Will an empty cookie jar deliver true privacy for ad tech?

Privacy remains a hot button issue. Headlines have been littered with news of digital giants like Google violating GDPR. Facebook being hit with a multibillion-dollar FTC fine and two U.S. senators calling for the investigation of the Smart TV industry. With the recent US Judiciary Committee hearing exploring the impact of data privacy on the digital advertising ecosystem and the FTC fining Facebook $5 billion in the wake of the Cambridge Analytica scandal, the problem has to a tipping point.

But one important thing to remember: although privacy ultimately took center stage as a result of inappropriate collection of consumer data, wholesale changes to the advertising ecosystem — including those prompted by regulation — will have enormous effects on companies across the entire digital supply chain.

In order for the advertising industry to thrive long term, we need to focus our efforts on how we can establish true privacy protections while maintaining profitability for brands, advertisers, and publishers.

Several big industry players are working to establish this mutually beneficial future — but these efforts may not come up roses for everyone in the industry. OEMs like Apple are showing their dedication towards establishing a privacy-compliant future through features like Intelligent Tracking Prevention 2.0 (ITP2), which creates a 24-hour window on the Safari browser during which websites can access cookies to track consumers on mobile devices. Once the 24-hour window has closed, the cookies expire — effectively rendering cookies an endangered species, and limiting third party data collection. In response to this privacy push by Apple, search engines Google and Mozilla have also announced their own solutions, and they all stand to have major effects on the broader industry.

Initiatives like ITP2 are partially driven by the need for more consumer privacy, and will help move the industry toward a more privacy-compliant future. But they also create a new hurdle for marketers, and a renewed importance on opt-in programs since they so curtail tracking so severely. Most importantly, features. What kinds of major implications does a shift like this have for the advertising industry, which today is so heavily reliant upon cookies for effective targeting?

Eliminating long-term cookie use for ad targeting means digital advertising will need to find a new mechanism to support effective targeting. Couple that with the additional hurdles posed by new consumer privacy regulation, and it becomes clear that not only do we need a new way to effectively digitally market to consumers, but also that some of the biggest players are actively pushing the industry in that direction.

You can’t target consumers without information. That’s like asking a sniper to take out a target from a thousand yards in pitch-black darkness. But what if instead of using sight to aim, the sniper’s bullets were magnets that were pulled toward their targets? These new, cookie limiting policies from OEM giants are laying a foundation to force that exact shift — from push to pull — and they’re doing it with their devices. Instead of exposing the consumers' data and aligning that with their devices, the devices themselves will likely start to govern targeting by doing the decisioning from the edges.

In the case of digital advertising, the device becomes the magnet and the ads are the bullets. As personal devices play more integral roles in the decisioning process, the concept of opt-in — where consumers choosing to share information with certain advertisers — will also become more meaningful to consumers, and therefore more meaningful to marketers.

ITP2 takes us one step closer to that reality, by allowing Apple devices to govern the extent to which data is available. It also lays the foundation to start true decisioning at the edge — turning the device itself into the SSP, resulting in user data never leaving the device in the first place. This will also eliminate now unnecessary middlemen that drive up ad taxes across the supply chain.

This inherent shift to decisioning on the edge has enormous implications for the business side of the equation — wiping out the vast majority of cookies, limiting retargeting capabilities, preventing third-party vendors from syncing up data and rendering DMPs far less valuable. Power may shift back to publishers. For brands, it will force digital marketers more importance on owning their audience through first-party relationships. Brands will have to double down on their media efforts, while acquiring opt-ins through owned-and-operated channels like email, app, and text.

While these efforts from digital giants appear to come from a good place, the industry should proceed with caution. Businesses across the ecosystem need to recognize and understand these implications, and start considering what the future advertising model and supply chain might look like, especially when an idea as revolutionary as device-enabled SSPs is on the table.

Consumer privacy is important and must be a priority for the entire industry — but we also need to ensure that present-day changes are not benefiting the biggest privacy violators in the long-run. The internet was built on the backs of advertisers, and when building the next iteration of the advertising ecosystem, let’s make sure we give ourselves a fighting chance against the duopoly. And make sure we remember that privacy and profitability really can coexist.