The Fall of the Cookie & Rise of Out-of-Home

Out-of-home advertising has been at a disadvantage against online ads for many years. Online has offered levels of data and intelligence that no other ad format could touch. This is possible with the technology of third-party cookies. Third-party cookies continually follow a user across the internet recording their actions. The sharing of this data has enabled brands to use personalized 1-to-1 marketing strategies that are extraordinarily effective and is the main reason why online ad spend has grown 10X over the last decade. However, not everyone is happy with all of this data sharing. Many consumers feel an invasion of privacy of a brand's ability to know almost everything about you.???

A year ago, Google announced they would be blocking third-party cookies from their browser at the end of 2021. Google Chrome has nearly 70% of the market and this would effectively end their usage. Most outlets labeled this news as a huge win for privacy advocates, but offline media companies also saw this as a victory as it should help even the playing field with online media.

Advertisers, publishers, and brands were not thrilled with this news. Modern marketing and advertising are reliant on the data they get from third-party cookies, and without it, they will have to transform the way they target and engage their customers.?

A couple of months ago, regulatory pressure and complaints from the industry pushed Google to delay this transition until the end of 2023. This gives brands a little more time to prepare, but it’s never too early to understand how the removal of third-party cookies will affect the future of advertising.

“We predict a lot of this capital will flow into proven media formats like OOH that don’t depend on such personalized data.”        

What is a third-party cookie?

Cookies are small data files that are sent to your device when visiting a website. The first time you enter a URL, that web server will send what is called a first-party cookie. When you return to the site, this file is still on your browser and allows the brand to craft a better user experience by storing site settings, history, and login info. First-party cookies are extremely important to the internet’s usability and are not affected by Google’s decision.

On the other hand, third-party cookies are sent by ad servers from websites that participate in data collection. They follow you around the web and collect data at every step along the way.? This gives marketers a peephole to your activity across the internet and allows them to build a detailed dossier about you. This user profile makes it possible for advertisers to customize messaging that at times can get too personal.

What kind of data is stored by a third-party cookie??

Third-party cookies generally store marketing-relevant information like age, location, gender, and user behavior. They can remember your google search history and even websites that you wanted to visit privately. Some cookies hold personally identifiable information like your name, home address, email, and phone number.

What is more insidious is that storing and sending cookie data is by default completely invisible. This makes controlling your privacy an active chore that most users never know about. Google has taken notice and recently announced, “Users are demanding greater privacy… and it’s clear the web ecosystem needs to evolve to meet these increasing demands”.? Google is making it known that this tracking is not what consumers want and they are doing something about it before it somehow hurts their business.??

How will the lack of third-party data change advertising??

Online advertising revenue has been exploding for decades. Can this cascade of growth continue without having the data to prove ROI? A recent study showed that publisher revenues without third-party cookies could drop an average of 52%.

Google’s business is reliant on this revenue and will not abandon third-party cookies without finding a suitable replacement. They have been testing several technologies over the years and the most promising replacement is called FLoC (Federated Learning of Cohorts). It uses AI to predict a user's behaviors and puts them into small segments that act very similarly. Their study shows that publishers using these groupings to target consumers were 95% as effective as a cookie strategy. A drop of five percent in effectiveness could represent a huge loss of revenue. ?

From the brand side, FLoC will not give advertisers the ability to specifically retarget someone. Context is a huge part of why online ads are successful, and without knowing exactly who the viewer is, online campaigns can’t be as productive.

These concerns should make online ads less sexy and advertisers will likely look for safer formats for their budgets. This is why we predict a lot of this capital will flow into proven media formats like OOH that don’t depend on such personalized data.?

How will third-party cookies affect Out-of-Home Advertising?

A whole industry has been built for understanding OOH audiences and improving ROI. These tools don’t rely on third-party cookie data and will not be affected by this change. Dozens of mature systems have already been adopted by the media industry and offer competing levels of intelligence and attribution online once third-party cookies disappear.?

Studies even show that these tools are nearly as successful at driving results at the lower end of the brand funnel. Mariel Hernandez, Account Representative at Adkom says, “Almost all my clients are using OOH audience tools simply because they work. They deliver the right impressions and continuously show ROI.”

Out-of-Home Advertising becomes more relevant.?

Even with the influx of remote work, people continue to spend a lot of time out of their homes. Data shows that automobile traffic is nearly back to pre-pandemic levels. Americans spend almost 6% of their waking hours in a car. That totals 84 billion hours of driving a year! This is the main reason roadside billboards continue to be in such demand. They deliver excellent ROI, greatly improve brand visibility, and offer a 100% share of voice opportunity to highly alert consumers whose faces aren’t buried in their phones.??

Furthermore OOH ads have always had the ability to be contextual because you know exactly where each one is playing. This knowledge lets your brand craft custom messaging that has been proven to be more effective. Charles Manning, founder, and CEO of Kochava said, “DOOH is actually in a favorable position... Brands are now having to take a broader look at the real-world context for their ads and here is where DOOH delivers.”

Finally, tiny online ads never offered a majestic platform to build a brand identity. Billboards and other large-format street media have always offered a much grander creative stage that online ads could never touch. Without a data advantage, why wouldn’t brands move considerable portions of their budget out of display ads and into mediums with more creative potential? ? ? ?

Summary

Third-party cookies are living on borrowed time. The data they provide has powered exponential growth in online advertising for twenty years. Replacement technologies will have much more respect for user privacy, but will also greatly decrease the ability for brands to retarget users and craft personalized messaging. The removal of third-party cookies should even the playing field with OOH and make it a much more important marketing tool going forward.??

Adkom’s mission is to greatly simplify the Out-of-Home buying experience. Our platform connects independent media owners into a unified network with the largest reach of any OOH company. We offer a huge variety of formats that allow you to saturate important markets or hyper-target key locations. Our seamless buying process will save time by allowing you to build and deploy a complete campaign through just one vendor.

?2021 Adkom LLC