In a previous post, I wrote about what might be seen as the beginning of the end for advertising cookies. But what might a cookie-free future look like? One version is an advertising industry dominated by the few (two? three?) online service providers whose logins are the most popular. In this post, I’m wondering out loud: What would it really take for this to happen? And how should we plan for that possibility, today?
THE AD INDUSTRY WILL BE DOMINATED BY LOGINS, NOT COOKIES
There are three main things which might lead to this, and all of them seem like feasible possibilities.
Advertising budgets are better spent on login-powered, rather than cookie-powered, inventory
When a user is sold as cookies, he or she is sold simultaneously in lots of different places. When they’re sold as a login, they’re sold in just a few. It seems likely that login-based ads would be more expensive because the number of vendors then drops. But we know that logins are very powerful in advertising: audience insight and targeting is more detailed and more reliable. Login-based inventory should offer a higher ROI in advertising. Despite their higher cost, we’re probably right to expect login-powered advertising to win budget from an outgoing cookie-powered alternative.
New technology puts an end to old
New technology frequently renders old technology ineffective or obsolete. In advertising, that technology might emerge client-side or publisher-side. Client-side, in the UK, we’ve seen the use of ad blocking extend to about 20% of the population. Third party and cookie-based advertising are affected, and the tech war between publishers, ad networks and users continues to escalate.
Looking at changes from publishers, we should consider e.g. Google and Facebook’s move to blocking cookies. Google is already planning to stop supporting third-party ad tech cookies on YouTube. If the third party players are selling user behaviour, taken largely from YouTube and other Google services, then relatively soon they may find themselves with a lot less to sell.
On mobile, apps tend to be available either on Google’s Android or Apple’s iOS. It’s quite conceivable that third party ad tech could be taken out of the picture pretty swiftly.
Legislation pushes the industry down an easier route
It’s been a weakness of cookie-based advertising that it is separate from the services it monetises. If the free service operates fully without a cookie, then it seems fair to wonder why users should be forced to acquiesce to their use. With login-based advertising, there is no separation: the advertising, the service, and the login are all come as one package, and one cannot opt out.
Tightening legislation might irritate the cookie-based digital ad economy to such an extent that it’s worth making life easier by abandoning cookies and the legislation that comes with them.
WE’LL SEE DOMINATION – BY ONLY A FEW SERVICE PROVIDERS
And what are some factors which might prevent or hamper the growth of login based advertising?
The establishing of a new dominant, agnostic login platform and personal data storage solution.
It’s quite attractive to imagine an alternative vision where logins power advertising, but where the login platform and associated data belongs to the user, and not to an advertising company.
Advantages might include user-centric, pooled data, better user privacy, and the value and clarity of a user’s data that’s transferred along with their genuine intent. But it seems inconceivable that anyone will pull it off. The likes of Google and Facebook will mitigate their exposure to risk by carefully limiting the extent of integration with third parties. More significantly, users and software developers alike are resistant to change. When we’ve already surrendered so much of our privacy and control over identifying data, motivations like “more control” may be too intangible to make a difference, especially when Google and Facebook offer a fair degree of control (on their own terms) to users directly.
Tech companies stop delivering high-quality free or freemium services
That’s not going to happen. It’s their business.
People stop wanting to use free services
Unlikely. It’s free, is the feeling, so there can’t be much to lose?
So, how does one react? Here are three final ideas.
- Don’t get attached to the present. Think about the new opportunities, and invest in those; don’t invest in preventing the inevitable.
- The prospect of there being just two or three major players who control the arena might be worrying because excess power and comfort tend not to make anything better. But remember: Peter Thiel said “the absence of competition promotes innovation” – and that’s a good thing. Remember anyway that Google, Facebook and Amazon all look locked in vigorous combat mainly with one another. It’s hard to describe that as non-competitive.
- If you see a problem with the future, get to work now on the next disruption.