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What Apple's privacy update means for advertisers worldwide

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Apple's new privacy update sent the world of advertising in somewhat of a turmoil. With the possibility for users to choose which apps track their data, a debate was started asto whether this was something Apple should do or not.

First, Facebook briefly exchanged blows with the Cupertino giant, arguing that small advertisers would be hurt by this new policy – while Apple focused most of its arguments on the importance of privacy. And when we think about consumers, we can see why it makes for a much safer and more private navigation experience. Keeping that in mind, how can brands and advertisers find a way to circumvent this new challenge? How can we compete in a cookieless future?

We reached out to Yaron Galai, Co-Founder and Co-CEO at Outbrain, to learn more about the topic below.

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What the end of third-party cookies means for marketers and advertisers

In 1994, a 23-year-old computer programmer by the name of Lou Montulli invented a tool that would help websites remember its users. Known as cookies, it rapidly became apparent that this script could be used to track users across the web. The advertising industry quickly took note, embracing the technology as a way of delivering targeted ads to potential customers.

Almost 30 years later, and we are now witnessing what looks to be the return to the initial intent of the cookies: remembering users - yes; targeting users across the internet - no. Tech giants, including Google and Apple, have their sights firmly set on data privacy. As part of their broader strategies to protect the data of their customers, they are seeking to eliminate the use of third-party cookies on their platforms. 

A product of shifting consumer sentiment  

The decision made by the tech giants to target third-party cookies should come as very little surprise. As more and more people engage with online platforms, general market awareness of data security and data protection is rapidly increasing. Multiple surveys have shown that consumers are not comfortable knowing that their data can be accessed and shared between data markets and leveraged by advertising vendors.

For example, a prominent study by the Pew Research Center revealed that 72% of people feel that almost all of what they do is being tracked online by different stakeholders, be it advertisers through to tech firms. What’s more, 81% of those surveyed said that the potential risks they face because of data collection outweighs any benefit received.

Tech firms have been closely monitoring shifting public sentiment over the last decade. As early as 2013, browsers such as Firefox and Safari allowed for the blocked third-party cookies, while in 2019, Safari started disabling cookies after seven days. This has initiated a snowball effect which has now taken hold of the entire industry.

Of course, we must remember to take into consideration the challenges and obstacles that stakeholders will face during this current period of cookie reform. Advertisers, publishers, and data platforms have all come to rely on third party cookies as means of generating revenue.

The fact that third-party cookies are being stamped out means that these organisations need to review and adapt their existing data solutions. The process could be complicated and expensive – according to an analysis by McKinsey & Company, the publishing industry will have to replace up to $10 billion in ad revenue through first-party data gathering.

Should marketers and advertisers be worried?

While there will be initial pain points, there is a huge opportunity for marketers to engage with users while respecting their privacy in a post-cookie world. Although targeted content and advertising have naturally made consumers cautious, questioning just who has access to their data and how this information is being used, personalised advertising and marketing tools will remain practical and useful going forward.

In particular, there will still be opportunities for brands to reach younger demographics using their data. According to a study conducted by the Open Data Institute (ODI) and YouGov in the UK, around 25 percent of young adults feel comfortable sharing personal data with social media companies. As a demographic, they appreciate the benefits that it brings in terms of enhancing their user experience by creating personalised content feeds that are more relevant to their interests and purchasing behaviours.

However, Apple’s new privacy setting creates more challenges for brands targeting consumers who are less tolerant of data sharing. For example, only eight percent of adults aged 45-54 feel comfortable sharing personal data with social media companies. Brands need to think of new ways to reach these consumers online effectively, with limited user data.

Some brands have already started to activate first-party user data in their advertising campaigns through existing CRM systems and CDP platforms. Such an approach will ensure that they can deliver targeted marketing and sales collateral to their existing customer base. However, other brands are taking a wait and see approach before properly assessing how they can best manage their transition to a cookie-less future. Given the time and investment that such a transition will require, it is understandable why some brands are not committing to a particular course of action just yet. However, there is also a risk these brands will be playing catch-up if the market moves quickly.

Marketing in a cookie-less future

Apple’s data privacy update is compelling brands to look to new marketing channels and platforms that do not rely on cookie-based attribution and instead embrace machine learning and automation.

Cookies were never intended to be used for long-term targeting of web users. They also only provide a limited snapshot of the user, without any real context to properly understand the profile of the individual.

Some of the biggest obstacles to innovation are complacency and inertia.

Effective targeting campaigns need to be informed by two factors – context and interest. Rather than generating an instant profile of a user, technologies, including AI and machine learning, can be applied to analyse clicks and engagements on a publisher network, building an in-depth understanding of users and presenting them with quality recommendations. Rather than crudely promoting a product or service, these networks can ensure that marketers are able to implement more effective and efficient communication strategies.

Some of the biggest obstacles to innovation are complacency and inertia. While there is no doubt that technology has revolutionised the advertising and marketing industries, it would be wrong to assume that we have witnessed the full potential of this transformation. Innovation is by no means static, and any forward-facing business knows that keeping one step ahead of the competition means understanding what new innovations lie on the horizon. So, with many of the leading businesses of today being those that were the first to leverage the power of cookies, the leading organisations of tomorrow will be those that can harness new marketing technologies.

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