Opinion: Down to the Last Byte

It wasn’t meant to be like this. In the 1990s, the cookie was created to play a fundamental role in helping tech companies alleviate storage problems. Back then, people accepted it as something that made the internet work seamlessly. The flip side of that acceptance is that many companies took advantage of it and abused its power.

So much so that this small (4096 Bytes) piece of code has allowed the dark side of Big Data to rise. As the internet became complexly intertwined, cross-site cookies increased the amount of data being collected and shared between platforms, publishers and marketers for mutual commercial gains. In return, consumers were promised a more “relevant” experience. Yet, as the media explored the impact of the digital world on events such as the 2016 US presidential elections and the Brexit campaign when the European Union began working on its data regulation, the full, brute force of the privacy debate hit cookies hard, leading to calls for their eradication.

Among the big tech companies, Apple was the first to capitalize on the discussion when it added its ITP (intelligent tracking prevention) feature to its Safari browser in 2017. What ITP does in simple terms is to reduce the amount of time that cookies can remain on a computer before being deleted. It used to be several days, but Apple has now cut that to 24 hours. This limits their usefulness and changes the way marketers can target consumers with relevant ads on and across platforms. With Safari constituting 15% of global web traffic, other tech giants, including Google’s Chrome and its 64% share*, eventually followed suit.

The search for what will replace the cookie is on. In a recent blog post, Google announced a new initiative to develop a set of open standards to fundamentally enhance privacy on the web. Some observers see this quest as part of a greater battle between Apple, Google, Facebook, Amazon and the likes to enrich their own ‘walled gardens’ or ecosystem. Cutting out tracking in general and cookies will inevitably lead to revenue losses for digital publishers. Google estimates this at 52%. But even without cookies, data collection goes on.

The ideal and most ethical way forward is and will continue to be log-in ID data. This level of data is not only deterministic data such as email/phone number, but also opt-in data by consumers. Apple recently introduced its own ‘log-in with Apple’ solution for its consumers, as they enhance their walled garden with services such as TV, Music, News and others like Apple Pay. This is particularly important in the mobile app space where cookies are not applicable. As log-in data is opt-in data, this approach is the right thing to do from a consumer perspective.

So, what does this all mean for individuals, businesses, the advertising industry and the tech companies?

Consumers: They will be the biggest winners. Tracking across platforms and devices will decline and data collection will focus more on opt-in models. People are increasingly ready to pay more for both a better experience (consider the rise of subscription-based services) and brands with an ethical approach to privacy. They may end up seeing less relevant or hyper-targeted ads, but these contextually placed messages will be more ‘on-topic’.

Businesses: Companies will need to decide on which side of the privacy conversation they stand. Successful businesses will be the ones investing in data specialists/partnerships to develop data strategies that will ultimately define their data purpose. One goal is to build opt-in experiences that can give consumers both a personalized journey and continuous communication. Businesses will also need to focus on value-based brand messages for the top of their funnel as performance marketing will be impacted by these changes, as will reporting in the short term. Businesses will need to either reset their reporting or plan for what measurement will look like as these changes take hold. Visitor return and conversion rates will be among the most affected metrics.

Advertising Industry: Performance marketing budgets will be negatively impacted by the changes and, as a result, so will publishers. They will have to either capture a greater share of audiences or develop more content that lives natively on other platforms. Publishers will need consumers to see this content as an essential part of their Internet experience, paying it more than occasional visits. With retargeting being affected, advertising will move back up towards the top of the funnel, with a growing focus on brand-building campaigns. They will tell stories with a stronger purpose to bring consumers closer to brands until they ultimately opt-in to hear more from them. The over-reliance on performance marketing we’ve seen over the past couple of years will begin to balance out.

Tech companies: Everyone in the advertising industry will have to work a lot harder to adapt to the new reality but tech companies have a head start. They just need to remain agile in their objectives and dynamics. One stands to gain the most from all this. The richness of Amazon’s data and its deep integration into consumers’ lives will make the e-commerce giant the ultimate winner from all these changes.

Digital marketers and publishers must explore a future beyond cookies, at least in their current form, as consumers’ trust is fraying quickly. This doesn’t mean they need to go back to square one and abandon all forms of tracking or user identification. But the changes will be significant enough to require a readjustment. There will be some pain in the process but there will also be gains. As consumers keep expecting more, businesses will adapt and lead marketing back to its core, while tech companies will grow by offering convenience-based services for all.

Fadi Maktabi is the general manager of Hearts & Science MENA