We are here at eTail Boston and hearing about all things e-commerce and retail.
Today we’re going to talk about the cookiepocalypse that never happened, and what Google’s decision not to deprecate third-party cookies means for all those marketers preparing their first-party data strategies, as well as all those consumers out there that still like their privacy.
To help me discuss this topic, I’d like to welcome Jaysen Gillespie, Head of Analytics and Data Science at RTB House.
Resources
RTB House website: https://www.rtbhouse.com
Connect with Greg on LinkedIn: https://www.linkedin.com/in/gregkihlstrom
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Transcript
Greg Kihlstrom:
We are here at eTail Boston and hearing about all things e-commerce and retail. Today, we’re going to talk about the cookiepocalypse that never happened and what Google’s decision not to deprecate third-party cookies means for all those marketers preparing their first-party data strategies, as well as those consumers out there that still like their privacy. To help me discuss this topic, I’d like to welcome Jaysen Gillespie, head of analytics and data science at RTB House. Jason, welcome to ETL Boston and welcome back to the show.
Jaysen Gillespie: Well, thank you, Greg. It is great to be here and I look forward to discussing third party cookies, everybody’s favorite topic right now.
Greg Kihlstrom: I know, I know, as if we weren’t sick of talking about it already. We’re going to dive in a little bit more here, especially with Google’s relatively recent news and stuff. But before we do that, for those that didn’t catch you last time you were on the show, why don’t you give a little background on yourself and your role at RTB House?
Jaysen Gillespie: Sure, so I am our head of analytics and data science, as you mentioned, and that means I’m heavily involved with understanding the effect of marketing and how marketing technologies are changing over time. I do a lot of incrementality tests, for example, and I really focus on what’s going to happen as the availability of data as proxied by the deprecation of the third party cookie rolls out over time. I think this is an extremely exciting time to be in ad tech. I’ve been in it for about 15 years at some other similar companies, but it’s probably never been more fun than right now.
Greg Kihlstrom: Yeah. Yeah. So, yeah, so let’s dive in here. You know, we’ll start with the news that is likely not news to most most marketers out there, but, you know, still still recent enough to be talking about here. You know, Google kind of perpetually delayed deprecating third party cookies and then, you know, just kind of made an announcement that They’re basically abandoning that whole plan together, used a little softer language than that. But, you know, they’re essentially the cookie apocalypse is is indefinitely postponed. So, you know, first, in hindsight, was this truly a surprise, you know, as somebody that follows the stuff a lot? And, you know, do you think that most brands have kind of been met with relief when they when they heard this? You know, how many truly were ready for the cookie apocalypse in the first place?
Jaysen Gillespie: Yeah, wow. So a lot of great questions there. Let’s start with the one where you’re asking my opinion, since there’s really no way I can give a wrong answer then, which is, you know, were you surprised by this? And it’s a little bit of a yes and no, like everything. Are you surprised that the plan to get rid of cookies has changed? shocked No one would have ever thought the schedule the timeline the mechanism could have changed Of course, I say that very tongue-in-cheek. It’s changed three four five six times. I mean cookies going away is like the Olympics There’s something new every four years. So of course it’s changed where the yes part comes in is the exact mechanism by which Google has chosen to execute the change. Now we’re talking. This is very interesting, right? What Google has done has said in a blog post of all things with very little additional information, we’re going to elevate user choice. We’re going to elevate that user choice experience. And we’re all just now going to guess what that means. I think the majority of guessers, me included, would say something like, hey, by the way, Chrome users, You can disable third-party cookies right now if you really want to. It’s buried away in the settings somewhere. What if we made that setting much more front and center, kind of the way Apple does with ATT, or App Tracking Transparency, where you have to opt in to the sharing of your user ID. Apple does it on an app-by-app basis. We don’t know if Google would choose to do this on a website-by-website basis, on a blanket basis, offer you both options. We just know that They’re going to elevate that choice, which implies they’re going to make that choice a lot more visible. They might force that choice. It’s not a technical problem. If Google wanted to do this a week from now, they could push it out to 3 billion browsers. They’re very competent technically. It’s a policy problem. It’s a problem of what’s the way to do this that makes the most sense for users, for advertising, which unlike Apple, they’ve got to balance sort of their own needs on advertising. for antitrust compliance with the UK CMA and other groups. Google’s a bit under the microscope these days, having just been ruled a monopolist in search, going into, I believe, another DOJ trial. They’ve won some things here and there too, so it’s a mixed bag probably. But I think they’re looking very carefully at all the angles to this. So was I surprised this changed? Absolutely not. A little bit surprised about the exact mechanism that it changed. The other thing you mentioned was, Are marketers prepared for this? And do they feel some sort of sense of relief? My primary response there is, you know, if you’re not prepared for it, one, you still better be. And if you feel relieved, you better wipe that relief off your face pretty soon. Because our strong suspicion is most users, given the choice, will not choose to share, i.e. will not accept the third party cookie, because that’s what the data shows in the Apple world. People probably will behave the same way. They’re very concerned about their privacy. They’ll probably basically create a world that’s not a lot different in the end. Some users will have cookies, some users won’t. We don’t know what fraction will be in each bucket. We think the majority won’t. We think people that are saying, hey, woo, done, I don’t have to worry about cookie lists, could not be farther from the truth. And those people are going to be blindsided hard. You know, what if Google comes out in a month and says, we’re launching this, every Chrome user can now pick. And not only is cookie lists coming, but it’s coming sooner, not later, sooner than you thought it was. Totally a possibility that you need to be prepared for.
