How cookies’ demise will impact cost of advertising

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Third-party cookies have been identified as an imperfect way to target consumers with advertisements on digital platforms. Google’s decision to hold off on ending support for third-party cookies until mid-2024 has reignited debate about its likely impact on marketers and publishers.

While the demise of third-party cookies is good news for consumers, it has major implications for the digital advertising industry. One of the key concerns for marketers is that they may have to pay extra to achieve the same marketing goals in a cookie-free world.

Dabur India Senior General Manager and Head of Media Rajiv Dubey said from a marketer’s perspective that advertising costs are always determined by market forces based on prevailing circumstances. He also said that first-party data will grow in importance in a cookie-free world.

Cookies will be phased out in 2024, so everything will depend on the current market situation. Market forces determine the cost of advertising whether it is TV or digital. The marketing world will be a lot cleaner and sharper when you stop using cookies. Marketers will have to work on creating their own first-party data, which is not that helpful at this point because many companies have first-party data but don’t know what to do with it. In a post-cookie world, the utility of first-party data will rise. We currently use a lot of second and third-party data,” said Dubey.

He also said that ending support for third-party cookies will be good for consumers, while advertisers will have to deal with a number of challenges. “As a customer, it’s good that my data is not shared with anyone. Marketers will need to obtain consent from users to collect their data. It will be much safer in terms of data protection. As advertisers, ending third-party support will present a lot of challenges and we will have to avoid those challenges,” said Dubey. TVS Motor Company SVP-Marketing Aniruddha Halder said that digital advertising rates may see a decline and they hope that the phasing out of third-party cookies will lead to a better digital experience for consumers. “In general, rates can optically see downward movement. While this is an effective cost-of-sale metric, it would be interesting to see how removing third-party cookies affects ad fraud overall. We hope that more first-party, consumer-facing methods will lead to a better digital experience and return on investment.”

Arilli chief commercial officer Rajeev Dhal said that advertising costs per unit may not change much, but the increased inefficiencies will impact the brands’ unit economics. “Even today, there is an inverse relationship between targeting and advertising costs. The more specific the targeting, the higher the advertising rate. Moving to a cookie-free world will mean: 1) dependence on intermediary advertising technology to access relevant audiences and having to pay for this technology. 2) the shift of ad dollars to larger platforms with their own first-party identifiers, where ad prices were inherently higher,” explained Shenoy.

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