Cookies still on plate, but save your appetite for first-party data, say agencies

Google's recent announcement to retain third-party cookies has caused considerable introspection within the digital advertising industry, particularly among large agencies that play a pivotal role in digital media and advertising. This decision has far-reaching implications for both major and minor players in the industry. What was more interesting was getting people to talk. Much like the reactions, the response rate was a mixed bag.

Preetham Venkky, Chief Digital Officer at DDB Mudra, highlights the anxiety that typically accompanies changes related to privacy and cookies. He states, “I think there's always a lot of anxiety whenever beta testing announcements are done because you know that you're going in a specific direction as far as the rollout towards privacy is concerned.”

Initially, Google's move towards a privacy sandbox was viewed positively. However, their recent shift away from it has led to speculation about their motives, with Venkky noting concerns about revenue: “For reasons best known to them, they've completely moved away from that direction.”

Vishal Jacob, Chief Transformation Officer at Wavemaker India, shares a similar perspective. He states, “While Google has not yet shared any guidance on the new user choice experience or mechanism, we know they intend to allow users to make an informed choice, and that they continue to be strong advocates for a more private web.”

Jacob anticipates that the new user controls will lead to a significant number of users disabling third-party cookies, based on past benchmarks on iOS. “As a result, advertisers will still need to rely on a variety of cookieless solutions to adapt, including solutions enabled by (but not restricted to) Privacy Sandbox APIs,” he adds.

Unlike Apple's unilateral approach with Safari, described by Venkky as "non-consultative, the way Apple takes decisions, but that's typical of Apple," Google's decision impacts a broader ecosystem. This includes agencies, advertisers, and ad tech partners, making unilateral decisions challenging. Venkky explains, “There are so many platform stakeholders on Google that they can't take the same kind of decision. They're not a very monolithic organization in that sense.”

Paras Mehta, Business Head – Programmatic Solutions at Interactive Avenues (digital arm of IPG Mediabrands India), notes that Google's decision was influenced by various factors, including pressure from the UK’s Competition and Markets Authority and the Information Commissioner’s Office.

Mehta explains, “The pressure stemmed from feedback across the industry that cookie deprecation and the proposed privacy-enhancing technologies could unfairly advantage Google’s advertising business.”

He believes that a strategic collaborative economy may emerge, with more advertisers and data providers engaging in data, insights, and analytics collaborations via sandbox-like setups.

Venkky emphasizes that changes in cookie policies affect not only Google but also its partners, publishers, and the entire ad tech ecosystem. He acknowledges that Google's business-as-usual approach has provided some relief by avoiding immediate drastic changes. However, introducing privacy controls can increase spend per KPI, reducing ROI, which is concerning for advertisers under pressure to manage marketing budgets. “At a time when there is a lot of pressure on marketing spends, you're introducing something which is going to technically increase the spend per KPI, therefore dropping ROIs?”

Despite the uncertainty, Venkky asserts that collecting first-party data remains a strategic investment for brands. “One thing is clear that first party data is a good thing to have,” he states, emphasizing the importance of first-party data and Customer Data Platforms (CDPs) for long-term brand and business growth. He adds, “Collecting that data is going to be useful in the long run, especially when you're trying to build your own boards and your own platforms.” This investment should continue regardless of changes in third-party cookie policies, as it provides sustainable benefits and ensures brands are not overly reliant on third-party cookies.

Sajal Gupta, Chief Executive at Kiaos Marketing, taking a bird’s eye view on how this impacts agencies, says, “How it unfolds is the First Party Data narrative is weakened from a targeted advertising perspective with Cookies remaining. A large FMCG (largest ad spending cohort) can live with the contextual advertising that Google will continue to provide. It is the performance advertiser to whom direct conversions from the traffic is important this will affect. Going by the Apple’s ATT experience there was a drop in performance and market had to recalibrate its expectations. First Party Data contributes beyond targeted advertising in terms of audience understanding and building personalised communication this aspect of FPD continue to thrive.”

Chetan Asher, Founder and CEO of Tonic Worldwide, points out the importance of how Google introduces the 'user choice' prompt. If the prompt is similar to Apple's "Ask app not to track" language and is prominently placed, there's a higher likelihood that users will opt out of tracking, significantly impacting advertising revenues. Asher advises advertisers to explore multiple solutions to target consumers safely and effectively, including alternative IDs, server-side solutions, or shifting budgets to streaming services and retail media that offer robust targeting options.

This highlights the need for digital agencies to remain adaptable to privacy regulation changes, focus on first-party data collection, and educate clients on the implications of these changes. The investment in first-party data and CDPs should be driven by brand growth goals rather than solely as a response to third-party cookie policies. “The reasons for that are for brand growth and business growth, and not as a response to third-party cookies,” Venkky clarifies.

Asher echoes this sentiment, stressing the importance of continuing to reduce reliance on cookies and investing in first-party data strategies. “Overall, while stakeholders may feel frustrated over spending time, energy and effort in creating something that is going to be different again, it’s important to recognize that the deprecation of cookies will be possibly led now by user choice rather than being removed by Chrome,” he says.

Ishank Joshi, CEO and Co-Founder, Mobavenue Media, adds, “Advertisers and agencies can benefit from stability and continuity. However, privacy advocates see this as a step back for privacy improvements. Publishers can maintain their ad revenues but need to explore new, privacy-compliant revenue streams. Tech companies developing cookie alternatives might experience slowed innovation due to less urgency. The players most impacted are those focused on privacy-centric solutions, which now need to adjust their strategies. At the same time, programmatic platforms and data management companies benefit the most by being able to continue their existing business models.”

The digital advertising industry must remain adaptable, focusing on first-party data collection and educating clients on the implications of privacy regulation changes. This proactive approach will ensure sustainable benefits and reduce reliance on third-party cookies.