If you pay attention to the news (or the gas pumps) you’re aware of the concept of “peak oil,” which posits that oil production will hit a high point after which the number of barrels produced declines in every subsequent year. This decreased production, coupled with continued reliance on oil, could have far-reaching negative economic effects.
There’s a strong parallel in online media, where the rise in mobile content consumption is making the cookie less important. While there are detractors to the concept of “peak oil,” it’s impossible to deny that we’re very close to hitting “peak cookie,” leaving marketers with less access to cookie-level data in the following years.
Peak oil is dangerous because the world economy hasn’t taken the steps to adjust. The same fallout potential exists online, since consumers are used to free ad-supported content that relies on cookie targeting. To avoid potential catastrophe, online media must adapt to the waning days of cookie-powered marketing.
But just like oil, cookies will never go away. The desktop browser will always have a place in online marketing, but it will carry less weight. U.S. consumers are already spending more time on mobile than on the desktop, according to Nielsen data, and there’s no reason to think that will change. Facebook is indicative of this changing behavior, with 53% of its ad revenue coming from mobile, according to the company’s Q4 2013 earnings. Other popular networks and websites will soon switch to app-centered modalities.
In the very near future, the central consumer data signals used for marketing will be based on the form and function of the devices used to access content. For example, the screen on the tablet makes it easier to look at retail items and go online shopping. The phone is always at hand, so it's used for quick information, but it’s not always a browsing tool. This matters when serving ad messages.
But looking only at mobile is a shortsighted view of the future. The post-cookie ad targeting economy will rely on the ubiquity of Internet connections in consumer electronics, from wearable items like the Fitbit to household devices like Nest. Google’s purchase of Nest was driven by access to data, with the understanding that it paints a richer picture of consumers’ lives.
Marketers are no longer dealing with a piece of code that can teach us about browsing habits. They’ll need to wade through an exponentially larger pool of data, one that allows for detailed and flexible customer profiles while also presenting a very complex intellectual challenge to the marketing community.
Just like solar power or alternative energy, tackling cookie alternatives in a post-peak-cookie world requires heavy investment in research and development right now. Advertisers need to reconfigure their data collection strategies across the board. They’ll be increasingly relying on their own first-party data for RTB and programmatic transactions.
Fortunately, many of them have data available from their existing customers and sales. When combined with the signals from a variety of devices, including a mix of Internet browsing devices (phone, tablet) and lifestyle electronics (fridges, fitness aids), marketers will have a very clear picture of their current and potential consumers, and how they respond to messaging in different environments.We’re more than capable of solving the problems in the era after peak cookie. Consumers will continue to accept advertising, but the challenge falls to advertisers to develop ways of extracting data and targeting that are within the privacy guidelines but still profitable enough to sustain free content. This challenge is upon us now, not later. Let’s start finding that solution.