Cookies, including third-party cookies, have been used on the Internet for decades now. They serve important purposes but have also been abused over the years. Users’ data has been used to target them, largely without their consent.
Now, the real paradigm shift that’s happening in the news media industry globally is a privacy-first model, says Mark Zohar, president and chief operating officer of Viafoura. This is driving technology providers, users, regulators, publishers, and media companies to figure out how to manage in this new privacy-first world.
Speaking in an exclusive Webinar on Wednesday, Zohar told INMA members that the reality must be faced that Internet users have voted with their feet, taking control of their own private data and how advertising is presented to them, using ad blockers or leaving Web sites that infringe upon that.
“Talking to our publisher customers and media companies, that ad-blocking traffic is anywhere from single digits for some sites, upwards to 20% or 30% for other sites,” Zohar said. “Users are responding to this by taking control.”
The second aspect is regulatory acts that have imposed regulations to ensure data compliance, consent, privacy, and so on. The technology vendors, particularly browser makers, have followed — even targeting “super cookies” that are embedded elsewhere in the browser and hard to clear, which Zohar described as even more nefarious than third-party cookies.
“All of that has led to a kind of cascading effect,” he said, “but the real 800-pound gorilla here is Google and Chrome.”
Chrome controls two-thirds of the browser market, so when Google declared it was going to get rid of third-party cookies by 2022, that was the watershed event for the media industry (and others) to figure out how to operate in the cookieless future.
Effects on advertising revenue
Third-party cookies have been used heavily for programmatic ad revenue, which presents a challenge for digital publishers, Zohar said.
“When the third-party cookie demise occurs, there is likely to be a significant impact on publisher revenue.”
“The most infamous prediction was from Google last year, when they indicated that publishers may see greater than a 50% ad reduction through this,” Zohar said. He added that he believes that is a worst-case scenario, though there will be a correlating revenue drop of at least 10%-20% that will likely last a while.
He shared some data from a recent survey the company conducted, which revealed that just over half of respondents were uncertain about the effect the death of third-party cookies would have on their organisations. By far the biggest concern was revenue loss, with 80% citing that as their primary issue.
Additional concerns were augmentation and segmentation of first-party data (53.3%), increased overhead costs of adapting to new business models (33.3%), negative impacts to the user experience (33.3%), the scale and cost of activation of first-party data (20%), and the shift from DMPs to CDPs (20%).
These concerns lie on top of challenges the organisations already experience in their current use of customer data, which include:
- Integration of all data sources into a centralised location.
- Lack of a cohesive or comprehensive data strategy.
- Data quality.
- Lack of resources or expertise.
- Compliance with privacy regulations.
- Regular training of internal teams.
“I think a lot of companies today still don’t have a data strategy,” Zohar said.
When it comes to how prepared companies reported feeling about the transition away from third-party cookies to first-party data, there was also a lot of uncertainty, with only 20% of respondents feeling somewhat prepared.
“It kind of reminds me of GDPR, when people only really woke up to the issue three or four months [in], and we were all cramming for our final exams,” he shared.
Creating a new first-party data strategy
Dan Seaman, vice-president of product at Viafoura, jumped in to deliver a bit of good news and some opportunities for publishers in the midst of this shift.
“I think this is a generational shift, and it’s really a once-in-a-generation opportunity,” Seaman offered. “There’s a real opportunity to shift the balance of power, and I think that’s the way the [INMA] members need to look at this.”
He referenced Deloitte Digital, which said advertisers have two years to adjust to a future without third-party cookies, and for those that do it right, this can deepen customer relationships and drive growth.
For organisations that value these relationships and generate truly quality journalistic content, this shift represents real opportunity, Seaman added. It is a move away from the focus on simply driving as much volume as possible, to authentic user engagement and relationships.
“This is really an opportunity to force a transition and think about how you can really build a genuine direct relationship with your audience,” he said.
Viafoura’s data is seeing a forecasted 15% average drop in ad revenue for quality publishers who already value first-party data and already have good relationships with their audiences.
“So much of how we’ve designed news experiences, how we’ve designed Web experiences for our audiences, has really be based around this sort of paradigm of volume, of ad revenue, and it represents an opportunity for us to really re-think how we deliver that content to our audience, how we think about our relationship to our audiences, and to me that’s really the good news about this.”
Where opportunity lies
Digital publishers have a unique advantage over other brands, Zohar said.
“They are content producers, and content generates first-party data. So I think they’re in a good place.”
