Consumer/Analysis/ The cookie crumbles — which adtechs will pick up the crumbs? The phasing out of the third party cookie has put the ad industry in a spin — but it's creating opportunities for new adtech startups By Éanna Kelly 25 February 2022 Source: ShowHeroes Group Source: ShowHeroes Group \Consumer European vet techs are in good health for 2023 By Adam Green 16 February 2023 Consumer/Analysis/ The cookie crumbles — which adtechs will pick up the crumbs? The phasing out of the third party cookie has put the ad industry in a spin — but it's creating opportunities for new adtech startups By Éanna Kelly 25 February 2022 The cookie — the small piece of computer code that lets advertisers track user behaviour online — is about to become obsolete. The move has the potential to gut the ad industry, which has been left scrambling to adapt. It is also ushering in opportunities for a new crop of adtech companies with alternative approaches. Last week Google confirmed that it would curb digital ad tracking on its Android phones and Chrome browser, setting in motion plans to kill software known as third-party cookies in the near future. First announced in 2020, then postponed, the move has been welcomed by privacy advocates. But the third-party cookie is the workhorse of the near-$400bn digital advertising economy and its demise is leaving the industry reeling. “This is a moment of foundational change” “This is a moment of foundational change for sure,” says Stuart Colman, a sales executive at InfoSum, a London-based startup that provides a platform for secure data sharing between organisations. Faced with ad armageddon, the urgent question for publishers, brands and the intermediaries that facilitate personalised ads: what comes after the cookie? Cookie carve up Tech companies are scrambling to provide answers. “We can already see some winners and losers,” says Joanna Burton, chief strategy officer at ID5, a London adtech firm. “The whole premise of our company is to make a better system. We’re looking for a more sustainable approach to advertising that starts with the question: what’s the minimum amount of information we can take to build an identity [of a customer]?” The company is building a new and more private method to capture users’ preferences, with a complex process that involves gluing together various bits of information that don’t include a person’s identity or web browsing history. “It’s like a new language for the advertising ecosystem,” she says. Another cookie alternative comes from InfoSum, which uses so-called data clean rooms (clients include TV stations like ITV and Channel 4). “It’s like a new language for the advertising ecosystem” “In a clean room, we can use data with your permission and we’re not going to give it to anyone,” explains Colman. “That’s a better story than the cookie, where your data could be shared with 400 companies and we don’t know who they are.” The Google plan is gradual; the company has not said when its cookie replacement will be fully implemented, but rather that a beta-launch of its cookie alternative, called the “privacy sandbox”, will likely come later this year; with further testing and tweaking in 2023. It’s a less abrupt schedule than a separate cookie-killing move by Apple across its products last year, which has made it much harder for apps to gather user data for personalising digital ads. Still, last week’s update on the Google plan — and remember, Chrome has over two-thirds market share for desktop browsing globally — led to the worst stock drop to date for mega ad platform Facebook/Meta in February. Don’t call it a comeback But if you’re in the cookie-replacing business, times are good. One approach that had fallen out of fashion but is now enjoying something of a comeback: contextual targeting, which is the practice of ensuring that ads appear next to content that’s context-appropriate. So if you’re reading an article about tennis, a sports-related ad can show up on your page. Unlike cookies, this method doesn’t need any specific knowledge of the user. “We’re getting a lot of requests,” says Ilhan Zengin, CEO of video advertising technology company ShowHeroes Group in Berlin. Instead of collecting user data, ShowHeroes’ system uses something called “semantic targeting” to place video ads based on the content (or “context”) of a web page. “It’s a great opportunity — we’ve been promoting a cookie-less approach from day one — and now the market is finally going in that direction. Everyone will be in our wheelhouse,” Zengin adds. “This is the way advertising and tracking should have always been — the fact that cookies have been so fundamental for so long is obviously contentious,” says Peter Wallace, senior VP of sales at GumGum, another company that creates ads without damaging anyone’s privacy. “But where is the difference really? I’m still targeting you, I’m using your data” “Nobody finds context creepy — it doesn’t require you using anything personal around this user. Contextual is always going to be compliant [with privacy regulations],” Wallace adds. Every significant advertiser will be adding contextual tech to their media plan now, he predicts. “The number of adtech vendors trying to jump on the bandwagon has increased significantly.” His company promises a deeper, AI-enhanced level of context targeting than its competitors. “People talk about using keyword-targeting ads on their website. But a ‘crane’ could mean something on a building site — or a bird. We provide a deeper level of understanding of text; we can read it in the same way a human would, and figure out if it contains positive or negative sentiments.” (Brands live in fear of their content accidentally appearing next to sensitive news stories or images.) Another marketing obsession now is the best ways to collect “first-party data”, or information volunteered by users to apps or websites (for example, readers of a news site may participate in surveys, which generates data to let that publisher improve its advertising). “But where is the difference really? I’m still targeting you, I’m using your data,” argues Zengin. “There are workarounds to the cookie but the result can largely be the same; so we’re turning in circles here a little bit.” For sure, when the cookie obituaries come in, marketers will probably say it was the easiest way to target people with ads — not everyone will agree it was the best way. “You could still be seeing ads pop up on your computer for cars 30 days after buying a new Mercedes,” Wallace says. Editor’s note: Like other news publishers, Sifted asks readers if it can use some cookies [at least for now]. Eanna Kelly is a contributing editor at Sifted. He tweets from @EannaKelly1 Related Articles How are ecommerce startups keeping up with consumers? Six things we learned from our panel By Dalvinder Kular Click here to read more “The world of tomorrow is not just the world of Amazon”: Ankorstore raises €25m By Freya Pratty Click here to read more Money for old phones — but can the refurb boom last? 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