Digital advertising is rapidly changing due to the loss of third-party cookies and increased privacy regulations. Agencies, partners, and publishers need to act now to stay ahead of these changes.

Key Learning Points

• Technology changes and increased privacy regulations
• The likely impact of privacy changes on digital advertising
• Steps you can take today to get in front of privacy changes

The Start of a Journey

Whether you are an experienced online advertiser or new to the field, understanding the current landscape of ad privacy is crucial. This course will help you adjust your marketing strategies in light of privacy shifts.

Rapid Changes in Digital Advertising

Users’ increasing expectations for privacy are driving significant changes in digital advertising. According to a Pew Research study, 81% of people believe the risks of data collection outweigh the benefits. These changes include:

• New Privacy Regulations: The introduction of laws like GDPR (General Data Protection Regulation), CPRA (California Privacy Rights Act), and LGPD (Brazil Lei Geral de Proteção de Dados) has made it increasingly difficult to collect and use granular individual user data. These regulations aim to give users more control over their personal data, requiring explicit consent for data collection and use. As a result, advertisers are seeing less data in their Google Ads accounts, especially when consent banners default to rejecting cookies, which 76% of visitors ignore.
• Rise of Ad Blockers: In the US, more than 26% of internet users are using ad blockers, a number that is likely to grow. Ad blockers prevent the serving of ads and can also interfere with conversion tracking by blocking client-side JavaScript. This trend is even more pronounced among younger consumers, with 45% of individuals aged 15-33 using ad blockers. The increasing use of ad blockers presents a significant challenge for advertisers who rely on traditional ad-serving and tracking methods.
• Technology Platform Changes: Browsers like Safari and Chrome are removing the ability for advertisers to use third-party cookies to track conversions and remarket to users. Mobile operating systems, such as Apple’s iOS, are restricting tracking in apps. For example, iOS 14 restricts the use of third-party cookies on all iOS devices for Chrome, and Apple has removed the sharing of the non-consented Identifier for Advertisers (IDFA), impacting the linkage between app and web tracking.

Impact on Digital Advertising

These changes are altering many best practices in digital advertising. Advertisers are experiencing:

• Less Granular Ad Targeting and Personalization: The ability to target ads and personalize content based on user behavior is becoming less precise. Traditional methods that rely on third-party cookies are becoming ineffective as browsers and operating systems enforce stricter privacy controls. This results in less accurate audience segmentation and targeting.
• Changing Measurement Best Practices: With the loss of third-party cookies and reduced tracking capabilities, advertisers are finding it harder to measure the effectiveness of their campaigns accurately. The shortening of conversion windows and loss of view-through conversion data on browsers like Safari means that many attribution models are starting to show fewer conversions for paid media and more for “direct” traffic, even though these conversions may still result from paid campaigns.
• Ineffectiveness of Cookie-Based Marketing Tactics: Cookie-based remarketing and sophisticated targeting options, such as using third-party data providers, are becoming less reliable. As additional restrictions take effect, these methods will continue to lose effectiveness, making it increasingly difficult to reach target audiences and achieve campaign goals.

Major Changes to Watch

1. Loss of Third-Party Cookies: Browsers like Safari and Chrome are eliminating third-party cookies, which have traditionally been used to track user activity across different sites for conversion tracking and remarketing. This change significantly impacts the ability to follow users across the web and serve personalized ads. As of now, iOS 14 restricts third-party cookie usage on all iOS devices for Chrome.
2. Shorter Conversion Windows: Browsers like Safari are placing shorter expiration windows on key cookies, including those used for conversion tracking. These windows can be as short as 24 hours, which limits the ability to track longer-term conversion events and makes it harder to attribute sales and other actions to specific ad campaigns accurately.
3. Loss of App to Web Tracking: Apple’s changes in iOS 14 have also removed the sharing of the non-consented Identifier for Advertisers (IDFA), impacting the ability to link app and web tracking. Instead, Apple has started to share aggregate conversion data through their SKAdNetwork solutions, which are privacy-centric APIs designed to measure the attribution of mobile ad campaigns for iOS apps.
4. Increased Privacy Regulations: Important privacy laws like GDPR, CPRA, and LGPD are making it harder to generate and use granular individual user data. These regulations require user consent for data collection, limiting the amount of data that can be collected and used for advertising purposes. As a result, advertisers may see less data in their Google Ads accounts, especially when consent banners default to rejecting cookies.
5. Rise of Ad Blockers: The use of ad blockers is increasing, with more than 26% of US internet users blocking ads. This number is even higher among younger consumers, with 45% of individuals aged 15-33 using ad blockers. Ad blockers not only prevent the serving of ads but also make it harder to track conversions by blocking client-side JavaScript and disabling conversion tracking.

