How Identity and Privacy Changes Will Affect Advertising
May 5, 2021
Recent news on identity and privacy changes may sound alarming (and confusing) to some and we are here to explain two of the most common concerns:
- Google’s Privacy and Identity Changes
Google, specifically Chrome, is ending the use of 3rd party cookies by 2022, out of – what many would argue – respect for user privacy, allowing for digital advertising to rely more on privacy-aware data sources. Though if this happens, many advertisers will question how they should approach audience targeting at scale.
- Apple’s iOS Privacy and Identity Changes
Apple, with the release of iOS14, is requiring app users to opt-in to IDFA. The biggest app affected? Facebook. Many marketers rely heavily on Facebook as a source of advertising, so this is expected to significantly impact paid campaigns from top to bottom: strategies, budget allocations, and targeting capabilities/relevancy.
In short, we’re going to be okay. These changes represent an important evolution in targeting technology, with greater emphasis on user privacy. The way in which we target audiences may be different, but we can still target them with strong precision. Here are the details.
First Up: Google’s Privacy and Identity Changes
What would we do with a cookie-less future? We’re not talking about chocolate chip cookies. We’re talking about the types of cookies that we, as advertisers, leverage to reach our audiences – tiny pieces of software code that get installed on a user’s web browser when they visit a website. Let’s review the types of cookies:
- 1st party (1P) cookies: Owned and operated from a specific website, where the site does not pass information to other parties. For example, if a user visits NYTimes.com, their data is stored by The New York Times, allowing them to collect analytics data, remember language settings, store passwords, etc. (Important to note that we expect 1P data to become increasingly more relevant for brands and marketers to build upon (think: improved CRM database, etc).
- 2nd party (2P) cookies: Data that is shared between two parties privately, such as when a 1st party owner sells its data to another party. For example, an airline might sell its data to a hotel – and when that data is used, it’s considered a 2nd party cookie. (Google’s changes aren’t affecting these cookies – and quite frankly, some don’t even acknowledge 2P cookies; they lump them together with 3rd-party. No big news here.)
- 3rd party (3P) cookies: Advertising technology used to identify users, or more specifically a certain user’s browser, thus helping advertisers build out audiences, retargeting pools, and attribution.
Google has announced that it is taking away 3rd party cookies by having its browser, Chrome, block them. There has been a lot of noise about this announcement; it is Google after all, a technology giant. But what a lot of users may not know is that this is not exactly a brand new precedent to all other browsers. Firefox and Safari have actually already implemented this, where 3rd party cookies are disabled by default, and the industry has been operating without them for years.
Solutions to Google’s Changes
So what do we do? With the majority of digital users on Google Chrome (around 47% in the US, according to Statista), leaning on 3P data technology, how do we track and target those audiences?
The good news is that this is not the end of tracking. There are several solutions already in the works. Google itself has come up with it’s Privacy Sandbox, which leverages the Federated Learning of Cohorts (FLoC) technology for behavior-based advertising by clustering large groups of people with similar interests. Since each user is assigned to a “cohort” or a group, this approach essentially hides individuals in the crowd.
Other solutions include using other methods for targeting, such as:
- Statistical models or predictive targeting that leverages many points of data on an aggregate level
- Unified IDs and hash-based/anonymized email identifiers
- Panel-based measurement, where users opt-in for tracking and some form of compensation. For example, when you’re at the airport and you need to opt-in and watch a video ad so you can get free wifi for 30 minutes)
And of course, there’s still the option of working directly with publishers and using their first party cookies.
Next Up: Apple’s iOS Privacy and Identity Changes
Today, all app inventory and users are trackable using unique mobile identifiers (IDFA for iOS and GAID for Androids) that allow for targeting and measurement across your mobile devices. For example, if an ad for the newest, Bose bluetooth headphones pops up in the midst of a heated “Words with Friends” game, on your new iPhone – IDFA was used to track and target you, as a user.
However, with the release of iOS14, Apple is making the use of IDFA opt-in for users, on an app-by-app basis. A user will be shown a pop-up box and they must choose to allow each application access to the identifier.
With a greater focus on user privacy and data, as a whole, many believe fewer people will opt-in to tracking, which will create a significant blindspot for advertisers, specifically affecting in-app targeting and measurement.
Biggest Mobile App Impacts
With Apple representing approximately 60% of the mobile market, these changes will cause almost 60% of mobile ad inventory to become less trackable (see below image). So while your Words with Friends games may become easier to play (without any pesky ad pop-ups), other apps (read: Facebook) will have a different experience. With over $70B in ad revenue in 2019 alone, Facebook is expected to take a serious hit, with many marketers (and agencies) questioning the investment value, as the ads will be both less trackable, and therefore, less relevant to their audiences.
So what does this all really mean – for advertisers, marketers, and brands alike?
A greater focus on user privacy presents a challenge, as it relates to user data accessibility and effective and efficient ad targeting. Up until now, advertisers and agencies have relied on 1P data, 3P data, and heavily on Facebook, specifically, for accurate and relevant audience targeting – creating a personalized ad experience for the consumer, translating into higher ROAS for the brand.
With the removal of 3P cookies and higher “walled gardens,” everyone will need to re-think their digital strategies. Now is the time to start thinking about proprietary data sets and audience segmentation strategies, re-thinking your advertising partner list, and being open to embracing new technologies. This will ensure you’re still targeting the right people, and doing so ethically and legally.
If you need help, we’re happy to chat with you. We love this stuff.