This content relates to : DIGITAL TRANSFORMATION
Kelly Leger
Managing Director, Deloitte Digital
Hi, everybody. My name is Kelly Leger. I am a managing director here at Deloitte. And I am here to talk to you about signal loss and cookie deprecation. In 2021, Deloitte surveyed over 100 top marketing executives to understand more about the potential risks around third-party cookie deprecation. It’s my goal to walk you through some of our findings, why those findings matter, and how to take action so that you or your company aren’t caught by surprise. So let’s get into it.
Marketing leaders are rightfully anxious. In a recent study of executives who lead US brands, 77% were somewhat moderately or extremely concerned about the technology changes surrounding third-party cookies. If you don’t know what a third-party cookie is, it’s basically what powers the entire advertising technology ecosystem. There’s been a lot of news recently from large tech companies around whether they will or won’t deprecate the third-party cookie and when that’s going to happen. We are estimating right now that third-party cookies will be deprecated in 2025.
So when we did the survey, we really wanted to understand where the market was, the understanding, and what potential risks most marketers thought their companies, you know, might encounter if they want to do anything about these signal loss and cookie deprecation changes that were heading their way. For the survey itself, we post questions that range from demand side platform, or what we call a DSP, to data ownership, to understanding the amount of digital spend these marketers implemented in their organizations. We then took all of that data and apply it to revenue risk calculation. This helped our projection to be able to understand the risk posed by third-party deprecation for those various entities or companies on behalf of the marketers who are answering the survey.
And across the companies surveyed, an average risk range from around 91 million to about $200 million in revenue per year with some companies risking upwards of $300 million in revenue each. And that is if these companies did nothing to change their current digital advertising practices, platforms they were lying on, technologies that they used. So if you take a look at the article, you can see a further breakdown by the sector.
But at a high level, that’s a pretty hefty risk assessment, you know, on behalf of these marketers that answered the survey. So let’s chat about the digital ad dependency and what that means for potential risk. Sixty percent of the respondents spend at least half of their media budgets on digital advertising. So that is a ton of money being spent on what I like to call the interwebs. So obviously, if your marketing mix is heavily leveraged in digital advertising, you’re in a high-risk category.
However, there’s still risk and it depends on the platform, the data you use, and the technology and tactics that you implement across your marketing mix, across your digital advertising campaign and capabilities.
The top three questions you need to ask yourself to start assessing that risk are, number one, what percentage of your marketing spend is digital and dependent on that third-party data and technologies? Number two, what amount of your overall ad impressions are implemented via digital channels? So that is digital banner ads, video, anything that you would show on a laptop, PC, or potentially, on a mobile environment. And then what third-party tags on your sites are being used to inform and measure your digital campaigns?
When you think a little bit further about how digital advertising is impacted by those third-party cookies and signals, you also need to consider your overall mix and allocation across the channels. So looking at your overall digital platform mix and technology landscape is vitally important to understanding your risk and how to start mitigating that risk. Seventy-seven percent of the survey responders used demand-side platforms for programmatic ad buying, and on average used more than four DSPs across their campaigns.
Now, demand-side platforms are third-party platforms that have traditionally been dependent on third-party signals to serve ads to relevant audiences. When the third-party cookie gets deprecated, you will have impact to those platforms, audiences being served your message, so forth and so on. So it’s a little bit of a domino effect. So when those third-party cookies go dark or no longer work, the third-party platforms like the DSPs will have less of ability to show the ads in an efficient and optimized manner on behalf of advertiser or brands, thus putting your media and digital marketing dollars investment at risk.
Again, so it’s something to really consider when you’re looking at your digital marketing mix and how dependent you are not only on the signal but on the platforms that enable that third-party signal on behalf of your marketing campaign. So the top three things to start looking at now to understand your risk. What DSPs and DMPs are you or your agency using to orchestrate digital advertising? What percentage of your overall ad impressions are dependent on those third-party signals? And how is the overall performance for your digital campaigns triggered by and measured on these third-party signals? These three main objectives to look at right now will really help you assess and understand your platform risk, as well as potentially the measurability and interoperability of those signals coming out of the platform.
