Come next year, that’s all going to change.

The overhaul might also give publishers, not least the media industry, a chance to mend their bungled approach to making money in the era of digital consumption. 

A vast cookie economy has developed over the years where thousands of companies trade user data to target ads more precisely to potential customers. The agency trading desks use demand-side platforms to buy ad impressions programmatically from ad networks and supply-side platforms on exchanges running a real-time bidding process.

“It has historically been really easy for third parties with no legitimate agency or claim to the consumer’s data to gain an understanding about the user and then monetize and re-sell that understanding,” says Wil Schobeiri, chief technology officer at MediaMath Inc., a firm that manages online ad campaigns. “The debate now is,” he says, “who gets to control that and make decisions about the user and the user’s privacy?”

Apple has identified user privacy as a key selling point for iPhone, iPad and Macs. In 2017, Apple has introduced the improved Safari version (Apple's web browser) that blocks third-party cookies easier. In 2019, Mozilla followed suit. 

The biggest news came in January when Google, whose Chrome browser has more users than everyone else combined, announced that it would phase out third-party cookies over the following 18 months. The ad technology industry took a deep breath.

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It was inevitable. Google, whose $162 billion in 2019 revenue makes it the gatekeeper for almost half of all global digital ad spending. Android, the biggest mobile operating system; and, in Google Search, Maps, YouTube, and Gmail. Most significant, Chrome is the biggest web browser, with a 64% market share, according to the web traffic analysis firm StatCounter.

Even without third-party cookies, Google will be able to track users’ activity so long as they’re on Chrome. Whatever it decides, goes. So while your data may no longer be traded willy-nilly around the internet, there’s a good chance that Google will still be able to use your browsing history to target you with ads tailored to either your interests or products you’ve already considered buying. Just how it will do that is as yet unclear. 

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“Chrome is driving this process, and the rest of us are providing feedback,” Alan Chapell, a lawyer for a number of startups.

A lot of companies will go out of business after whatever Google decides to implement. Even Facebook Inc. is likely to encounter some difficulties.

At the moment, if you see an ad for a hair product on the Instagram then decide to buy it sometime later through the Chrome, Facebook can tie the events together through third-party cookies because you’re likely signed into one of its services. It estimates the effectiveness of an ad converting into sales. Without this capability, Facebook will lose its measurables and this will post a threat to its business, even as the second-largest tech company. 

For publishers and content creator, however, it will present a tremendous opportunity. With the fall of the print advertisement from USD49 billion to USD14 billion, Google's ad revenue has jumped from USD11 billion to USD63 billion at the same time. Media organizations have all too willingly outsourced the responsibility for serving their audience with ads to other companies and they focused on creating content to captivate their audience. 

But having said that,  the U.K. newspapers have warned they could potentially lose £50 million (USD63 million) in advertising revenue over three months, even though their online readership has spiked because brands have added COVID-19 associated vocabulary into their blocklists, which means that their ads won’t appear alongside news stories containing those words. 

Recently there is a new trend of news organizations leaning towards online subscription and user registrations. This allows them to know their users, geographical location and interest with the absence of cookies. With this, users can be grouped into similar interest with that person's permission. 

If they can get it right, media organizations might be able to reclaim some of the billions of ad dollars haemorrhaged over the past 15 years. Sure, it will be easier for companies with the scale of the New York Times, Condé Nast, or Gannett than it will for independent regional organizations. But the cookies are disappearing from the jar, and everyone should prepare to scramble to catch the crumbs.

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Source: Alex Webb, Bloomberg.com