brands and advertisers had been diverting substantial resources towards developing strategies around a cookieless future. This included investments in first-party data, privacy-compliant technologies, and alternative targeting methods. With the continuation of third-party cookies, there's a potential for a recalibration of these efforts,” notes Jacob Joseph, VP – Data Science, CleverTap.

Companies may reconsider their allocation of funds, and experts say that while investments in first-party data and privacy-compliant solutions won't become entirely obsolete, their priority might diminish.

“There could be a shift towards optimizing campaigns using third-party cookies, at least in the short term. Additionally, many experimental budgets were dedicated to exploring cookieless solutions and new data sources. With the extended lifespan of third-party cookies, some of this experimental spending might be reduced or redirected,” adds Joseph.

Third-party cookies have long been a mainstay for companies to track web activity and have largely informed the digital advertising ecosystem as advertisers became extremely dependent on cookies to gather data on their customers. According to data from various sources, approximately 40.9% of websites globally use cookies to gather data on users.

Chirag Bhatia, Managing Director – India for Channel Factory notes that a significant portion of the internet has already transitioned to a cookie-less environment, encompassing platforms like CTV, mobile apps, DOOH, contextual offerings, and the apple ecosystem.

“While Google’s announcement of the cookie sunset back in 2020 accelerated initiatives around 1st party data ownership, the conversation around it was ongoing for much longer. Post the announcement Brands had started heavily investing in building and leveraging first-party data to connect with current and potential customers,” says Bhatia, adding that this cookie-depreciation announcement had not only spurred efforts to prepare for a cookie-less future but has also prompted considering a re-evaluation of fundamental marketing principles.

While the immediate impact might be a slowdown in investments in cookie alternatives, it's crucial to note that regulations around data privacy are becoming stricter globally. Indeed, it was this increased scrutiny around privacy issues that impelled Google to release its Privacy Sandbox initiative in 2019, an initiative it is continuing despite the scrapping of plans to depreciate cookies. It’s also notable that even before the scrapping of cookie depreciation, Google delayed cookies’ phase out repeatedly, testament to how dependent the digital advertising ecosystem still was on the technology.

What Next?

As previously reported, Google wrote in a blog post that rather than depreciating cookies, the company will “introduce a new experience in Chrome that lets people make an informed choice that applies across their web browsing. We're discussing this new path with regulators, and will engage with the industry as we roll this out.”

“I feel irrespective of Google changing its stance on cookie depreciation Brands will undoubtedly continue these efforts, as effective communication with customers remains crucial, with or without cookies. The focus on first-party data is not just a response to the impending changes but a strategic move to ensure long-term resilience and adaptability in an ever-evolving digital landscape,” says Bhatia.

Like any other ecosystem change, this change will also call to re-evaluate the brand’s marketing strategy in line with 1) the nitty-gritty of Advance Google privacy sandbox 2) how easy it would be for users to disable cookies and 3) how many users actually disable them.

“Effective marketing is a basic foundation of a successful business and experimentation is a necessity for marketing mix to succeed and hence I don’t feel a brand will pull back from investing in connecting with customers or stop experimenting in any way,” adds Bhatia.

It's probable that third-party cookies will eventually be phased out. Therefore, investments in first-party data and privacy-compliant technologies are still strategic for long-term success. “Even if third-party cookies are retained, the industry is likely to move towards a hybrid model where first-party data and privacy-centric solutions play a more prominent role,” says Joseph, adding that companies that have invested heavily in cookie alternatives might possess a competitive edge, as they could be better positioned to adapt to future changes and potentially achieve better campaign performance.

This is why most industry insiders say that while it's reasonable to expect a temporary slowdown in investments in cookie alternatives, but the overall trend towards first-party data and privacy-centric approaches is likely to persist.

“While it is now evident that third-party cookies will continue to play a significant role in audience targeting, users have also become more conscious of consent and data privacy. Google's much-anticipated 'New Path' is expected to provide further clarity on this issue. It is essential to look beyond cookieless alternatives as mere fixes and prioritize responsible advertising,” says Joshi.