Let’s talk a little bit about third-party data. So I like to call third-party data the “easy button.” Over the last sort of 10 years, you’ve had data management platforms make it easy for advertisers, brands, agencies to enable and targets for acquisition retargeting or enhance customer understanding with third-party data being readily available on these platforms. Survey responders noted that they rely on more than 45 third-party data sources for digital advertising campaigns. Can you imagine 45 data providers to be able to acquire, retarget, and learn more about your audience that is most impactful to your marketing? Well, that third-party data will and has already started to leave the system, deprecate from the system.
Right now, we at Deloitte are estimating that roughly 45 to 50% of the interwebs or the internet is dark. So what that means is not only is the third-party data that you might be buying from those 45 providers not actually able to get transacted on and make it to that buying destination or that end destination, you won’t — you will also not be able to understand the effectiveness if that ad is served to that consumer. So there is a big house of cards here that I think the majority of marketers and agencies have been heavily reliant on for the last 10 years. And once that sort of third-party cookie final flip is switched, the deprecation happens, a lot of that data will disappear, will go completely dark from a targeting and acquisition and sort of an overall advertising perspective.
So it’s important that you start thinking about sort of these next three tactics or questions to start moving away from that third-party data and enabling more defensible capabilities, technologies, and tactics.
So the three questions or the three areas I’d like you to dig into and to look at are, number one, are you accurately capturing consent to use your first-party data? So if you’re a brand that is gaining consent on behalf of your customers, are you capturing that consent and making sure you’re understanding that you have that ability to use that data for advertising and marketing purposes?
Number two, where are you in your first-party customer data platform, or CDP, journey? Are you and your teams using its capabilities to its fullest extent? If you haven’t implemented a CDP, this is my pleading with you, if you will, to go and implement a CDP. Your first-party data will be the main signal that will help funnel and articulate and activate across the digital ecosystem once third-party cookies are deprecated. So it’s super important that you implement that CDP, get your teams up and running on it, and start using that as a best practice.
And sort of number three, what is the quality of that first-party data? Do you need to enable better identity, better cleansing, better hygiene? Again, that first-party data will be the most important signal pushing into your advertising and marketing as you move forward. And sort of last but not least, are you starting to shift your marketing mix towards more of that first-party data? And if not, what is your plan to do so? And what is the timeline around moving that to your first-party — moving your marketing mix to that first-party data?
I’ve given you a lot to think about today. There are a lot of really interesting tidbits in this article around signal loss and cookie deprecation. But now is the time to take a break and understand what’s really happening in the market around third-party cookie loss and signal deprecation.
The announcement from the large tech providers tends to give us a false sense of reprieve that, although this may not be happening until 2025, we don’t need to do anything now. The reality is with roughly 45 to 50% of the digital ecosystem being dark and sort of signal-less, it is imperative that you not waste time and that you move as fast as possible to be able to start shifting your marketing mix, start understanding your platform dependencies, start understanding your third-party data dependencies so that you are not caught flat-footed when third-party cookies are fully deprecated.
The loss of signal and understanding and data and the ability to measure your campaign effectiveness is a reality that we in this market are facing. I talked to clients every day. And it’s important that you also look at your measurements systems, your measurement methodologies, that you start to understand if you’re seeing blindness in your measurement capability. Because as much as we love to spend and invest the money across these third-party technologies and across the sort of advertising landscape, digital advertising landscape, you have to be able to measure and prove that what you’re doing and what your teams are doing is effective. And if your measurement is being affected by that signal loss, which I would venture to say it probably is, you might need to look at new measurement capabilities such as multi-channel attribution, incrementality testing, so forth, and so on.
So a big area to also focus on is measurement. In the end, it’s important for all of us to understand what’s happening around third-party cookie deprecation as well as the areas in which we can start to fortify and create new capabilities and tactics so that we, again, aren’t caught flat-footed and we get ahead of this seismic shift that’s happening in the market. I hope you learned a little bit today about signal loss and third-party cookie deprecation. Take a look at our article and our survey from 2021. And if you have questions, please feel free to reach out to me. Again, my name is Kelly Leger. I’m the managing director here at Deloitte Digital. And I hope everyone has a great day. Thank you.
Author :
Kelly Leger
Managing Director, Deloitte Digital