Industry welcomes online tracking crackdown, despite short-term pain

The world’s most powerful tech companies are uniting behind a common goal of giving consumers greater oversight and control over how they are tracked across the internet, by eroding the power of the tracking cookie.

A host of industry executives predict the shift could see advertisers retreat from precision-targeting in favour of good old-fashioned contextual marketing.

Google last week became the latest company to crack down on third-party tracking tools on its Chrome browser.

The new controls, announced at its annual I/O developer conference, will allow Chrome users to block or clear cookies that use trackers, while leaving single-domain cookies that control user logins and settings unaffected.

Google’s move to crack down on cookie tracking in Chrome has been long-anticipated and comes as part of a wider shift to clean up digital advertising and give consumers greater control over how their data is used, following the introduction of GDPR.

“Everyone is talking about privacy and transparency so it was inevitable that the digital advertising industry was going to change, and given digital is heavily led by cookies, that was the first thing that was going to give,” says Laura Quigley, Integral Ad Science managing director for Southeast Asia.

In fact, Google is arguably late to the party.

Apple has been serious about controlling advertisers’ ability to track users across its Safari search engine for some time. Before introducing Intelligent Tracking Prevention in 2017, Safari blocked third-party cookies on desktop and mobile by default. It then took a gentler approach, purging third-party cookies after 30 days, before introducing the much more rigorous ITP 2.1, which eliminates most first-party cookies after seven days and blocks all third-party cookies by default.

Firefox also has an anti-tracking program, Enhanced Tracking Protection, which gives users the option to block third-party trackers among other features, but with just a 5% browser market share globally, according to April 2019 stats from StatCounter, it won’t be keeping advertisers up at night.

With a 63% global market share (Safari sits at 15%), Chrome’s cookie restrictions have the potential to upend the digital advertising model. But with a business model built around ad revenue, its approach is markedly softer than Apple’s.

It requires users to actively opt out of cookie tracking, which is dependent on users having both the desire and understanding of how to access Chrome’s ads settings.

Taking Firefox’s now-defunct ‘Do Not Track’ option as an example, when only 5% of users opted to disable tracking when it was first introduced in 2011, no one is expecting a mass switch-off

But Quigley says more education is needed to help consumers understand how their data is used, and the value of targeted advertising.

“The natural instinct from a consumer that doesn’t understand the options being presented to them would be to say no,” she says.

“If consumers understand the change then the effect could be really positive. By disabling cookies and data that is not relevant to them, agencies and brands will know that they will be reaching an audience that is relevant.”

Banding together

Tougher stances on cookie tracking will affect the whole digital advertising industry, but some stand to lose more than others, particularly companies that trade on audience data or retargeting companies whose business is wholly reliant on cookies.

As is the case with most digital advertising shifts, those with direct-to-consumer relationships stand to benefit the most, further feeding into the dominance of tech giants like Google, Facebook and Amazon. Although companies will likely have to redo permissions with consumers to allow their data to be used for retargeting purposes.

The challenge for advertisers will continue, therefore, to be navigating the walled gardens. Chris Steedman, APAC managing director at M&C Saatchi Performance, foresees more instances of rival companies banding together to develop a common currency across digital advertising, following the creation of The Trade Desk’s unified ID, backed by Lotame, Rubicon Project and SpotX.

The Trade Desk hopes the industry will “roll behind open standards”.

“On our part, we support new identity solutions, for both cookie and cookieless environments, so that advertisers can strike the correct balance between relevance and privacy," says a spokesperson from the company. "With this approach, the industry can operate effectively, while respecting user privacy." 

Dialing back on precision

One potential outcome of the cookie clampdown could see advertisers turn their attention back to content marketing and contextual targeting based on first-party audience insights, putting the power with media owners.

“The industry is very reliant on tracking cookies to power performance-based marketing, which is generally focused on trying to get as many clicks as possible,” Quigley says. “If we went back to where we were many years ago and focused on content instead of cookies, maybe we would get a better outcome—and clean up the ecosystem at the same time.”

While this could trigger a reduction in clickbait content designed to drive clicks, it could also result in less impressions and higher CPMs, Quigley suggests.

“Marketers have to be prepared for that,” she says. “Consumers could disable cookies that are not relevant to them, meaning less impressions, but those impressions will be of a higher quality.”

A move away from precision marketing would also help balance serving consumers with relevant advertising without being too intrusive, Steedman suggests.

“The cream will rise to the top,” he says.

Transparency key to sustainability of digital advertising

While there may be short-term pain to the digital advertising bottom line, reducing the industry’s reliance on tracking cookies is ultimately positive for advertisers, media owners and consumers.

Empowering consumers to control their data will help restore trust in digital advertising, when scandals such as Facebook’s Cambridge Analytica have knocked consumer trust in advertising to an all-time low.

"We believe that a future in which consumers have full transparency, choice and control over their data will lead to greater trust in online advertising and more sustainable brand-consumer relationships," Stephan Loerke, chief executive of the World Federation of Advertisers, tells Campaign Asia-Pacific. “This is both a societal and economic issue for brands; consumers will only trust brands which use their data in a responsible way."

Building a sustainable future for the online advertising industry based on respect for people’s data has been a “major focus” for WFA over the past two years, according to Loerke, and forms the bedrock of the manifesto it unveiled last year.