Greg Kihlstrom: Yeah, and that kind of that leads into my next question here is, you know, all all this time and effort and has been spent on, you know, building first party data strategies and and things like that. So, you know, I think you kind of answered this, but just to dive in a little deeper on it, you know, Are these brands that have made some pretty big investments in first party data strategies, are they, you know, are they still a step ahead of of their competition that may have been lacking? How are there are there going to be branches in the road that they need to, you know, try to try to foresee as well?
Jaysen Gillespie: yeah you know it’s first party data is never a bad idea like there ought to be a t-shirt that we just wear around with that right because data is the new oil gold whatever historical comparable you want to push in there which means your data should be owned, operated, managed, and leveraged to the best of your ability. So the rush to first-party data is long overdue. I think many companies have actually been there pretty effectively for a while. The reason I think those that haven’t dug into first-party data are a little behind is because there was this additional availability of third party data. And that’s the data set and the data availability that’s likely to go away. If you look at some of the dialogue that Google’s engaged with around the functionality of the privacy sandbox, which is going to be their primary mechanism for doing first party advertising without a cookie. They basically said, hey, things like first-party retargeting, where you look at what someone did on your website, and then you show them ads based on that first-party data on another website, we’re gonna allow that. We think that’s a fine use case. It doesn’t really involve cross-site tracking much. We’re gonna do that in a much more private way. We’re not gonna allow that data to be exposed out through the cookie into the broader internet. Only trusted vendors are gonna be able to access it. But basically, that’s gonna work. Other types of marketing that are much more reliant on what looks like third-party data, such as constructing an audience, say, of people who intend to buy a sweater, by looking at people who looked at sweaters on x.com, y.com, z.com, j.com, That’s cross-site tracking, that’s cross-site audience creation. Google has specifically said, we’re not going to support that in Privacy Sandbox. So for users who retain a cookie, you might still be able to do that. For a lot of users, you won’t be able to. So you’re going to have to get away, not only from third-party data, but from some third-party marketing mechanisms. And I think that’s going to be real interesting how marketers choose to respond to that when the time comes.
Greg Kihlstrom: And so, you know, so some of what you’re saying already is at first party data, consumers are already averse to, you know, companies using their data and in ways they they deem making them not private. And, you know, brands can benefit from this first party data strategy approach in the first place. So, you know, from a marketer’s perspective, maybe to go back to the glass half full scenario, it’s like, you know, third party cookies live on, but to your point, thinking that we’re going to just keep living in the same world that we’ve always been living in, not really realistic, things are going to change regardless. So, you know, what’s the true benefit to marketers in this scenario where, you know, we’ve got third party cookies, but we’re still moving in this direction? You know, how does the marketer truly benefit?
