In the ongoing debate on the future of third-party cookies, there has been a (not-so) quiet undercurrent of thought from some branded publishers that the cookie’s demise will bring back an era of sky high CPMs, captive audiences and long expense account lunches with the Pets.com sock puppet.
Sorry to dash your hopes, but nothing could be further from the truth.
The narrative goes something like this. If third-party cookies go away, then so will the bulk of audience buying and, in turn, the ability for advertisers to reach desirable market segments without overpaying for content brands or contextual waste. The only way to reach premium users will be through branded vertical sites and then, after those are sold out, the bounty will be shared with premium content publishers.
The real story is a bit more complex. Programmatic ad buying and selling, with its unique capability to extract the highest value from any inventory source, has reduced friction in the market, and in the process, extracted a good deal of fat. Media buyers are loath to return to the days of manual buying based on syndicated research and fuzzy contextual proxies. As evidenced by the projected 98% growth rate in 2013, (source: eMarketer), RTB (one small slice of programmatic) is on such a tear that it is expected to take over nearly 20% of the display market this year.
The demise of the cookie will not eliminate online data capture. Persistent IDs, so called “device fingerprinting," and other tools to enhance ad relevancy have moved from fringe technologies to the forefront of how ad-tech is supporting support the blistering demand by marketers for audience based buying that delivers better results at a lower cost.
Plus, third-party cookies play a large role in the serving of first party ads (unless you own your own ad server) and in the delivery and synchronization of such data. As was eloquently stated at a recent conference, “Third-party cookies can deliver first-party data, and first party cookies can deliver third-party data. The delivery vehicle isn’t the problem.”
Even if third-party cookies disappear, third-party data will continue to play a big role in the growth of audience targeting.
Data-driven, automated buying and selling is not going away. You can close your eyes and call it a “fad," just like classified editors at newspapers did in 1999 when Monster and Craigslist hit the scene, or broadcasters did in the 1970s when this thing called “HBO” was piped into a few homes in Pennsylvania. Or, you can do something about it. A defensive strategy in the face of progress never works.
Smart premium publishers are getting this. Hearst has embraced programmatic in a real way, by both investing in ad-tech and re-structuring sales teams and inventory allocation. Forbes has built an “inventory optimization” approach that seeks to drive the highest value for every impression -- regardless of channel. Others are building private exchanges – which to work well, need third-party cookies.
Some may call this “throwing in the towel," but just like those who thought that cable networks were “also rans,” media progress has proven otherwise. Case in point -- the Disney ABC /Cap Cities deal in 1996. Broadcast was still the high flier, and the focus of the $19B acquisition (one of the largest in media up to that date) was the ABC Network / Affiliate group. Today, ESPN is estimated to be worth $40B; its sister company, the ABC broadcast network AND affiliate group, $4.3B, per Forbes.
Killing the third-party cookie will not save branded publishers. On the contrary, new, even stickier technologies, and an ad-tech industry whose focus is performance and delivery efficiency, will continue to innovate and push forward.
You can get on board and be part of a solution that advertisers increasingly favor or you can try to block progress. History has shown which side the winners are on.