Google has finally given up on the challenge, fulfilling its promise to phase out third-party cookies in its Chrome browser by the end of this year. Rather than wait for the other shoe to drop, some marketers are taking matters into their own hands and starting to test alternatives. But considering this article has been on the wall for years, most marketers seem unfazed. But in the aftermath, agency executives expect a compounding impact on trends such as the rise of retail media, streaming and audio ad spending, and the role of display advertising.
Signal loss due to Google's data privacy initiatives is having ripple effects in the marketing industry. The loss of third-party cookies forced marketers to explore and promote their first-party data, and retail media networks were born. Thanks to the cord-cutting trend, advertising dollars were already flowing from terrestrial TV to streaming. However, some agencies are seeing less investment in display advertising as the loss of third-party cookies disrupts targeted advertising. Supports streaming video and audio. While display advertising won't see the light of day anytime soon, media buyers are taking a different approach to the role it plays in the media mix, especially as banner blindness and digital fatigue continue.
Google isn't to blame for this trend, but the loss of third-party cookies added fuel to the fire.
“The real opportunity is not to try to recreate what has been lost with the cookie, but rather to seize the opportunity to move away from outdated media practices and, as the cookie turns 30 this year, become more suited to the specific purposes that brands are aiming for. “The goal is to invest in channels and formats that help us achieve our goals.'' Duncan Smith, U.S. CEO of performance marketing agency Journey Father, said in an email.
Digiday spoke to six agency executives to find out what to expect in the fallout from Google.
Over the past couple of years, a gold rush to build first-party data sources has exploded, igniting a retail media arms race with everyone from Walmart to Cars.com offering audience data to advertisers. It's up for auction. Wawa, the gas station with a cult following, is the latest company to launch its own retail media service last Tuesday – Goose Media Network, with ads on its website, mobile app and videos .
For Claire Russell, head of media at advertising agency Fitzco, the growing list of retail media networks poses the biggest challenge in phasing out third-party cookies. “Deprecating cookies was supposed to bring more fairness to this area. It was supposed to protect consumers and others,” she said. “But all it has done is make these walled gardens hold the data even tighter, and there is no reason to share it.”
Russell is not alone. Last November, Digiday reported that several agency executives are grappling with the influx of retail media networks that is creating market fragmentation and forcing agencies to figure out how best to distribute their clients' advertising dollars. I spoke to him. Don't expect to see a decline in retail media networks anytime soon due to the impact of third-party cookies. At least 42% of brand and retail professionals say retail media makes up “the largest portion of their marketing budget,” according to a Digiday survey. Retail media is also expected to account for one-fifth of global digital ad spending this year, raking in $140 billion, up from $115 billion last year, according to Insider Intelligence.
“What's going to happen is there's going to be disruption of other platforms by these retailers and brands, and then there's going to be a gradual consolidation,” said Ashley Karim Kinsey, vice president of media at advertising agency Dagger. “There's no way we can fully support it over the long term.” That means something similar to what's happening with streaming consolidation could eventually happen with retail media.
Audio and video streaming
As cord-cutting continues, streaming platforms are siphoning ad dollars from terrestrial television. Streaming ads have become the new normal, as more players like Amazon Prime and Netflix create an ad-supported streaming world. (Click here to learn about Amazon Prime Video's pitch deck.)
Again, Google isn't to blame for the rise of streaming. But with the loss of third-party cookies, agency executives are advising clients to consider spending on things like streaming video and audio instead of display ads, where targeting is compromised by data loss. Again, it's the compounding effect.
“As consumers and as consumers of digital media, it’s already built into our behavior. [display] advertisement. Even in its heyday, it's still not a great brand driver, and the situation is only getting worse,” said Jose Villa, president of cultural marketing agency Sensis Agency. “Those days are over. For some advertisers, it will be obsolete, if not yet.”
Google lost as a one-on-one advertising opportunity, so streaming could be the winner. That is, in contrast to multiple ads on the page at the same time, streaming mostly allows him one ad at a time. Advances in technology have made it possible to measure and target your audience within your streams. But possible doesn't mean perfect.
The golden age of digital media has given performance marketers greater visibility from both a measurement and targeting perspective. While we are seeing progress in both video and audio, we have yet to catch up to things like social and display advertising. Few media channels have yet reached that level. According to a Digiday study, 52% of brands and retailers and 43% of agencies report using ad-supported video streaming platforms. In contrast, 80% of brands and retailers and 71% of agencies use display advertising. Agency executives say the streaming space still has untapped potential with a huge audience.
“Streaming audio based on mobile usage is not necessarily a great performance model because over time, you lose some data. Patrick Kelly, senior vice president and group director of investments at Havas Media Group. “Because usage is high. Spending isn't necessarily tracked accordingly.”
Digital fatigue and display advertising
Despite the disruption of tracking, targeting, and measurement caused by the collapse of Google's cookies, marketers are still investing heavily in display advertising. Of the six agency executives Digiday spoke to for this article, only one said display ad spending had declined significantly. Of programmatic purchases, Fitzco customers' spending on displays is down 17% year over year, Russell said, adding that this decline is expected to continue this year. But the “spray and pray” approach to display advertising may be coming to an end. (Learn more about why agency clients prefer programmatic advertising over direct-sold advertising as online display reliability and spend declines.)
“Gone are the days when traders would log into a DSP. [demand-side platform] Then, peruse and choose from a vast library of data segments,” said Leah Askew, senior vice president and head of precision media, Digitas North America, in an email. “Many of our teams work closely with smaller targeting data relationships.”
So we're going back to first-party data and a more context-based approach, but it doesn't yet offer the scale or measurability of Google's third-party cookies.
“To address the challenges for both consumers and brands, we need to fundamentally rethink the role of display advertising,” Duncan said. “The decline of cookies should ideally encourage more brands to adopt these progressive ways of connecting, rather than flooding current user journeys with ineffective display ads. ”
Villa said that as Google begins to deliver on its promise to phase out cookies, agency executives are increasingly advising clients to move to first-party data-driven strategies in preparation. Google's data loss problem is filling his cookie-sized hole left by the data. In other words, the hodgepodge of alternative data that marketers rely on is not as easy to scale, he added.
Still, display advertising is one of the most efficient mediums and one of the cheapest ways to get attention, Karim Kincy said, and as Google continues to phase out cookies, customers' dollars will continue to go to display ads. He added that it would continue to be spent. All in all, change has been a slow trickle as Google dragged its feet on his cookie phaseout, and marketers dragged their feet in response.
“More and more clients are starting to embrace programmatic, so this is a step in that direction. Create custom profiles and segments that are cookie-agnostic using programmatic and third-party data sources. “I do,” Villa said. “That's going to make our job even harder. We have to piece together data from different locations.”
