Putting the cookie back in the jar isn’t going to work

A reinvention of the third-party cookie misses the mark for what the ad industry needs, writes Semcasting's Ray Kingman. He explores the battle over the first-party cookie and what we can expect with the future of identity.

BY RAY KINGMAN
PUBLISHED: SEPTEMBER 19, 2022

https://corp.smartbrief.com/original/2022/09/putting-the-cookie-back-in-the-jar-isnt-going-to-work

Regardless of when, or if, third-party data from tracking cookies crumble, attempting to reinvent and replace the cookie with a single alternative that doesn’t break existing digital infrastructure is destined to fail. 

Congress seems serious this time with the American Privacy Protection Act and blocking any form of person-based identifier. The industry has been chasing cookie alternatives for a while now and, right now, the bright-shiny object is brand-based, first-party data stores. 

The walled gardens won the first round

The first phase of cookie alternatives kicked off when the walled gardens recognized their logged-in users could be levered to provide privacy protection and enhance their share-of-wallet. While good for the platforms with walled gardens, the results have been generally unsatisfactory to the brands. 

Phase two has been about brands taking back control of their own first-party data. Brand data has historically been used to generate co-op marketing fees and/or for cross-selling, but creating the infrastructure to mimic the same protectionist game that the walled gardens were playing seemed like a cost saver and a new path to revenue.

First-party data fit really well within the sometimes-accidental design goals of the walled gardens. It has always been in the commercial interest of any online portal to own the eyeballs of the customer. The walled garden model justified protectionist behavior and (to some extent) shielded them from the prying eyes of brands and regulators.

However, walled garden control didn’t fix the cookie problem. Actually, far from it. 

In adtech, there is a sense of pride around inventing our way to a solution. And yes, we can anonymize and contextualize, AI and model our way into a proxy for identity. However, brands bought into programmatic because they wanted to know exactly who they were advertising to and where their money was spent. 

“Nature finds a way” in some form or fashion, and in spite of the machinations of Congress, device manufacturers and the walled gardens – I bet that brands who write the checks will still get the targeting and measurement they want.

Eliminating third-party data is not a sustainable

Publicly available third-party data access is systematically being unwound. Anonymous site cookies, location data, even modeled purchasing behaviors are getting a bad rap.  Data in all forms is being sensationalized and it is reactionary to conflate data with bad-actor behavior ranging from spammers, the likes of Cambridge Analytica, incessant retargeting, or even identity theft.

Of course, none of that was the data’s fault.  

Thankfully, what we see in Congress is a growing recognition that chasing legislation to unwind access to consumers and public third-party data will pose an economic risk – especially to the long-tail businesses that need digital marketing support the most.

Third-party data fuels the open digital marketplace. It provides direct-to-consumer businesses, local businesses, all the small- to medium retailers and services providers who are coming with Amazon a path to viability.

Public third-party data promotes access to new customers, invention and growth. Some might say public data and the anonymous cookie was chaotic and at times an optics problem to privacy advocates, but at least it didn’t artificially limit consumer choice.

Identity is fractured (and it could break)

Apple and now Google are curbing device ID access. Connected TV doesn’t support either cookies or universal IDs. Walled gardens still do not share impressions or anything else. New attribution solutions from Facebook and Google are not doing their advertisers any favors.

 Privatized universal ID has taken hold in some verticals, but due to cost and coverage, they are unlikely to truly become universal.  

One popular industry analyst identified over 50 vendors with alternative ID solutions. Therefore, with brands now actively building their own first-party data solutions, the prospect of many more IDs is not only possible, but probable. 

The larger point is that the footprint of identity remains fractured and there is a very good chance it is only going to get worse.

Ironically, the answer to the privacy challenge may just lay in a diversity of identity options.

The biggest risk to consumer privacy is unauthorized reuse of a person’s identity. While advocates rush to point at the third-party cookie or the public data as the culprit – it is actually the reusability of any identifier that creates exposure.

One of the benefits of brands taking back control of their first-party data is that they are in charge of their identity assets. Many new first-party IDs for customers and prospects will come from this ownership. 

But … what if identity became the antithesis of universal, and there was a multiplier effect on a user ID that resulted in the equivalent of an account number for each person on each platform?

Furthermore, what if that identity is only usable on that one platform. Identity as a commodity is no longer risky. It doesn’t have value if you reduce its usability to its local application and limit its exposure.

Cross-platform and omnichannel campaign measurement would of course require cooperation between marketers. Also, they would still have to call on trusted third-party solution providers to construct a co-op of matching services across the many IDs that are now transacting in the public square. 

Layering the IDs to multiple media platforms only increases the multiplier effect. Admittedly, this may be too nuanced an approach to privacy for Congress or consumers – but it might have some appeal with the brands.

With access, bad actors will do bad things. But data isn’t at risk if it’s being used in a privacy-friendly way across multiple parties for mutual benefit. 

That’s a future state we should all be working towards.