No more cookies! Will the media industry starve to death? by Philippe Barbe 31 Mar 2021

Cookies are little files that are stored on your computer when you browse the internet. When you log onto a website, a cookie is stored on your computer that allows you to navigate on that website without retyping your password every time you click something. Different types of internet cookies exist with different purposes.

The commonality of all internet cookies is that they are set on your computer by the websites that you visit. If a company can access those cookies it has a good idea of what interests you and can send ads to your browser targeted to your interests.

Cookies placed on your computer that come from a different website than the one you are currently browsing, that is, when they give information on your browsing history, are called third-party cookies.

Sticking to our culinary analogy, because cookies say so much on what you have been browsing, they are the bread and butter of digital marketing that promises advertisers that their message is reaching those who are most interested in the product or service they are selling.

Yet third-party cookies are disappearing. Digital marketers and online advertising may go dark, (a result many users will herald) or the online advertisers may find alternatives.

But what could be the consequences of no more cookies for the overall media/advertising industry?

In this article I would like to describe a nightmarish scenario.

Why are third-party cooking disappearing?

Clearly there is a growing awareness and concern among customers and regulators about data privacy and data rights.

Since cookies gather data about the user, the European foundational GDPR made cookies a part of personal data. As such, their use is subject to explicit approval from the user. Hence, the GDPR make third-party cookies inaccessible by default and corporations operating in Europe need to comply. As more countries are inclined to enact their own version of the GDPR, corporations envision the end of third-party cookies everywhere.

Another aspect is that as users become more aware of just how much they are revealing about their lives and the value of their data they tend to see such data as an asset belonging to them. Companies that sell and profit from data users see as theirs may be viewed negatively by users, generating bad publicity.

While it is hard to speculate on the motives of each of the companies involved, data privacy and data rights are probably not the whole story behind recent announcements from the tech giants. After all, on the technical front, some web browsers such as Firefox, have been blocking third-party cookies by default on the grounds of privacy protection for years.

In a series of steps, Apple set its web browser’s (Safari) defaults to make third-party cookies inaccessible in 2020. While the general sentiment on data privacy certainly informed Apple’s decision, that decision was also a way to weaken potential competitors like Google who need cookies for their advertising-based big tech businesses, regardless of the browser.

Google followed through, announcing that Chrome, the leading web browser in terms of users, will also make third-party cookies inaccessible by default, starting in 2022. Who can argue with their stated reason of user privacy? Are third-party cookies really disappearing?

In fact, third-party cookies are not actually disappearing. They are just blocked by default. More precisely, unless the user opts in, they are blocked from a simple access through the browser. Companies that make web browsers can still have access to these cookies, store them in their servers, and monetize them.

This is what Google, which has 50% of the browser market, plans to do with Chrome.

Facebook, which does not make a browser, has slightly different plan to collect user information through “like” buttons and its own platform.

Of the big tech companies… Apple, Microsoft, Amazon, Facebook and Google… the two with a pure advertising revenue model – Google and Facebook - have no plan to stop using third-party cookies or technologies that provides the same information.

To the contrary, they are on their way to building a very profitable duopoly of user browsing history. Marketers looking to target their online advertising to the most receptive prospects will become even more reliant on Google and Facebook.

How to starve the traditional edited media industry to death… a scenario?

The disappearance of third-party cookies sets up a possible nightmarish scenario for advertisers trying to target an online audience who will need to rely on the duopoly for audience targeting data because without direct access to third-party cookies they will not be able to build consumer profiles themselves.

Without customer profiles, advertisers may not be able to do as much planning and campaign orchestration as they are currently doing. To respond to advertisers’ need to do these things, the duopoly may offer more planning, execution and reporting services… the beginning of a vertical integration of the advertising value chain.

First, more sophisticated digital planning tools will be offered.

Second, since the edited media industry gets a fair share of its advertising revenues from online content, it will be more dependent on the duopoly not only directly but also through its own customers.

Third, it is conceivable that a complete planning, transacting and reporting platform will be built by the duopoly, first in the digital space. Then, advertisers will demand more integration.

The current fragmentation of the planning, buying, execution and reporting tools in the edited media industry will make it very vulnerable to a few acquisitions which the duopoly could make to enter the more traditional advertising market. If this happens, the duopoly could, in time, have full control of the advertising market, both digital and non-digital, owning the revenue pipeline of the entire media industry, and thus controlling all media.

Is this scenario inevitable? Not necessarily as this is still a large market which will be more and more an online one regardless.

But, in this nightmarish scenario, the duopoly would be a powerful force to restructure that market, and it would control the edited media through the purse.