Life After Cookies: Part Five — How the Sell Side Will Define the New Data Pyramid
“At the end of the day,” says Garrett McGrath, vice president, product management, at Magnite, an independent sell-side ad platform, “the whole point of third-party cookies was to identify audiences and make them addressable—at scale.” Scale is essential, he notes, for “targeting to really make sense.”
On the other hand, he says, “third-party cookies got out of control because the industry found a relatively easy way to grow by using them but did a poor job of explaining the value exchange with consumers.” To consumers, he says, “it sounds confusing. It sounds intrusive. The consumers are not really there for the ads; they’re there for the content. And making it worse was retargeting. When a pair of shoes someone looked for online started following them around the internet, it made them uncomfortable because they didn’t understand the how or why.”
“There has been a big consumer element to this in terms of understanding how the internet works and, from that, the utilization of cookies and other identifiers,” says Tom Richards, global product director at MiQ, a programmatic media company. “It’s the world in which we now live and breathe, colliding with consumers’ preferences and requirements around privacy and the way in which their data is used.”
But the days of third-party cookies are numbered, and their imminent demise has forced many industry players to wonder what the world will look like in terms of identity and addressability just a year from now. Agreeing with everyone we’ve talked to in putting together this series of blog posts, McGrath says that what we’re faced with “is actually an opportunity for improvements and better transparency and control in the hands of the people where it should be: the publishers and the end users.”
Richards agrees. “From a broader point of view, the opportunities for the industry are a value exchange with consumers and a set of guidelines and principles that give a level of security, stability, and ultimately longevity to what we’re doing from a digital marketing perspective,” he says.
The Post-Cookie Pyramid
When third-party cookies are gone, McGrath believes there will be three distinct ways in which audiences are discovered, addressed, and communicated with in bidstreams. He visualizes this as a pyramid with segments that get larger the further down you go.
The first and smallest group, at the top of the pyramid, he says, will include logged-in users and IDs generated from hashed emails such as those provided by IdentityLink, LiveRamp’s identity authentication system, and The Trade Desk’s Unified ID 2.0 platform. As McGrath envisions it, “these platforms will get end users to log into a site and be ok with their email being anonymized and then turned into an identifier.” That’s very close, he adds, “to what we have today with third-party cookies in terms of cross-site addressability.” While he notes that people do log into websites today and will continue to do so, providing these new platforms with “some level of success,” he says he would “call it 20%. For the other 80%, the center of the solution is the publisher—first-party data and first-party identifiers controlled by publishers.”
And this is what makes up the second, somewhat larger, middle layer of the pyramid.
“Today,” McGrath explains, “we use third-party cookies as a way of allowing the buy side’s demand-side platforms (DSPs) and data management platforms (DMPs) to approximate interests and other things about consumers and then to stitch those things together into pools of users and have enough scale to be of interest to an advertiser. And all of that audience identification, collation, and assembly is done on the buy side.”
A Move to the Sell Side
“When third-party cookies go away, the job of audience assembly, creation, and recognition moves to the sell side—sellers and seller tools, including SSPs.”
However, he believes, when third-party cookies go away, that changes, “and the job of audience assembly, creation, and recognition moves to the sell side—sellers and seller tools, including SSPs.” In this scenario, McGrath says, “first-party data supplied to an exchange is translated into anonymized user segments, probably keyed off an independent open source first-party identifier, such as prebid.org’s SharedID.” And this works, he says, because “publishers actually have a ton of very valuable information about their users that is incredibly important to running their businesses—and incredibly expensive to get. This data is not just what page they’re on, but how long they’ve been there, how recently they’ve been there, what they are currently watching, what they’ve watched in the past three weeks.”
One danger in this approach, and a big concern for publishers, McGrath adds, is that this information will leave the publishers’ environments and become “an identifier that ties back to the user on the page that is then shared and able to be synched with another set of users. After which all of the segments that are attached to those users are combined and graphed in some buy-side platform.” That concern, he notes, makes some publishers “very reticent to let their data get into the bidstream.”
A solution for this problem, and a way to strengthen the center of the pyramid, McGrath says, is for SSPs, like Magnite, to build tools that allow publishers to generate, identify, and anonymously tag using an independent identifier that is only relevant to that page. “What I’m saying,” he explains, “is give them audience assembly tools. Give them the option to federate across multiple sites—or not, depending on the kind of audiences they’re trying to generate.” At the same time, he suggests, “give the buy-side buyers, DSPs, and others the ability to come into a platform like ours and create custom segments, off-the-shelf segments, or even customized off-the-shelf segments.”
To take this even further, McGrath says, Magnite has begun to work with a cross-industry working group composed of publishers, SSPs, DSPs, and end buyers, such as MiQ, where, he says, “we’re getting together weekly to say, ‘Look, if we agree that this is a big part of our future and we want to make first-party, federated, publisher-controlled data segments a thing that people care about, all the way down to the advertiser level, let’s work together to figure it out.’ We are rapidly working toward a place where we’re willing to run test campaigns with actual dollars, transactions, and DSPs.”
Maintaining an Independent Open Web
“No one is willing to just let Google and Facebook take over the world. Both advertisers and end users demand that there be independent solutions and an independent way to market.”
At the third, and bottom, layer of the pyramid, McGrath explains, are such Big Tech platforms as Chrome’s Privacy Sandbox. While he notes that what Chrome, for example, is doing with the Privacy Sandbox is “the same sort of thing as having audiences created, identified, and assembled at the publisher level,” he contends that it “raises the question of whether you, as either an industry player or a consumer want a black box system that does all of the multi-party computational magic that no one can see. It’s a question of whether you want a system that is open and transparent and very clear about what it’s doing, or whether you just trust what they’ve assembled although you can’t see how, why, or when.” And that’s the crux, McGrath says, of why, though the Privacy Sandbox will certainly be used, no one is “willing to just let Google and Facebook take over the world. Both advertisers and end users demand that there be independent solutions and an independent way to market. Nobody is willing to let that be the internet, so there has to be an independent open web.”
And that, most observers say, is both a challenge and an opportunity. “This is a moment where we get to rewrite the rules,” McGrath says. “It’s not about power and who is in control. It’s about collaboration and cooperation among the entire ecosystem.”
In the next and final installment in this series, we’ll take an optimistic look at what’s ahead, what surprises might be lurking around the corner, and what actions advertisers and agencies can take right now to be ready for anything that develops in the brave, new, cookieless world. Read part 6 here.