Likely Impact of Changes

If advertisers relying on traditional tracking methods don’t implement mitigation measures, they may experience:

1. Perceived Decline in ROAS: Fewer tracked conversions lead to misattributed conversions. Tracking occurs with fewer conversions of paid media, including those taking more than 24 hours and view-through conversions. Attribution models are showing fewer conversions for paid media and more for “direct” traffic, even though these conversions may result from paid campaigns. This change is particularly acute for iOS users, mobile advertising, upper-funnel campaigns, and web campaigns driving app conversions.
2. Actual Decline in ROAS for Remarketing: Traditional cookie-based remarketing is impacted by existing browser restrictions on third-party cookies. As additional restrictions take effect, it will become increasingly difficult to reach audiences and achieve campaign goals unless durable privacy-safe solutions are adopted.
3. Actual Decline in ROAS for Targeting Options: Advertisers using sophisticated targeting options, such as third-party data providers, may find these options increasingly limited over time. This results in lower ROAS as the ability to target specific users and measure the effectiveness of campaigns diminishes.

Bridging the Gap

The industry is trying to close some of these gaps. For instance, Google is working on solutions that don’t require user-level tracking to help advertisers and the advertising industry. The good news is that some of these solutions are already available:

1. Enhanced Conversions for Web: This product in Google’s privacy-centric measurement portfolio helps preserve accurate measurement when fewer cookies are available. It allows conversion tags to capture hashed consumer data that advertisers collect on their conversion page, such as an email address and matches it against Google logged-in data.
2. Conversion Modeling: This approach uses observable signals to help unlock a more complete picture of your performance in a privacy-safe way. Using observable conversion data, a machine learning model can be trained to predict and verify conversion rates for all users who interact with an ad. This allows the measurement of unobservable conversions due to browser restrictions on cookies.
3. Chrome’s Privacy Sandbox: This initiative aims to create web technologies that protect people’s privacy online and provide tools for companies and developers to build thriving digital businesses. The Attribution Reporting API, part of the Privacy Sandbox, offers a privacy-safe alternative for conversion measurement, including audience reach use cases supported by the Topics API (interest-based advertising) and FLEDGE (remarketing).
4. Consent Mode: Currently in beta for clients in the European Economic Area and UK, this allows you to adjust how your Google tags behave based on the consent status of your users. You can indicate whether consent has been granted for Analytics and Ads cookies. Google’s tags will dynamically adapt, only using measurement tools for the specified purposes when consent has been given by the user.

Recommendations for Advertisers

To get in front of these changes, advertisers should take a holistic approach with these three key actions for privacy-safe growth:

