McKinsey has published an excellent article looking at the steps advertisers can take to thrive in the post third-party cookie world. The report is well worth reading in full, but to summarise, McKinsey suggests that there are three strategies advertisers can take to balance personalised customer engagement and impact-measurement with consumer privacy. These are:
While McKinsey provides insightful and practical guidance, there is more that can be said on the subject, and its existing recommendations can be taken a little further for advertisers to realise additional benefits.
Rightly, McKinsey focuses on first-party information as a crucial source of value for advertisers. This is data that customers share with them on their owned websites, apps, and other digital properties. As McKinsey sets out, brands can encourage users to share this information through incentives and enrich it with information from Customer Data Platforms. What’s more, combining this data with second-party data sources from partners will add more value to the data.
As McKinsey states, advertisers can leverage universal IDs as first-party cookies to activate and enrich their information across marketing channels. Such IDs recognise a user in the marketing ecosystem and enable their consented information to be shared with adtech providers and publishers.
However, while important, our view is that such IDs will only be one part of the solution to the end of third-party cookies. Universal IDs are important, but they are nevertheless still restricted. They do not provide a joined-up view of web users across the anonymous, unauthenticated web, nor do they have the ability to recognise ‘ghost’ users across the various devices they use.
In addition to universal IDs, we propose that an interoperable pseudonymous verification ID will also be crucial. This ID would enable advertisers (or publishers for that matter) to leverage telco intelligence to verify users behind the telco firewall. As a trusted partner, the telco can recognise users wherever they are on the web, and across devices, without needing to know who they are as individuals (i.e., it is a privacy-first design).
As McKinsey sets out, first-party intelligence is just the start. Advertisers will need partners to build out on this information to reach audiences at scale. While we agree, it’s also important to note that to reach users on both the authenticated and anonymous web telcos must be a key partner in the ecosystem, and interoperable pseudonymous verification IDs a core enabler of programmatic transactions.
With this approach in hand, McKinsey’s third strategy – experimenting with contextual advertising – becomes less important, because brands will be able to retain the personalised engagements at scale they currently enjoy. That is a good thing, because despite the many benefits of contextual advertising – and we would not for one minute argue that there is no place for contextual advertising in the marketing mix – it does come with limitations.
For example, contextual in practice limits the inventory available to brands. No company wants their brand to appear next to overly negative content, for example, which significantly constrains inventory in news publications when, like today, there is an overabundance of negative news items. It’s little wonder that McKinsey suggests that contextual will likely be a short-term fix only.
The digital advertising industry has been struggling to come to terms with the loss of third-party cookies for some time now, and it is great to see McKinsey adding its expertise and knowhow to providing a solution. We agree with its findings but would go further in some respects. Most importantly, we believe that programmatic, personalised advertising at scale can only continue in a privacy-first way using interoperable pseudonymous verification IDs in conjunction with universal IDs and authenticated log-ins. It is the most effective way to elevate first-party intelligence into a truly scalable solution.