What brands should know about the digital advertising privacy shake-up

The rapid shift to pri­va­cy-cen­tric tech­nol­o­gy is a major chal­lenge for the dig­i­tal ad world. As tech giants Apple and Google make sweep­ing changes to the core of their plat­forms, how can brands con­tin­ue to effec­tive­ly tar­get users and mea­sure ad cam­paigns? 

The Apple and Google pri­va­cy changes have been in the mak­ing for over two years. They start­ed to become a real­i­ty last year when Apple released its iOS 14.5 soft­ware. This asked con­sumers to active­ly opt-in to track­ing through the iden­ti­fi­er for adver­tis­ers (IDFA) – the unique code assigned to each person’s iPhone. Mean­while, Google will kill third-par­ty cook­ies in its mar­ket-lead­ing Chrome brows­er by 2023.

Both changes mark a huge shift for mar­keters. They’re used to being able to track users – albeit anony­mous­ly – across plat­forms and devices, before serv­ing them rel­e­vant ads. As Google and Apple move away from what’s now seen as inva­sive track­ing, brand adver­tis­ers are being forced to com­plete­ly rethink their strate­gies.

But the path to pri­va­cy hasn’t been smooth. Google’s third-par­ty cook­ie changes have already faced obsta­cles. Launched last year, the firm’s orig­i­nal Fed­er­at­ed Learn­ing of Cohorts (FLoC) alter­na­tive failed after oppo­si­tion from reg­u­la­tors and pri­va­cy advo­cates, who said it risked unique­ly iden­ti­fy­ing users.

Google quick­ly respond­ed with a new solu­tion, Top­ics, which is seen as more pri­va­cy-cen­tric because it allows adver­tis­ers to broad­ly serve con­tent based on a user’s inter­ests, rather than the spe­cif­ic sites they vis­it. 

Measurement challenges

Top­ics is viewed as a win for con­sumers. How­ev­er, Google’s move away from third-par­ty cook­ies – the track­ers that fol­low peo­ple around the web – will chal­lenge the brands that once relied upon them. One of the biggest obsta­cles will be mea­sure­ment. 

“We use cook­ies to track how many peo­ple have seen an ad and the num­ber of times they have viewed it,” says Andrew Spurri­er-Dawes, head of pre­ci­sion at Wave­mak­er EMEA. “We do not want peo­ple to see our ad so often it becomes irri­tat­ing, and these changes will make it hard­er to do that auto­mat­i­cal­ly; we have to build it into our plan­ning instead.”

The demise of third-par­ty cook­ies and move to Top­ics means brand adver­tis­ers will lose gran­u­lar­i­ty, says Ben Fos­ter, man­ag­ing part­ner, dig­i­tal at the Kite Fac­to­ry. “We won’t know about a cer­tain prod­uct, just a whole range.”

Accord­ing to Fos­ter, Google’s Top­ics will make retar­get­ing a chal­lenge and response rates will be impact­ed. “Cur­rent­ly, when some­one engages with your con­tent, you can build a bespoke audi­ence and tar­get them with anoth­er mes­sage. That doesn’t exist under Top­ics,” he says. “Top­ics are pre­de­fined seg­ments and not bespoke, so the change is not sup­port­ing that retar­get­ing, and you’ll get low­er response rates. You will also have to piv­ot your strat­e­gy to con­tin­ue the con­ver­sa­tion with peo­ple. You can’t bring them back after ini­tial research to pur­chase.”

With the loss of gran­u­lar­i­ty, com­pa­nies will need to obtain com­pli­ant data cap­ture through their web­sites, says Fos­ter: for exam­ple, encour­ag­ing peo­ple to share their email address. 

So where does this leave the adver­tis­er? Some in the indus­try are pos­i­tive about the changes. Solu­tions like Top­ics can be used in con­junc­tion with con­tex­tu­al con­tent, says Alex­is Faulkn­er, chief dig­i­tal offi­cer at Mind­share UK. First-par­ty cook­ies – which track users with­in the web­site they’re vis­it­ing – will also con­tin­ue to play a key role through options such as social media plat­forms, which are still able to col­lect large amounts of data. 

At the same time, there’s an oppor­tu­ni­ty for tra­di­tion­al media like TV, radio and out of home (such as bill­boards and bus shel­ters) to “remind adver­tis­ers of their var­i­ous strengths” as they com­pete for a big­ger share of ad spend, Faulkn­er says.

Top­ics enables a move to con­tex­tu­al adver­tis­ing, agrees Lor­raine Bar­ber-Miller, chief mar­ket­ing and e‑commerce offi­cer at Philips. “Brands need to recon­nect their mar­ket­ing with their val­ues and where they want to adver­tise. In many ways, third-par­ty cook­ies made it tempt­ing to aban­don the con­tex­tu­al approach in favour of chas­ing clicks around the inter­net and blind­ly trust­ing algo­rithms with the data they col­lect­ed.”