Google shared, for instance, that an ad activation using first-party data can get a 2x yield over that of a third-party data ad.
“So it’s going to yield better, it’s going to get better results. The challenge for publishers is getting the coverage, getting more first-party data, having a direct relationship, getting registrations, getting more information contextually about the user about how they’re moving through the site.”
Once a publisher has developed that, Zohar continued, it is then their proprietary value that can be leveraged instead of “riding the coattails of someone else’s cookie.”
Thus far the user experience has been largely affected by programmatic including pop-ups and other intrusive ads, leading to a lesser quality experience. It also creates a heavier, slower site load.
“This opportunity to take control of first-party data is also an opportunity to create a much better user experience,” Zohar said. “This ultimately is going to create a cycle of success for the user, for the brand, for the publisher, and for monetisation.”
Challenges and risks for publishers
The uncertainty is, to a large degree, paralyzing news media organisations.
“The standards have not yet crystallised,” Seaman said. “There is no new version of the third-party cookie that has yet emerged as a clear winner or standard. The date is drawing near, and I think where this leaves a lot of people is sort of unsure about what to do. My advice is to refocus on core principles.”
No matter what standard does emerge, those core customer relationships are the most valuable thing that can be leveraged. Providing value to those users in exchange for their volunteered first-party data is key.
“The No. 1 mistake is doing nothing,” he warned. “The best thing you can do is really start to build that direct relationship.”
The challenges lie in bridging unknown and known audience traffic, moving users from unknown to known, and gathering data about them. The hit from loss of revenue is another challenge, but Seaman reiterated that publishers who are prepared for that and already building direct relationships will fare much better.
Having a registration wall within the path to subscription is a very effective strategy, he added.
User-generated content is an area he believes media publishers have largely overlooked. UGC is an under-appreciated mechanism for building that user relationship.
Audience engagement for building first-party data strategy
Using relationships and engagement with your audience to build first-party data comes down to three things, Seaman said.
- Building the volume of data that you have.
- Increasing the accuracy of that data.
- Ensuring the recency of the data.
“When you focus your attention now on building that direct relationship where you own the data about that user, what that does is frees you from all of the choppiness and uncertainty in terms of browser or regulatory restriction,” he said. “Once you’re tracking that user server-side, those restrictions essentially go away.”
Publishers must still be compliant with privacy requirements and be able to export or delete the user data, but tracking the data server-side allows for direct understanding and relationship-building with the audience, and first-party data without cookies.
This first-party data can come from a variety of sources:
- Content they read on the publisher’s Web site.
- How they interact and engage on the site.
- Content they opt-in for or follow.
“Engagement actions, even small ones, are very powerful signals of interest in the topics that you’re covering,” Seaman said. “Measuring is always critically important to the success of your strategy.”
Those measurement practices need to shift as well, he added. Articles that generate high pageview volumes aren’t necessarily the content that actually converts the most users.
“You need to look at what is the content and experiences you’re providing that actually trigger conversions,” he said.
Registered users, for example, generate 20 times more pageviews and more time on the Web site that non-registered users. Even lightly engaged users spend about three times the amount time on the site. Users who engage, even in light ways, also have about a 50% retention rate in month two, versus only 3% for users who don't engage in any way.
“The key to frequency is really retention,” Seaman said. “What we’re seeing is this nice alignment of the reader revenue model and the forcing event of the death of third-party cookies. The beauty of it is the strategies are aligned.”
Leveraging first-party data to activate audiences
While collecting basic data such as name and e-mail address is important, the strategy goes much deeper than that, Zohar said.
“What we believe is that if you do this right, you’re going to have a real, comprehensive profile of that user. You will understand their interest data — what are they reading? What topics of interest have they opted in for?”
Behavioural data, opinions, and social information such as language and gender are part of the full user profile publishers can establish.
“Then you can activate that really well into a marketing campaign,” he said.
“One of the things that I think is emerging with this increasing shift to first-party data strategy is the rise of CDPs, or customer data platforms,” Zohar said.
DMP platforms have primarily been used for anonymous data, but as publishers collect more of their own first-party data, the need for more customer relationship management will be crucial and allow for greater data retention strategies.
“There is a lot of work to be done,” he concluded, “but the good news is that a lot of this is in the control of the publishers. And if you take the strategies correctly, that is proprietary value, and you can manage your business into the future without the concern that someone is going to change an algorithm on you or delete a cookie, and all of a sudden your business is cratering. It’s an opportunity in the industry right now.”