Post-Cookie-Era Update Feb 2021

Is addressability coming to an end?
No, but policy changes will impact about 50% of today’s addressable scale. If implemented, digital advertising will dramatically change with these alterations. In this blog post I explain what changes are around the corner, speculate how this plays out, and address how Programmatic Mechanics and Pontiac Intelligence are preparing for all possible scenarios.

What is happening?

Two separate things are happening over the next 12 months that will impact addressability.

  1. Apple is making changes to iPhone and iPad operating systems which will have an impact on advertising, addressability, and tracking.
  2. Google is changing the Google Chrome browser to no longer allow cross-site tracking via cookies.

What channels are impacted?
Desktop Display advertising and Mobile-in-app advertising are impacted. CTV is not impacted. Native advertising is primarily driven by click-based actions, and therefore will also feel little impact.

Most scaled advertisers, agencies, trading desks, and technology companies are now pretty diversified across the four different channels. This will impact about 30% of OUR portfolio across Programmatic Mechanics & Pontiac Intelligence LLC.

Google Chrome Change Jan 2022
Google Chrome announced 12 months ago that as of 1/1/2022, third-party cookies will no longer be available on Chrome browser. By default, Chrome browsers update automatically when the new version is available. So, this could roll out quickly in the beginning of 2022.

What does this mean?

Right now, Safari & Firefox do NOT allow third-party cookie tracking. ProgMechs & Pontiac see about 25% of our desktop ads served to those devices. That is significant considering those browsers rarely have OPTED-IN to cookie-based advertising. We expect this change to impact 95% of Chrome browsers which is about 60% of the entire market. For those Chrome users who do nothing, they will no longer have 3rd party cookies enabled on their browser. 90% of browsers will no longer allow:

  • Behavioral Targeting, including Remarketing
  • DMP integrations
  • Post-View Attribution

Is this definitely happening?
I estimate the likelihood of this happening at about 95%. Google makes their money on advertising, unlike Apple. By making this change, they will either need to make many of their products less effective, or flagrantly provide themselves an advantage by owning Google Chrome, Google Ads, and DoubleClick’s Ad Server in monopolistic fashion. Since Apple and Safari already made this change, there is precedent. However, Apple doesn’t make the majority of its revenue through advertising. In fact, it’s a very small part. Google, on the other hand, is predominantly advertising revenue.

How does this impact programmatic and social advertising?

There are two major changes which will have dramatic impacts on the performance of display advertising.

  • Remarketing scale will be severely limited. Chrome accounts for 80% of remarketing delivery due to it being the largest browser which accepts cookies by default. Additionally, most of the remarketing is done on desktop computers.
  • Post-View attribution will no longer work. Post-click attribution will continue to work, but many campaigns look far more efficient when post-view attribution is counted.

Now, many solutions will be handicapped dramatically. Third party-data companies, dynamic remarketing companies, DMPS, and CDPs are in trouble. With the removal of the third-party cookie, companies cannot identify individuals. Facebook advertising will also not look as strong due to the inability to consider post-view attribution as well. But, most of Facebook’s conversions are driven by click and the platform is exceptional at driving users to take action. Banner ads are not as effective as driving click conversions. Hence the concentrated fear on the programmatic side.
Recently, Google has announced a proposal called Floc: Federated Learning of Cohorts. This is a potential solution for audience data and audience targeting. Using the Chrome data of millions of browsers, each individual browser declares which audience category they are in based on browsing behavior. It is extremely controlled by Chrome, but probably better than actual third-party data. However, it does not solve the main two issues at stake (remarketing & attribution, as discussed).

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