—With privacy protections being strengthened around the world, digital marketing based on third-party data will be changed forever. Jed Schneiderman explains what fewer cookies could mean to marketing and media in the months and years ahead—

Privacy was undoubtedly one of the most important stories of the year in 2019.

The public’s outrage over almost daily data breaches—combined with fast and loose data policies exemplified by the 2018 Cambridge Analytica scandal—have percolated into widespread calls for action.

Legislators around the world want to be seen as guardians of the public interest through legislation like the GDPR (General Data Protection Regulation) and the CCPA (California Consumer Privacy Act). Meanwhile, the calls to update Canadian data policy are increasing.

Apple and Mozilla Firefox have responded with solutions for a public whose trust in data has been shattered—enabling no tracking by default in their products. Even the data-happy Google shows signs of changing with the times, allowing users to turn off third-party tracking.

Loudly and clearly, consumers are asking for control over their data. Whether the proposed solutions will give back the desired control is up for debate. But one thing is clear: the movement is taking aim at third-party data cookies and all they entail.

So how does the US$19 billion third-party data marketing industry react to its bread and butter—or in this case, its cookies—disappearing?

As the cookie crumbles

Currently, third party data is the stock and trade of digital marketers. Both pixels (which track whether a user has viewed an ad), and click trackers (which track if a user clicks on an ad), use third-party cookies to operate. These provide insights that help optimize everything from media spend to brand messaging. Brands and agencies alike are thrilled to quantify the sometimes mystical results of marketing budgets.

Consumers get better user experiences, more relevant advertising, and free access to high-quality content. That content also comes from more diverse sources, as independent publishers have an easier time funding their work.

Not with a bang, but with a whimper

Third-party data will not instantly disappear. But as fewer consumers allow third-party cookie tracking, its effectiveness decreases. The new restrictions coming from GDPR, CCPA and other copycats will only accelerate this decline in favour of first and second- party data.

Under GDPR, a company must justify why it is collecting the data it is, and can be held liable for a third party’s lack of compliance. CCPA requires that consumers can opt out of the collection of third-party data, and allows them the right to sue over data breaches.

Larger online players like Facebook, Google or Amazon will have some of their data gathering curtailed by the incoming legislation. However, their audience size and ability to collect user data to provide better service will allow them to remain dominant in the ad marketplace.

Unfortunately, many smaller third-party data aggregators and advertisers will be hit harder, and might even disappear.

Walled gardens become islands

As third-party data aggregators decline, individual publishers will have to collect, measure, and use data independently.

Without third-party data, consumer activity inside each walled garden can no longer be linked to activity outside. This will further incentivize publishers to keep consumers within their own walled gardens as much as possible. In response, publishers are tying their rafts together to make conglomerated first-party networks. These will have larger audiences and datasets, and be more attractive to advertisers.

Meanwhile, smaller niche publishers—with less data—will have a harder time convincing advertisers of their platform’s independent value. Likely, they will move their content publishing onto one of the larger walled gardens, or fold.

In this way, each walled garden will become an isolated island of data.

A question of agencies

Brands are increasingly approaching vendors directly to save costs, leading to questions about the role of media agencies.

However, the forming of “islands” of data made from multiple publishers creates a new opportunity for agencies. Agencies can combine data at the source through second party provisions to provide net new value for the brands they work with.

Loyalty royalty

As first-party data dominates, brands that invest in collecting quality first-party data—such as through robust loyalty programs—will have a strong advantage.

Similarly, ad tech vendors can create substantial value through enriching this data and providing actionable insights.

Mobile moment

Mobile devices already contain richer data about consumers. With desktop browsers increasingly blocking cookies, advertising in mobile applications becomes even more valuable.

However, advertisers need to be aware of the enormous trust they have been given. When a consumer downloads an app on their phone, they are informed of what permissions that app requests, and can accept or deny each one.

But part of the issue with cookies was that consumers generally had no idea what information was being collected and for what purpose. Advertisers should be careful to not betray this trust, or they could trigger a new consumer privacy backlash in mobile.

Guidelines for a Braver Data Future

So what should brands and businesses in data be doing to adjust for this new world?

Get Leaner: Contrary to much of the prevailing wisdom, bigger is not better when it comes to data. Only measuring the right thing will get the right results. Collecting and storing extraneous data is costly and a liability. Be selective about what data is collected, and remove data when it is no longer relevant.

Get Consent: Build back consumer trust by actively informing and involving them when collecting data. When partnering with data collectors, ensure an unbroken chain of consent.

Go Diverse: Verified advertising across the web will be on fewer platforms or networks, and more expensive. Brands and agencies can diversify their data sources to gain meaningful insights and invest in solutions to bring it all together.

Partner Deeper: Disruption will strengthen the importance of relationships. Agencies, vendors and publishers that commit to full transparency and deepening their relationships with brands will unlock greater value for everyone.

Be Brave: Remember that the future of data and marketing is being written right now. Every player has an opportunity to affect the industry and decide what the future holds.

Much like a forest fire allows for new growth, the crumbling of the cookie will make space for better, more accurate technologies.

Jed Schneiderman is the EVP, growth and marketing at EQ Works. He is also the co-founder of M2T Collective (www.m2tcollective.com) a full-time, year-long opportunity to work with four companies within the marketing, media and technology space. Prior to this, Schneiderman was the president and co-founder of Tapped Mobile, and has held director and senior roles at Microsoft, Bell Media and Procter & Gamble.