Jaysen Gillespie: Yeah, so it’s a little bit indirect, but bear with me here. If you imagine a world of July 21st, where the plan was to just phase out cookies altogether, and then you’d have sort of this privacy sandbox mechanism that could do some of what the cookie did. And you might have some people that just opt out of everything. So you’d have like one or two classes of customers. Now you’re gonna have three classes of customers when you group them by how you can reach them. Those were the cookie, those are the privacy sandbox, those are perhaps nothing. Because that swim lane over on the left, that 10-20% that keeps the cookie, is still there, it’s going to dramatically improve the other solutions. So if you’re in ad tech like me, or even in marketing and really dig into your first-party data, You’re going to always be able to compare like Champion versus Challenger. Champion being the legacy solution, the third party cookie. Challenger being things like Privacy Sandbox or other alternatives. You’ll always be able to compare them to that cookie swim lane. That, in theory, should make those competing solutions actually perform much better. because they’re now held to a standard and that standard wasn’t going to be available on July 21st. On July 22nd and going forward, that standard will now be there. I think this is incredibly positive for those of us who are in the business of developing tools and technologies because we have that benchmark. We also have additional data from that ongoing set of people. that while it may not be great for a marketer because you’re like, I can only reach 15% of my users through that. It’s awesome for data scientists and product developers because they now have a robust data set on a minority population, but nonetheless a very robust data set that they can use to better develop tools for the population without that data set. I may be the only person in the world that loves this, but I love this announcement.
Greg Kihlstrom: No, I I know what you’re saying. And I think, you know, just I guess to be, you know, bluntly speaking, you know, a lot of that third party data was not just not very high quality data. Right. And in the first place. And so, you know, I think I’m I’m I’m with you here is that, you know, it it was it was cheap and easy, but not necessarily good. So, you know, in that good, fast, cheap, whatever scenario, it was checking a few boxes. But like, this is actually pushing us to be better as as marketers, as advertisers and everything like that. So, I mean, I think just kind of I think that that mirrors, you know, what you’re saying as well. And then, you know, I guess from the consumer perspective, Is there a benefit to this? So, you know, it’s it’s it would seem like, you know, third party cookies going away. There’s a lot of benefits to consumers. Are there any benefits to consumers of of Google’s announcement here? Or is it just kind of similar and it’s going to get better and stuff like that? But are there any immediate benefits to this for the consumer?
Jaysen Gillespie: Yeah, I’d say no. While this is big news in ad tech and marketing, average consumer, it’s just another shrug of the shoulders. They don’t even either know or understand what’s going on. Most of them. A few do. That’s a minority user. And if you think about it again, probably doesn’t change the end state because most consumers are going to opt out given the choice. Some won’t. And in the prior end state, the July 21 world was everyone was being opted out. So you could argue maybe there’s this very, very modest gain for the consumer because the consumer now controls that on the off chance. You know, you’re in that minority that actually wants the third party cookies to continue. You’ll have that option, though. Again, I suspect you know, that’s in Chrome now and you can get to it if you dig into the settings. So it’s either neutral to very, very slightly positive for the consumer. I think what’s more positive for the consumer is the fact that replacement tech like Privacy Sandbox is held to a dramatically higher standard of privacy while still allowing some of the cookie functionality. I think that’s the real win for the consumer because at the end of the day, if you’re a publisher, You know, you’ve got to monetize. You need a decent CPM for your inventory in order to create the content that the consumers enjoy. So the indirect benefit again here is that the replacement technology we believe will be good enough to continue to enable publishers to provide consumers with the free content they enjoy.
Greg Kihlstrom: Yeah. And so a lot of brands, I think, are moving at the chin. I mean, this is not the only thing they do, of course, is worry about third party cookies or not. So, you know, they’re they’re kind of moving at the pace of, OK, well, what do we have to do and by what date? And obviously that was not made very easy by continual pushbacks or anything like that. But, you know, for those brands that want to take a step further and not just kind of follow and and to what they absolutely have to do by the by the last possible day. So let’s let’s call them the brands that want to be overachievers. What should they be doing right now as far as consumer data privacy?
Jaysen Gillespie: Yeah, so definitely batting down the hatch is a bit on privacy. You know, there was an underreported, but I think interesting ruling where the FTC recently came out around like one-way hashing. What people often call one-way hashing, which is a way of taking a piece of PII and like a phone number or your email address. And for years, companies have said, well, this is anonymous because you can’t undo the hash. Those of us in data science have been saying that’s absurd. All I have to do is get a list of all known email addresses or simply make them up. Phone numbers is even easier. Run them through the same algorithm. And presto chango, I get the quote, one-way hash. You know, government tends to lag tech, but has now caught up. In fact, it was just recently, a few weeks ago, the FTC came out and said, hey, hashing doesn’t make you anonymous. So they’ve caught on to this. Well, if hashing doesn’t make you anonymous, then the hash of PII by extension is PII. Welcome to the CCPA for those of you in California and other states that regulate PII more severely and welcome to the GDPR. Because once you’re in PII, you’re subject to a lot more rigorous regimes, regulatory regimes around data. So the hashing of things generally doesn’t affect a first party data, because why would you hash your own first party data? Maybe for some internal security purposes, but there’s no fundamental need to do that. It’s the hashing of things by third parties that now really has to go under the microscope. I only use this as an example, though, for first party and marketers, you know, the regulatory authorities are continuing to kind of tighten the grips on how you handle data, what you do with data, how you take care of data. You know, you need like a data czar at your company to look at every place that data is used because data often kind of runs wild on its own at companies that have especially been high growth and maybe haven’t got the processes they need in place. Bigger, more established companies usually have some robust sort of data security and protection mechanisms. But if you’re not there, I’d encourage you to get there pretty quickly.
