The winds of change that started swirling in 2023 are starting to blow a gale as the advertising industry charges into 2024. As part of the due diligence required to be a world-class marketer, every brand organization is kicking the tires on everything from retail media to CTV and even the Metaverse, still. Focal points are aplenty even without the 800 lb. gorilla of AI, which has stolen so much industry mindshare.
At the end of the day, all of these pursuits have varying degrees of merit, but they also take brand marketers’ focus away from the most pressing priority: moving to the post-cookie digital world. While I acknowledge that AI’s impact will be profound and transformational, it is a force that will reshape our business in years, whereas the marginalization of advertising IDs has already started. Only a few days into 2024, Google restricted cookies for 1% of Chrome users – around 30 million users. Despite the hope of some that Google may once again delay the phase-out, the writing is clearly on the wall.
Brands and their agencies, along with their publisher counterparts and – as a consequence – ad tech companies, are all at a critical inflection point that may go a long way in determining future viability. What has me puzzled is that only 41 percent of advertisers are moderately, if not at all, familiar with technologies that are independent of advertising identifiers, according to a global survey.
How Do We Maintain Scalability in This New Privacy-First Era?
So far, you can break out the digital era of advertising into three waves, sparked by game-changing technological innovation. First, we had Google inventing a new mode of consumer-intent advertising with its market-dominant search advertising engine. Years later, Facebook grabbed the spotlight by revolutionizing consumer data collection, highlighting the rise of social media as the second wave of digital ads. Most recently, the impressive growth and adoption of retail media has taken center stage as the third wave of digital advertising. According to GroupM’s 2023 Global Mid-Year Forecast, it is expected to grow by 9.9 percent this year, reaching $125.7 billion.
Exploiting consumer data is what binds the social and retail media waves’ success together. What makes these two sectors defensible is that, while users are less and less likely to share personal data for marketing purposes, these companies have enough scale of consented users to remain prominent. Nevertheless, the unstoppable trend of consumer demand for privacy and the resulting legislation will present existential challenges for those who remain ID-based.
Last year, California Governor Gavin Newsom signed the Delete Act into law, which will make it much easier for state residents to have their personal data removed from data brokers operating locally. This is the latest milestone in a years-long movement, which is picking up momentum, to put consumer privacy first following the CCPA and Europe’s GDPR before it in 2018. Today, a growing number of discrete state laws beyond California’s are being advanced, and the prospects of U.S. federal legislation are also getting brighter.
Yet, the deniers persist. Despite Google kicking the year off by shutting down cookies for some 30 million users, more and more industry experts are convinced that a delay to the final cookie deprecation will come. What’s more, there are still big parts of our ecosystem which are also mired in the stasis of third-party cookies and advertising IDs.
Several players touting unified IDs are, despite their best efforts, facing a nearly insurmountable challenge in creating the scalability to which marketers have been accustomed during the third-party cookie era. The hard truth for these companies is that unified ID solutions struggle to be interoperable, and their siloed nature doesn’t afford brands the access to the reach they demand. And the notion of a famously fractious industry agreeing on one common standard seems highly unlikely.
The Fourth Wave Will Be ID-Less Digital Advertising
Instead, we as an industry should focus our efforts on building and adopting technologies that qualify impressions at the placement level instead of a personal level. In this manner, we can continue to engage relevant audiences without the use of personal data. This approach will deliver scalability while aligning with consumers’ concerns and the regulatory regimes responding to them.
The only time consumer identity will be used is when it is fully consented, as in the case of retail media and the social media walled gardens. But for all those who are putting a fresh coat of paint on the same old ID-based advertising, there are many who embrace the concept of an alternative paradigm, built on privacy without compromise. Consumers are rejecting tracking for advertising at critical mass and we should too. Further procrastination is in no one’s best interest.