The Difficult Consequences of Cookie Deprecation: Layoffs and Lower Revenues

While the media industry has welcomed efforts to improve its privacy protections, one new report gives a sobering look at how such a shift could affect publisher ad revenues and staffing in the post-cookie future. Nearly half (48%) of publishers anticipate having to reduce their workforce due to a loss in advertising revenue caused by third-party cookie deprecation, according to a survey of 200 U.S. senior decision-makers in digital media and marketing conducted by Lotame. The company, an identity-tech vendor, offers services to publishers to manage their first-party data. The results from its U.S. respondents make up only a portion of its larger global report, titled Beyond the Cookie, which incorporates the U.S. findings but does not include them in the write-up. The Lotame analysis found that the three biggest impacts for publishers would be: a significant loss of programmatic revenue; reduced workforces due to revenue loss; and heightened competition to prove their value compared with other publishers. The study also found that 42% of marketers believe that the loss of cookies will decrease revenue, with 57% expecting a drop between 10% and 25%. The report cites a February finding from consulting firm McKinsey, which predicts the loss of third-party cookies will force the publishing industry to replace up to $10 billion in ad revenue. The effects of those losses could lead some publishers to make difficult decisions about their staffing. With No Third-Party Cookies, Brands Must Prioritize Martech “A cookieless future is closer on the horizon and whether or not the industry feels prepared, the end result is inevitable,” said Lotame founder and CEO Andy Monfried. Unevenly distributed The potential fallout from the coming deprecation of third-party cookies, now postponed to 2023, has loomed over the industry for several years. And while grim, the Lotame findings echo the conclusions of other recent studies. In May, Advertiser Perceptions surveyed 100 U.S. publishers to gauge the impact on revenue that the phase-out of third-party cookies and Apple's privacy measures could have. Of the 40% of publishers who had conducted an audit to predict the changes' impact on their monetization strategy, 80% believed they would lead to a reduction in ad revenue. "I do think that for some publishers, the deprecation of cookies will lead to a decrease in revenue," said Lauren Fisher, evp of business intelligence at Advertiser Perceptions. "It may be something that's not evenly distributed, depending on what publishers have prepared to offset it." A painful process, a worthwhile result However, others are more sanguine about the deprecation of third-party cookies. A number of publisher sources told Adweek that they felt prepared for the shift and did not anticipate any decrease in revenue. The publishers that have invested in quality journalism over the last several years will feel the effects less than their click-chasing counterparts, said David Chavern, president and CEO of the News Media Alliance. Cookies have been an imperfect tool since their creation and have served publishers poorly, Chavern told Adweek. The impact of their deprecation remains the stuff of informed speculation, but the future for journalism will be brighter without them either way. “Publishers with fewer resources will get hit the hardest––that's always going to be true––but those with lower-quality content will be hit harder,” Chavern said. “So it depends on whether you have invested in quality content or not. And if you haven’t, you're gonna be hit very hard.” Konrad Feldman, the co-founder and CEO of Quantcast, points to the vast portions of the web, including all of Safari and Firefox, that have already eliminated the technology. And thanks to the extension from Google, publishers and marketers have even more time to experiment with new identifier technology and prepare for the shift. Even if the industry does undergo a transitional period, it is likely to be brief, Feldman said. “Look at when GDPR was introduced in Europe. In the short term, there was a bit of a dip, where everyone was checking to make sure everything was set up correctly,” Feldman said. “And then it came back.”