January 26, 2024
Google has finally made good on a promise to bring us the “cookieless future” they and other advertising sages have been talking about for years. On January 4, 2024, the company started the process of phasing out third-party cookies on its Chrome browser by migrating 1% of their user base (30 million people globally) to their new model of data collection, which they’re calling a privacy sandbox.
This will be a yearlong gradual transition with significant implications for the marketing and advertising ecosystem. Google hopes to have all users over to the sandbox by the second half of 2024, reports Engadget, although anyone paying attention to this issue would expect this to take longer.
Why is this happening and what does it mean?
- Google’s privacy sandbox seeks to reconcile the conflicting demands of user privacy with the billions-of-dollars ecosystem of personalized advertising.
- The new system categorizes users into groups based on interests derived from their browsing activities, offering a less invasive alternative to traditional cookies.
- Advertisers will target these interest-based groups, rather than individuals, marking a departure from the granular targeting facilitated by third-party cookies.
- Advertising teams will have to spend more time defining and building their audiences to make sure they buy the correct channels and tactics to reach them – those that emphasize more qualitative research can paint more complete pictures of who they want to reach and where.
- Our bet is media buyers will shift more to publisher-direct relationships and start buying digital tactics the way that traditional tactics are bought (that is, find out what audiences like, and buy contextually rather than behaviorally). We also think we’ll see a surge in OOH (out of home) buying.
What other implications should you consider?
1. Performance Metrics: The absence of third-party cookies will likely result in a decline in traditional performance indicators such as click-through rates (CTRs) and detailed site traffic analytics. This change challenges the existing paradigm of measuring campaign effectiveness.
- How should you respond? Get very familiar with your site analytics suite if you are not already. Click-tracking codes and mapping site traffic metrics to your buy’s impression volume peaks and valleys will act as your success barometer. Prepare for uncertainty and for the media buying pendulum to swing more toward “art” than “science.”
2. Cost Dynamics: The shift is expected to drive up the cost per thousand impressions (CPMs) as advertisers compete for prime spots on high-quality content platforms. The scarcity of granular targeting data will heighten the value of premium ad placements.
- The extended story and how to think about it? Programmatic advertising has been fraught with fraud, relied on inaccurate targeting data, and plagued by shady reporting since its inception. We’re happy to see this element of the cookie-targeting era hopefully go away. What advertisers don’t realize (or at best don’t mind) is that a lot of partners participate in what is known as “cookie bombing,” which annoys your audience more than it activates – when you give partners high-volume buys, they will badger your audience until they capitulate. But at what emotional cost to the brand? With data becoming even less accurate, we hope and bet to see smarter, if more expensive, buys that wind up where advertisers actually want to be.
3. Strategic Shifts: Advertisers must adapt by focusing on quality over quantity. This change emphasizes the importance of investing in direct publisher relationships and premium content avenues. The move away from reliance on third-party cookies necessitates a reevaluation of ad placement strategies, ensuring alignment with target audience interests while maintaining brand integrity.
- How will we adapt? Adopt a CPM-agnostic attitude as soon as you can stomach it. We’ll all be seeing lower impression volume for the same budgets, but if you invest the time to nail your audience definitions up front, buying the correct channel and content (i.e., “quality”) at higher CPMs is much easier to rationalize.
4. A New Targeting Approach: With the new model, advertisers will need to think creatively about reaching their audience. Gone are the tidy and clearly defined audiences that anyone can create in-platform or pay to access. We don’t know what these new audiences will look like or how useful the data we collect from their behavior will be; new approaches will emerge for each brand.
- This will be an iterative, if not slightly painful, process – we can’t stress enough the importance of embracing uncertainty and staying nimble with your media buys. Be patient and open to the idea that certain channels/tactics just aren’t cutting it, and make the next move mid-flight.
This shift will require media teams and client leads to stay on top of the news cycle. Adaptability and curiosity will be your best friends as the year goes on, and media plans must flex and iterate to stay effective. If you’ve got questions about how this shift will impact your 2024 media plans, drop me a line and our team can help you think it through.