1. Build First-Party Data: As third-party data and non-consented device IDs become less readily available, advertisers who develop stronger relationships with their audiences will become an increasingly vital part of realizing the full value of their marketing investments. First-party data, such as email addresses and user purchase history, is the most accurate and privacy-safe option since users provide this information directly. This data isn’t available to advertisers’ competitors and represents information users have willingly shared with advertisers. Marketers are continuing to invest more in their first-party data relationships as third-party cookies are phased out.
2. Measure Data Accurately: Once advertisers are successfully collecting first-party data, it’s time to put it to use. Proper analysis and measurement can help ensure they see a representative view of performance across channels, allowing advertisers to generate insights and adjust their marketing strategies accordingly. Loss of measurement data, such as 24-hour conversion windows, loss of view-through conversion data on Safari, and loss of some user-level conversions in iOS apps, is already making it harder to measure the business impact of paid advertising precisely. This data loss is expected to accelerate.
   • Modernize Attribution Models: Use machine learning and conversion modeling to ensure a more complete picture for attribution in a privacy-safe way. Learn more about conversion models by checking out Think with Google.
   • Complement Attribution Models: Use other tools like Media Mix Models (MMM), modernized for the digital age. MMMs help with overall budgeting and channel allocation. Expand experimentation output — the number of tests taken from idea to scale. Find out more about media mix modeling by visiting Think with Google.
   • Adapt to Less Data: Companies comfortable making decisions with less precise data are likely to outperform. Try new things in small markets to demonstrate their impact.
3. Activate Data with Automation: By having a strong tagging infrastructure, robust first-party data, and privacy-safe measurement in place, advertisers will be ready to use Google’s automated solutions to unlock better results from their campaigns. Modeling and automation can help advertisers make the most of their first-party data by pairing it with other available signals to provide the most complete picture possible. First-party data can provide critical insights into users’ journeys from ad click to action and serve as a foundation for conversion modeling.
   • Use Machine Learning: As reaching users based on individual identifiers becomes harder, use machine learning to find the right users automatically. Share a single piece of data, the economic value of each conversion (such as lifetime value), to help machine learning grow the profitability of your advertising investment.
   • Broad Advertising Strategy: Start with a broad advertising strategy and pare it down to optimize what’s possible. Invest in a full-funnel strategy using all major Google Ads and Google Marketing Platform products to significantly increase conversions over time at your current cost-per-acquisition (CPA) or return on ad spend (ROAS). Learn more about full-funnel marketing by navigating to Think with Google.

Key Takeaways

• Privacy Expectations: Users’ increased expectations for privacy are driving rapid change in digital advertising. These changes include new privacy regulations and the rise of ad blockers. They also include the decrease in the availability of data used for measurement and targeting, such as browsers blocking third-party cookies and Apple restricting tracking on iOS.
• Impact on ROAS: Without action, advertisers may see a decline in ROAS from various tactics. The likely impact could include a perceived decline in the ROAS of paid ad campaigns and an actual decline in the ROAS of network-based remarketing and explicit targeting options.
• Google Solutions: Google is working on solutions that don’t need user-level tracking to help advertisers and the advertising industry. These include enhanced conversions, conversion modeling, proposals in Chrome’s Privacy Sandbox, and the Attribution Reporting API.
• Holistic Approach: Advertisers should adopt a holistic approach to privacy-safe growth. This includes creating a more durable user data infrastructure by building first-party data, measuring data accurately by evolving measurement strategies, adding data to models, and activating data by automating advertising strategies with machine learning. First-party data is poised to play an important role in the future of digital advertising.

The following are the questions from this article:

• Q: Your client is eager to kick off their privacy strategy. What’s one step your client can take today to get in front of ongoing privacy changes that are likely to affect the way data is collected?
• Q: The Chrome and Android Privacy Sandbox supports which two key advertising use cases?
• Q: Which Chrome and Android Privacy Sandbox API aims to measure campaign performance without third-party cookies?
• Q: Why are traditional methods of tracking becoming less reliable?

Resources

To learn more about this topic, select the following links.

• What’s the Difference Between First-Party and Third-Party Cookies | Article ↗
• Charting a Course Towards a More Privacy-First Web | Article ↗
• Take These 3 Key Actions for Privacy-Safe Growth | Article ↗
• The Digital Marketing Playbook for Driving Privacy and Performance | Guide ↗
• The Publisher’s Playbook for Navigating Today’s Privacy Environment | Guide ↗
• New Ways for Publishers to Activate First-Party Data | Article ↗
• New European Research on the Privacy-Focused Future | Article ↗
• Future-Proofing Ad Sales Growth Through First-Party Data | Deck ↗