News companies can thrive after the (delayed) cookie apocalypse
Smart Data Initiative Blog | 30 June 2021
Last week, Google announced it has rescheduled the phaseout of third-party cookies in its Chrome browser to late 2023. This means the “cookie apocalypse” dreaded by news publishers has been delayed, but not called off.
“Google has proposed a number of new targeting technologies that will be the alternatives to third-party cookies,” said INMA Researcher-in-Residence Greg Piechota at the Smart Data Initiative Meet-Up on Wednesday.
These new technologies, or APIs, would be global Web standards. But as of June, only four out of 30 APIs were ready for testing. And Google was facing criticism about the pace of these changes and its solutions, as well as scrutiny from regulators. This led to the delay in phasing out third-party cookies.
Piechota, who also heads up the INMA Smart Data Initiative, shared the new timeline with INMA members:
Stage 0: Development. Over the next year Google will discuss new APIs with the industry bodies, test the new APIs, and iterate based on feedback.
Stage 1: Adoption. Sometime in late 2022, all the new APIs will be launched in Chrome, and the industry will get nine months to migrate services.
Stage 2: Phase-out. Starting in mid-2023, Chrome will phase out third-party cookies over a three-month period.
“What does it really mean for news publishers?” Piechota posed. “Why does it matter?”
For one thing, the answer lies in the fact that Chrome is the most popular Web browser in the world, and Google is the leading ad tech provider for the industry. Third-party cookies are the backbone of online display ads. Disabling third-party cookies may lead to a drop in online ad revenue of up to 38%-70%.
While we know the risks, the industry isn’t sure of alternatives, Piechota said. Keep in mind there is no immediate change or impact to Google products today, but publishers must plan for the implemented changes coming.
“We see in general that this change is much bigger than just what is happening with Google and Chrome. We see a big shift towards a more private Web.”
Consumers expect more privacy on the Web, with nearly 50% using an ad-blocker in 2019 across the globe. Regulators also increasingly ask publishers for consent to collect and process users’ personal data. Other tech companies, such as Apple Safari and Mozilla Firefox, have already started blocking tracking by third-party cookies by default.
Publishers have been strategising their responses, and most INMA members have reported feeling only moderately prepared — especially considering that more than half are very reliant on third-party cookies for digital ad revenue, with one-third being moderately reliant.
Piechota said the online world after the cookie apocalypse will likely be built on many pillars including logged-in users, shared IDs, publisher segmentation, FLOCs and other cohorts, and contextual. And while first-party data is a gold mine, it has its limitations, according to chief economist of IAB in Europe, Daniel Knapp.
“Data on content usage covers only a slice of people’s activities,” Knapp said. “It says little about intent, shopping decisions, and offline behaviour. Publishers need to bridge this gap through research and data partnerships.”
An expert panel consisting of executives from several different companies discussed the path forward for publishers to thrive after the demise of third-party cookies.
Expert panel: Where are we and what’s next?
One question Piechota posed was this: Should publishers slow down their preparations for the cookie apocalypse in light of Google’s delay?
Kathrine Saastad, chief executive officer of Diar in Norway, gave a definitive answer: No.
“I don’t think anyone should slow down in this cookie apocalypse. Publishers need to understand that what is happening is a window of opportunity for them to increase the focus on their own data.”
First-party data is a much more scalable solution, Saastad said. Diar is already building a first-party data system with logged-in users — but Piechota acknowledged this is not the reality for most publishers.
Jakob Bak, director of Adform in Denmark, said first-party data still doesn’t represent large percentages of user data. While the users of big publishers in Europe, in particular, might be logged-in, they don’t pass on a lot of ID.
“It’s primarily made up of random first-party cookies that each publisher sets,” Bak said. “We also see quite a bit of logged-in IDs. What we cannot see is which of the IDs they actually have a log-in on and which ones they don’t.”
Based on all the publishers he’s talked to, he estimated logged-in first-party data is still probably below 10%. However, he is still optimistic when he looks at companies like Facebook. The reason they have such a huge advertising market share is because they operate on first-party data and logged-in IDs — far better than third-party cookies that only live for a week.
“I believe when they do the migration to a first-party world, whether it’s a random cookie or it’s a logged-in user, they can actually make the same amount of money as they can when based on third-party cookies,” Bak said. “So I don’t share the negative outlook, provided that publishers take the time to really migrate to that Facebook world.”
When you look at premium publishers, he said he believes they will make more money in the first-party cookie world because their data becomes a scarce resource.
“They will become the few that have the audiences advertisers need, and they cannot get that from third-party data provided anymore. So for some publishers, I think this change is a very good thing. But of course, for some publishers — especially those that have no data — that becomes less valuable in a world without third-party cookies.”
Piechota asked Saastad what Diar had done to prepare for the first-party world. She first pointed out that Diar was created as a joint venture within Aller Media and Amedia 14 months ago to be more agile, as small companies are more agile by nature than large ones.
“Our main focus is to make sure that the market benefits from the data,” she said. “So we have been developing our [self-serve ad] marketplace with first-party data. We all know when you are competing with data, you are also competing with Google and Facebook and everyone else. If you’re going to compete, you have to be on the same level.”
When publishers are talking to ad tech vendors, what should they be asking?
Bak said two weeks ago, his answer to this question would have been different, with much more urgency. Now that Google has delayed the cookie apocalypse, it depends on where a publisher is on this journey.
“A very simple thing to get started with, if nothing has been done, is to start passing first-party IDs. That brings automatically more revenue. The second step is collecting data based on these first-party IDs — so data that will work in the future. The third step is to figure out, how do I make those audiences available to the buyers in the best way?”