Greg Kihlstrom: Yeah. Yeah. So I want to wrap up by kind of coming back to the question of data quality. And, you know, we touched on that from the perspective of a marketer needs to sell widgets and wants to find the best audience, so on and so forth. So, you know, fairly, let’s call it straightforward marketing scenario of, you know, better data is generally going to get them that. And, you know, we talked about first party. Data generally being better and of higher quality. The other component here is you know, we’ve got to talk about AI so we’re required And just about every episode here. So let’s let’s go there and you know your company RTB House does a lot with machine learning deep learning I know we talked about that on the last episode you were on but you know in when we’re talking about this idea of data quality. And, you know, now it’s almost like some brands have a little bit of an out to focus a little less on first party data, maybe for at least for a few months while things sort themselves out a little bit more. Does this start creating this, like, bigger and bigger gap between the data leaders and data laggards? You know, what’s AI’s kind of part in the mix here?
Jaysen Gillespie: Okay, great question. Let’s first address the gap between data leaders and data laggards. And I hinted at the beginning, but my belief is data laggards on the first party data often fill in that gap with cheap third party data. The fact that that’s going away would imply that the gap would simply widen until those laggards can reach kind of that best-in-class level that the leaders have on first-party data. The second half of your question, I think, is around, well, how does AI affect this? And in a number of ways. There are a lot of cases, like you mentioned, we’re a deep learning company. We’ve been doing this for 10 years before deep learning was hot. It’s the underlying neural network technology that powers things like chat GPT and generative AI in general, like mid journey and Dolly. And It’s powerful because it doesn’t have a lot of the constraints that traditional machine learning approaches has. One of those is it’s much easier to handle missing data, incomplete data, data that’s coming in asynchronously at random times in random ways, because a neural network works like your brain. Nobody summarizes everything you saw the last 30 minutes and presents that to you in a data table. your brain figures it out. It’s continuously receiving that visual information, processing it, storing it, filtering it, determining what to hang on to and for how long, and frankly, dismissing the vast majority of it. And that’s exactly how deep learning works. And of course, we apply it to make marketing work better, but you could use it in a lot of different ways. And so it’s an opportunity to better use first party data, especially if you’re best in class, even if you were using some third-party data, you might find that, hey, with AI tools, the third-party data doesn’t add incremental value. I can dump it. I can dump those relationships. I can dump that cost. I’d rather put that into a data science and data engineering practice in-house, assuming you’re large enough, that can really benefit my whole business.
Greg Kihlstrom: Yeah. Yeah. Well, Jaysen, thanks so much for joining today. And, you know, one last question before we wrap up here. You’ve given a lot of great advice already, but just to kind of maybe summarize or just give some thoughts, you know, for those companies that maybe they’re not not on the leader side of things, but trying to figure out, you know, what what’s a great next step for them to take when, you know, They’ve made some first party data investments. There’s a little bit of uncertainty here as far as, you know, third party data and cookies and everything. You know, what’s what’s something they can do to make the most of those first party data investments they’ve already made?
Jaysen Gillespie: Yeah, that that’s a difficult question to answer because it would really be specific based on, you know, what those investments are. Is it tracking web behavior in more detail? Is it because they have the most awesome CRM and email system? This is where you You probably do need to lean on your vendors who, frankly, are always happy to talk to either a current customer or a prospect about, hey, what data do you have and how can we do more with it? Maybe it’s tightening up some of those integrations. It’s asking your vendors, what are you going to do when there is no cookie? Are you in privacy sandbox? How can you integrate my first party data? I think those are some great conversation starters with both who you have a relationship with now and other companies that you might think are best in class out there in the space.
