Digital Advertising Industry Plans To Replace Cookies With First-Party Data

As the third-party cookies crumble and in the wake of privacy regulation coming into effect, the online advertising industry is facing an identity crisis. They are in search of a new identity and one possible solution is people’s email addresses and phone numbers.

At the Interactive Advertising Bureau’s Annual Leadership Meeting in Palm Springs, California, on 10th February, the IAB wants to partner across brands, agencies, publishers and tech companies to develop new means to power digital advertising.

“Project ReArc”, a chosen name for re-architecture, a critical part of their multi-phase plans to build a replacement for the third-party cookies presently blocked by Safari and Firefox browsers and Google Chrome to follow soon.

IAB Tech labs proposed to build a new identity based on e-mail addresses or phone numbers, which provide a constant and rational way of recognizing someone than the third-party cookie did,  without giving up on user’s privacy. 

The IAB and all the involved entities are supporting the future of online advertising based on email advertising and phone numbers. They have witnessed Facebook and Google dominate the online ad world thanks to their platforms logged-in user bases and see e-mail addresses and phone number identifiers as a way for the open web to rival the walled gardens.

However, Megan Pagliuca, Chief Media and Data Officer at Hearts & Science says the people with signed-in users are going to win. If grounding the identifier on first-party data will create a disadvantage for long-tail and mid-tier publishers as they don’t have a sizeable number of registers. It is also unlikely to benefit the open web as a whole.

To protect the advertising business, if publishers are pressured to compel users to provide their email address or phone numbers, it is highly possible that many sites will put content open after registration so that only logged-in users can access it. While this can be a precarious situation for publishers to gain user registries, it could also lead them to lose a part of their audience. As a result, there is a  potential negative impact on the small and mid-sized publishers leading to an unanticipated consequence.

A publishing executive asked earnestly, “Do ad networks have a chance of returning?”

Ad networks started for small publishers like individual bloggers and act as mediators between publishers and advertisers to curate ad inventory from publishers and sell to advertisers. Eventually, supply-side platforms came up and replaced ad networks with third-party cookies on these sites to auction off their inventory to sell targeted ads. However, without third-party cookies, these small publishers will face difficulties to collect email addresses or phone numbers and once again will have to be under the umbrella of the ad network. 

The primary reason for ad networks struggles to attract advertisers is generally they are not transparent about where an advertisers’ ad appeared. However, this is not true in the case of brand advertisers who care about the context in which their ads appear while performance advertisers care whether the ad drove sales or any conversion event.

I could see a world where performance buyers return to using ad networks because they don’t care about transparency,” said the unnamed SSP executive to Digiday.

The return of the ad network is a concern for publishers because of the possibility for ad networks to siphon some of their revenue. While some ad buyers direct their money to big publishers as they have signed-in users, others may see ad networks offering a lower price and move their money in that direction to become cost-effective.