As more online entities move to respect their users and limit or restrict the use of third-party cookies, the entire ad tech ecosystem is facing profound change.

Accurate measurement requires high quality, first-party sustainable data. However, current ad measurement tools are built on third-party audiences: The solution provider does not have a direct relationship with the person being exposed to advertising. Providers have therefore relied on third-party cookies to identify who was exposed to what ad. Now that Google plans to join Firefox and Safari to phase out third-party cookies in less than two years, traditional ad measurement methodology will need to reinvent itself.

That is a scary prospect for the digital advertising ecosystem. The ANA and 4As have gone on record with their disappointment at the death of the cookie. However, it is worth remembering that the cookie has its shortcomings. Cookies paint only a partial picture of a brand's audience. Accordingly, forcing the advertising industry to adopt more accurate measurement solutions will be a positive development for marketers.

Yes, the change will take work and it will involve growing pains, but it will also lead to a more thorough understanding of your company's audience and campaign performance.

The Future of Measurement and Its Impact on Publishers

Cookies were crafted as connect-the-dots. Perhaps they should have been called "crumbs." After all, they provide only a fragmented picture of the customer journey, and they have caused a mess that users and platforms alike are trying to clean up. They have never been 100% accurate, nor have they been powerful enough to provide a continuous line of sight into consumer behavior.

Even beyond the dot-connecting issue, cookies are problematic:

  • First, they have unreliable shelf lives. Whether a cookie expires or it is manually cleared by a user, it can disappear at inopportune times.
  • Second, some cookies are never captured at all, such as when people turn to ad blockers and other tools to block them.
  • Third, cookies are device-specific, and they don't work well on mobile—specifically in apps.

The industry has accepted that cookies meet minimum measurement requirements—just enough to get by—for a long time. However, a growing number of marketers have been looking for more meaningful and complete measurement solutions, even outside of the changing regulations.

What is that more complete measurement solution? The simplest answer is first-party, permission-based audiences and technology—solutions that don't require cookies, identity-matching, or onboarding.

Identity-based publishers that have direct relationships with users are uniquely positioned to weather cookies' demise, or even benefit from it, because they can measure performance without cookies. The New York Times, Wall Street Journal, and other publishers with subscription services; social media networks, including Facebook and YouTube; and Amazon all offer identity-based measurement solutions.

But the impending measurement change is a tough pill to swallow for publishers—particularly in the news industry—because many news companies don't require users to sign in to access content. They face a conundrum: People want their news on the fly, so requiring them to sign in can negatively impact the user base and reduce impressions; but companies that require user IDs gain identity-based targeting and measurement capabilities—via powerful first-party data.

More and more publishers are rolling out subscription or membership models, not only because digital subscriptions are a valuable revenue stream but also because they can use first-party data to retarget users, to better understand their needs in order to improve their platform, and to create effective targeted advertising programs with accurate measurement capabilities.

Companies that lack first-party data are scrambling to find a unique approach to measurement, and to serve addressable advertising. Currently, workarounds include using IP addresses as a proxy for third-party cookies, but the solution is not perfect, because some households have dynamic IP addresses that change every few days—or even every 30 minutes—to protect privacy and security.

Publishers That Don't Have Identity-Based Measurement

eMarketer estimates that nearly 88%, or $81 billion, of total US digital display ad spending will transact programmatically by 2021. Programmatic advertising is predicated on the use of the cookie, so companies will develop a real gap in what they can and cannot measure, because not every business has identity-based audiences.

For those that don't, options include resorting to a "spray and pray" model, which could lower CPMs because targeted audiences cost more. From a measurement perspective, publishers resort to "spot measurement," for which they measure little pieces of a campaign. That leads to measurement gaps, questionable conclusions, and a hard time proving incremental value.

Publishers should start asking questions of their measurement solution providers now to prepare for the not-so-distant cookie-less future:

  • How can you measure the true value of my media without reliance on cookies?
  • How can you provide continuous line-of-sight into behavioral lift post-ad exposure?
  • How do you measure the impact of ad exposure even when users are anonymous?

The crumbling of cookies will indubitably cause challenges, but it will also nudge the marketing and advertising industry forward. It will force publishers and advertisers to demand better measurement solutions.

Adjusting to measurement in a cookie-less world isn't easy, but taking on the challenge will lead to better solutions and more effective advertising.

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The Silver Lining to the Death of the Cookie: Better Measurement

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image of Stephen Jepson

Stephen Jepson is the EVP of advertising effectiveness at DISQO, an audience-first insights platform. He has 20+ years of experience in the advertising industry.

LinkedIn: Stephen Jepson