Targeting consumers in a new digital world

The future of adver­tis­ing is rapid­ly shift­ing in line with dig­i­tal pri­va­cy changes. It’s now key to unlock first-par­ty data to offer val­ue for con­sumers, major brands say. Heineken USA has changed the way it thinks about data as a part of the cus­tomer jour­ney. 

“While we knew the demise of third-par­ty cook­ies would have a sig­nif­i­cant impact on how we adver­tise and mea­sure the effec­tive­ness of our cam­paigns, we realised it would be the push to build rela­tion­ships direct­ly with con­sumers and pro­vide them with addi­tion­al val­ue in exchange for data,” says Rebekah Kennedy, direc­tor, con­sumer data strat­e­gy at The Heineken Com­pa­ny. “With third par­ty data becom­ing less reli­able – and Apple and Google lim­it­ing cross-app track­ing – we need­ed to start col­lect­ing and using con­sent­ed first par­ty data to future-proof our busi­ness.”

Heineken USA had to rethink its data man­age­ment plat­form (DMP), which it used for tar­get­ed adver­tis­ing. “Since DMPs rely heav­i­ly on third-par­ty cook­ies, we need­ed a way to make up for the data we would lose when cook­ies are phased out,” says Kennedy. “With DMPs, match rates were already sub-par, and we want­ed to test build­ing looka­like audi­ences with first-par­ty data.”

Using its cus­tomer data plat­form Blue­Con­ic, Heineken USA start­ed to build up first-par­ty data through its direct-to-con­sumer chan­nels such as its web­site and offline events. As a result, the alco­hol brand has been able to analyse its audi­ence to bet­ter under­stand, for exam­ple, pre­vi­ous events they’ve attend­ed and drinks they’ve sam­pled, inform­ing engage­ment efforts. “We’re con­tin­u­ing to test cook­ie-less solu­tions and refin­ing our approach based on this,” says Kennedy. 

Pete Jeav­ons, mar­ket­ing com­mu­ni­ca­tions direc­tor at BT Con­sumer, says the firm has revised its media mea­sure­ment method­olo­gies by using adtech to get a bet­ter under­stand­ing of mar­ket­ing return on invest­ment. “With less track­ing, the econo­met­ric mod­els we use to give us short and long-term reads on adver­tis­ing per­for­mance are more impor­tant than ever before. We also now need more spe­cif­ic media exper­i­ments – such as A/B tests [which gauge people’s respons­es to dif­fer­ent vari­ants] – to prove the val­ue of new plat­forms, pub­lish­ers or tac­tics.”

Mea­sure­ment remains “a tough nut to crack”, says Bar­ber-Miller. While brands can use new strate­gies to reach audi­ences, basics like cross-chan­nel reach and fre­quen­cy cap­ping will “have to be com­plete­ly revised”. 

Bar­ber-Miller says first-par­ty data “has been the fore­front of our strat­e­gy for quite some time now”, and Philips has been invest­ing in mar­ket­ing mix mod­el­ling.

The mobile privacy shift 

While the demise of third-par­ty cook­ies marks a huge adjust­ment in web adver­tis­ing, it’s accom­pa­nied by a sim­i­lar shift in mobile towards pri­va­cy-focused solu­tions. This is being led by iPhone mak­er Apple, which has already imple­ment­ed its App Track­ing Trans­paren­cy iOS fea­tures that ban track­ing between apps and web­sites. The move has hit com­pa­nies hard, par­tic­u­lar­ly ad giant Face­book, which says it will lose $10bn due to the changes.

It’s a seri­ous mat­ter. Accord­ing to esti­mates, around 75% of Apple users are opt­ing out from track­ing, pre­vent­ing Face­book from mea­sur­ing the effec­tive­ness of cam­paigns.

Reduc­ing Facebook’s pow­er to micro-tar­get its user base comes as “a huge finan­cial blow”, says Jake Moore, glob­al cyber­se­cu­ri­ty advi­sor at secu­ri­ty com­pa­ny ESET. “Face­book offers a wealth of user data, which is a gold­mine for adver­tis­ers. By effec­tive­ly turn­ing off the IDFA and lim­it­ing the abil­i­ty for busi­ness­es to mea­sure per­for­mance, Face­book has and will be seri­ous­ly affect­ed, espe­cial­ly when cou­pled with a recent reduc­tion in active dai­ly users on the plat­form.”

Fol­low­ing the Apple pri­va­cy changes, adver­tis­ers can no longer see when some­one was served an ad on Face­book and went to the brand’s web­site to buy a prod­uct. This makes it hard­er for adver­tis­ers to tar­get users on Face­book and its sis­ter site Insta­gram. “If peo­ple don’t allow Face­book to col­lect the IDFA, it doesn’t know if an ad has result­ed in some­one com­plet­ing an action like buy­ing a prod­uct,” says Spurri­er-Dawes. “This means they are unable to build mod­els of peo­ple who have sim­i­lar inter­ests and actions for the adver­tis­er to show ads to.”