One way is to build a self-service ad platform, like Diar has done. Another is to use an agency or a platform like Adform.
The promise of first-party data
How do publishers move from strategy to tactics? Piechota led INMA members through the building blocks for first-party data strategies, which focus on identification and addressability.
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These building blocks usually include tech stack and data governance. Tactically, they focus on registering more users and enriching profiles. Piechota also shared best practices in identifying users.
“As reader strategies and ad revenue strategies converge, publishers refocus on registering users. What I can tell you based on our top 50 news subscription news sites in the world, we can see that people give you their data in exchange for something. You need to have a value proposition.”
These can include newsletters, apps, personalised content, the ability to comment or bookmark articles, or to read more content for free. To drive the volume of registered users, publishers should first drive exposure.
“Registration rates are rather low,” Piechota said. “The median rate is around 3%. We think the primary driver to register more people is to focus on exposure. Basically, you need to stop more people to see your registration offers.”
Then, publishers must focus on conversion. To drive conversion, make the registration flow frictionless. Leading publishers ask for very little data in the beginning — typically only an e-mail address — adding more data points such as password, name, gender, or country later in the flow.
Piechota pointed to Amedia in Norway as a publisher that does this very well. Subscriptions lead a path to Amedia’s walled garden at a scale competitive to the platforms. By the end of the first quarter 2021, the company saw 84% logged-in page views.
“It took them two years to get to 50% and four years to reach 75%,” Piechota explained.
He looked to The New York Times as a good example of driving exposure, where a registration wall drives sign-ups. The company recently reported that at the end of Q1 2021, two years after launching this registration wall, it had reached 100 million registered users.
“You can compare the performance of the registration wall for content versus registering people for newsletters, which is currently the most popular tactic amongst publishers,” he said. “The New York Times said they have 15 million people registered for their 70 newsletters — so they wouldn’t achieve 100 million just registering people for newsletters. They needed to stop people and register them for access to stories.”
News24 in South Africa was highlighted as a publisher that does a great job in simplifying the registration flow to drive conversion. By optimising its mobile app sign-ups, the company achieved a rate of 91% of mobile app users in Q1 2021 who were registered and logged in.
“There is one more thing we should probably mention,” Piechota said. “We need not only to ask for them to be registered, but also get their consent to use their data for targeting and personalising the advertisements. This is going to be an important part of our products in the future.”
In fact, users’ consent is the new currency in the post-cookie advertising world. If a user gives consent to use their data for personalised ads, the publisher can add her to a segment based on her data, allowing advertisers to target based on that segment. If the user does not give their consent, the publisher can only analyse the content they read and advertisers can only target contextually.
Expert panel: How to get and grow business with first-party data
Thomas Lue Lytzen, director of ad sales and tech at Ekstra Bladet in Denmark, discussed the building blocks his company has used for first-party data.
“I think the first thing you need to recognise is that the data strategy itself is just one building block within your entire strategy,” he said. “We started out on the advertisers’ business because we saw the lowest-hanging fruit, because targeting was really restricted in Denmark. What we’ve done data-wise is kind of a 360-degree approach because it also ties into our digital subscription business, in how we promote content to users.
“Everything needs to fit in. You need to realise that just plugging in an advertising DMP won’t solve anything because if you want true first-party data. You need to look at how many you can get to log in.”
This strategy must be central to the entire business, Lytzen added. Then, a company needs to start looking at tech — whether to build it or look to an outside source. Ekstra Bladet teams built the tech themselves to tailor it to their specific needs.This also enables them to speed up the process, not having to wait for certain features. Data analysts and AI techs are incorporated with this tech.
Piechota then turned to Max Gendler, manager of data governance for The New York Times, to ask how his company prioritises registration against subscription.
Gendler said the question presented a false dichotomy. “I don’t think we ever weigh it as, it’s either a registration or subscription — we see it as an eventual path towards getting subscribers.”
Over the years, The Times team has learned that registered users have a higher tendency to subscribe. Creating habits for users and engaging them to return again and again creates a propensity to subscribe.
“You don’t need to see it as a trade-off,” Gendler said. “You need to think about what your user wants at the end of the day, focus on the user, and that will lead naturally to registrations and then eventually to subscriptions.”
What about publishers who fear that if they require registration, people will leave their Web sites and traffic will go down?
“What did you learn after raising your registration wall?” Piechota asked Gendler.
Gendler echoed what Lytzen said about a 360 view. When working with data, The Times team considers what the user is actually coming to its Web site for. Without registration, they did not know enough about their users.
“If you focus on the strategy not as a ‘what helps us as a business,’ but ‘what helps our core demographic, what helps our readers,’ that’s where you can understand what the real value of registrations or subscriptions can be to the user.”
While newsletters are a very popular way to achieve registration, Gendler pointed out that is still off-platform. Publishers should focus on what they can offer their users through registration on their Web sites. When an organisation can answer that question for itself — and he said it will be a different answer for each newspaper — they will find their own strategic path.
“Once you’ve teased out what the benefits [of registration] are, not just to yourself but to your users, then you’ll see the long-term benefits of this type of program,” he said.
Piechota highlighted several key takeaways from the Meet-Up:
Some well-prepared publishers became so confident they can’t wait for the cookie apocalypse.
As time goes by, the apocalypse looks less scary, and in fact can actually present an opportunity.
Publishers are getting better in mining first-party data.
Thinking of data, one should prioritise users and not advertisers.
Two years ago, pioneers had to build new data tech stack because solutions weren’t available on the market, and today they are.
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