For Apple, the iOS pri­va­cy changes are a no-brain­er. Apple’s mar­ket­ing has long focused on pri­va­cy as a unique sell­ing point. But for Google, which is intro­duc­ing sim­i­lar changes in its Android oper­at­ing sys­tem, things are not as sim­ple. In con­trast to Apple, Google’s rev­enue is based on adver­tis­ing, so the changes com­ing to Android are not as dras­tic and will come into place after two years, giv­ing brands time to adjust their strate­gies. 

“Apple has noth­ing to lose, but if Google makes adver­tis­ing hard­er – via being expen­sive or because response rates drop – adver­tis­ers will go else­where,” says Fos­ter. “Mon­ey flows to what works at any giv­en time. There is no loy­al­ty; it’s based on per­for­mance and if some­thing works, brands will move very quick­ly.”

There’s no doubt about it: The land­scape is chang­ing and brands able to adjust to shift­ing con­sumer per­cep­tions will be the win­ners in this brave new dig­i­tal world. Like Apple, many brands are look­ing at trust as a point of dif­fer­en­ti­a­tion. “It is [a customer’s] data, and they should have the flex­i­bil­i­ty to choose the lev­el of engage­ment they want to have with the brands they trust,” says Bar­ber-Miller. 

If a brand is unable to sur­vive with­out invad­ing cus­tomers’ pri­va­cy, it is “a bad busi­ness”, says Spurri­er-Dawes. “Law­mak­ers are mak­ing it clear that users need to con­sent to share data and peo­ple are opt­ing out, so brands need to plan for this even­tu­al­i­ty. This should be seen as pos­i­tive. Brands need to exam­ine why any­one would give them per­mis­sion to col­lect, store and use their data, and give real val­ue back to cus­tomers.”

Amazon and TikTok: the next players in digital ads?

Pri­va­cy changes affect­ing dig­i­tal adver­tis­ing could see the likes of Ama­zon and Tik­Tok become the next big play­ers in the indus­try. Near­ly 40% of search­es start on Ama­zon and the online giant is large­ly unaf­fect­ed by cook­ie changes. 

Ama­zon has revealed it makes near­ly $10bn (around £7.6 bn) a quar­ter in ad rev­enue. This puts it ahead of Microsoft’s 2021 rev­enue of $10bn as well as Google’s YouTube video plat­form. Speak­ing on Amazon’s fourth quar­ter earn­ings call, the firm’s CFO Bri­an Olsavsky said the com­pa­ny has sep­a­rat­ed adver­tis­ing ser­vices results from its oth­er rev­enues. “Of course, adver­tis­ing only works if we make it use­ful for Ama­zon cus­tomers, and when we cre­ate great cus­tomer expe­ri­ences, we deliv­er bet­ter out­comes for brands.”

As mar­keters learn this new plat­form and Ama­zon refines its capa­bil­i­ties, this area is set for even more growth, mar­keters say. “Adver­tis­ers pay for search adver­tis­ing with­in Ama­zon much like you would in Google, with sim­i­lar fea­tures and a huge data envi­ron­ment around pur­chase behav­iours,” says Faulkn­er. 

Ama­zon car parts and acces­sories sales are attract­ing car com­pa­nies, while its invest­ment in live sports opens up new video oppor­tu­ni­ties, she says.

At the same time, Tik­Tok is invest­ing heav­i­ly in tripling its adver­tis­ing rev­enue to $12bn in 2022 after dou­bling the size of its adver­tis­ing prod­ucts and tech­ni­cal teams in 2021. With over 1 bil­lion active users, Tik­Tok is in a strong posi­tion to com­pete with Google and Face­book.

Bar­ber-Miller thinks it’s like­ly the “walled gar­dens” of Ama­zon and Tik­Tok will fur­ther grow as they are able to attract more adver­tis­ing rev­enue. But she says Philips will also invest with small­er retail­ers and pub­lish­ers as well as niche plat­forms. “We all need to devel­op a sus­tain­able media land­scape that’s pri­va­cy-first and future-proof by mak­ing thought­ful invest­ments with our adver­tis­ing spend.”

In this com­pet­i­tive land­scape, the own­ers of qual­i­ty data and con­tent will win, says Spurri­er-Dawes. It will always be impor­tant for ads to appear next to qual­i­ty con­tent, he says.  “Qual­i­ty can be defined in many ways, from lots of eye­balls and time spent on a site through to a high stan­dard of jour­nal­ism com­bined with a brand-safe envi­ron­ment.”
Retail­ers and pub­lish­ers could offer a “qual­i­ty inter­ac­tion” with the con­sumer along­side per­mis­sions to col­lect data in exchange for val­ue, Spurri­er-Dawes says. Wal­mart, which is rebrand­ing and expand­ing its dig­i­tal adver­tis­ing unit to take on Google and Face­book, is one exam­ple. Tesco’s Club­card also offers a wealth of oppor­tu­ni­ties.