© Copyright WARC 2021. All rights reserved. 2 © Copyright WARC 2021. All rights reserved. Digital marketing has reached a point of no return. Increased data privacy regulation, the deprecation of third - party cookies by Google, and the decision by Apple to require users to opt - in to ad tracking by mobile apps heralds the end of an era of free and easy access to consumer data. For some marketers the impact of these developments will be minimal, especially where brands have strong and direct transactional relationships with customers. However, in many other cases – in particular those categories involving low - consideration products, often sold via an intermediary – this sudden deprivation of customer data threatens to plunge their marketing and media investment strategies into darkness. This WARC Guide will examine the identity options available for advertisers in a post - cookie, post - mobile ad ID landscape, from first - party data acquisition and publisher partnerships to industry identity solutions and contextual targeting. It will also advise brands on how to prepare for some of the situations they are likely to face in the coming years, as the industry adapts to life without third - party cookies. 1. Why identity is changing Three major trends are combining to upend the way in which brands identify consumers. 2. Potential identity solutions An examination of the leading contenders to replace the third - party cookie, from identity ‘cohorts’ to contextual targeting. 3. Building a winning first - party data strategy The best way for brands to protect themselves from changes to identity practices is to build their own supply of first - party customer data. 4. Preparing for volatility We advise on how marketers can prepare for the identity scenarios that may impact their brands. 3 © Copyright WARC 2021. All rights reserved. 1: From 2023, brands will no longer be able to use third - party cookies to track consumers online. It will become harder to deliver personalised ads, and to manage campaign reach and frequency. 2: An ever - growing patchwork of national and regional data privacy regulation is giving consumers greater control over their identity 3: Brands with access to authenticated first - party data are best placed to thrive in a post - cookie ecosystem. 4: Audience - based targeting will still be possible, but data likely will be more fragmented across media owners and technology providers 5: Google is encouraging advertisers to move away from user - level targeting, in favour of ‘cohort’ groups based on shared behaviours and interests 6: Ad tech vendors are releasing dozens of proprietary ID solutions based on alternative identifiers like email addresses, but adoption levels remain a concern. 7: Brands can benefit from data partnerships with publishers , which have access to authenticated audience data. 8: Some advertisers are shifting towards contextual targeting , based on a user’s content consumption habits. However, scalability is a challenge for planners. 9: With last - click attribution no longer possible, brands require a fresh approach to campaign measurement . For some advertisers, this will mean a return to market mix modelling. © Copyright WARC 2021. All rights reserved. 4 © Copyright WARC 2021. All rights reserved. • Agencies will play a vital role in assessing the value and long - term viability of ID solutions on behalf of their clients. • Interoperability is key: media buyers should eschew ad ID solutions that are incompatible with advertisers’ own first - party customer profiles. • Brands will need assistance adopting new measurement techniques. Agencies can guide clients as they begin to use econometric modelling to inform audience targeting and media investment. • Marketers must review the first - party customer data they use to personalise marketing, and assess whether it was actively or passively shared. • Consumers are willing to proactively share insightful ‘zero - party data’ with brands in exchange for personalised services. • Brands can make better use of owned media and physical and virtual events to gain authenticated customer data. • Publishers and platforms with rich audience data are in a strong position to capitalise on the demise of third - party cookies and mobile app tracking. • However, media owners have a responsibility to handle and share data in strict accordance with user agreements. • Publishers can create tools to allow advertisers to contextually target audiences based on prior content behaviours, or by relating the content they are viewing at that moment in time. © Copyright WARC 2021. All rights reserved. The future of identity 6 © Copyright WARC 2021. All rights reserved. The cookie has nearly crumbled – and that’s not all. Google’s plan to phase out third - party cookies from its Chrome browser in 2023 (a year later than originally planned) will draw a line under a technology that – for better or worse – has provided the basis for frequency capping, retargeting and attribution models. Marketers will be required to rethink their measurement strategies. At the same time, mobile ad IDs (MAIDs) – a more reliable source of user data for advertisers – are also under threat, following Apple’s decision to require users to give active consent to tracking by apps. Combined with the fast - growing assortment of local and regional data privacy regulation across the globe, it points to a more challenging environment for marketers attempting to target audiences with personalised advertising. Evolving identity: 7 © Copyright WARC 2021. All rights reserved. An advertising ID is a means by which brands and publishers can recognise an individual consumer across the internet . Ad IDs take many forms, from email addresses and mobile phone numbers to device IDs and cookies. These IDs underpin audience - based media trading practices . They help brands to target relevant audiences, to manage frequency, and to measure the impact of their campaigns. Cookies are small software codes placed on an individual’s device by websites visited by the user, which keep a record of behaviour and interests. First - party cookies only work on the issuing website; third - party cookies track users across the web. However, third - party cookies are flawed for advertising purposes . They don’t hold much information, and they are not available on mobile devices. While cookies have been the default tracking mechanism for desktop devices, mobile marketing has been supported by m obile ad IDs, or MAIDs. These are random codes generated by a consumer’s mobile device and then shared with app servers, allowing publishers and developers to track the user journey. Examples include Android ID and Apple’s Identity For Advertisers (IDFA). Identity is essential for digital advertising The web was built on cookie technology Mobile ad IDs are vital to mobile marketing 8 © Copyright WARC 2021. All rights reserved. Google has confirmed it will remove all support for third - party cookies from its Chrome browser by 2023. Given Chrome’s near - monopoly of the browser market , this will be a devastating blow to the cookie - supported digital advertising ecosystem. Despite receiving advance warning from Google, many marketers remain unprepared. Only 37% of client - side respondents to WARC’s The Marketer’s Toolkit 2021 survey claimed to have any plans in place to reach consumers in a post - cookie environment; 21% actively disagreed that plans have been made. Source: WARC, The Marketer's Toolkit 2021 ● Strongly agree ● Agree ● Neutral ● Disagree ● Strongly disagree 9 © Copyright WARC 2021. All rights reserved. What the absence of third - party data means for advertisers Brands will no longer be able to create digital ad campaigns with reliable audience reach metrics. Nor will they be able to cap ad exposure in the way that cookies had, until now, enabled them to do. Data management platforms used by brands for re - targeting may no longer be fit - for - purpose. Brands need to reappraise their tech stacks and assess what vendors can provide instead. The death of the third - party cookie accelerates the need for brands to play their part in reinventing attribution, taking account of all touchpoints along the path to purchase. Reach and frequency compromised Weaker targeting and retargeting Attribution models are flawed Source: Jide Sobo , ‘ How brands can respond to the consequences of a cookie - free world ’, WARC, July 2021 Alphabet, Amazon and Facebook will become even more dominant in a cookie - free world, offering the largest reach and the best targeting options – but delivered by proprietary and often opaque solutions. More reliance on walled gardens 10 © Copyright WARC 2021. All rights reserved. While Google upends browser - based user tracking, Apple’s App Tracking Transparency (ATT) policy threatens to have a similarly chilling impact on mobile marketing. As part of the upgrade to iOS14, Apple requires app developers to gain active consent from users to access their Identifier for Advertisers (IDFA), which has long been the staple of mobile measurement and attribution for iOS mobile advertising campaigns. Early evidence from Flurry Analytics suggests take - up from US users is as low as 16% – though tests by IRI suggest this may not have as big an impact on campaigns as first feared. Note: Based on 5.3m daily mobile users using iOS 14. Opt - in rate is app users who allow tracking divided by number that allow or deny tracking in apps that have shown prompt Source: Flurry Analytics 11 © Copyright WARC 2021. All rights reserved. A growing number of territories and markets are introducing data privacy regulation to protect citizens’ personal information. Calls for US federal legislation are intensifying, to address a ‘domestic patchwork’ of state regulations such as California’s CCPA. Bills dealing with specific issues such as children’s privacy and biometrics are also making their way through America’s legislative process. There has also been a surge of regulation in APAC , with China and India working towards new comprehensive privacy laws. Source: DLA Piper ● Heavy ● Robust ● Moderate ● Limited 12 © Copyright WARC 2021. All rights reserved. Arielle Garcia, SVP, Business Operations & Compliance, Chief Privacy Officer UM Worldwide 13 © Copyright WARC 2021. All rights reserved. Brands and media owners alike are growing concerned that changes to audience targeting will hinder the use of mobile as a marketing channel. In WARC's survey of over 500 EMEA marketing professionals, in association with the MMA, a third (34%) of respondents cited privacy requirements such as GDPR as the leading barrier to mobile marketing growth. Meanwhile, consumer concerns about privacy was selected by 35% of survey respondents, up from 25% in 2020, ahead of ever - green challenges including metrics, measurement and ad fraud. Note: Based on a survey of over 500 EMEA marketing professionals (a mix of client - side, agency, media owner and technology vendor marketers). April and May 2021. Source: WARC, MMA, State of the industry 2021: Mobile marketing in EMEA © Copyright WARC 2021. All rights reserved. The future of identity 15 © Copyright WARC 2021. All rights reserved. With more than 100 advertising identity technologies already on the market, and many more in development, brands face an uphill task understanding which solutions best fit their business needs. Here we set out the main contenders. Some propose replacing third - party cookies with IDs based on other forms of personally identifiable information (PII), such as hashed email addresses. In contrast, data - rich Google is advocating a move away from user - level targeting in favour of ‘cohorts’, or audience groups based on content consumption and online behaviour. At the other end of the spectrum, some in the industry encourage a revival of contextual targeting, augmented with machine learning technology. Runners and riders: 16 © Copyright WARC 2021. All rights reserved. Brands are going to have to become more proactive about customer identity management – and that will mean greater investment in data, platforms and services, according a study by Winterberry Group The consultancy expects the European identity market to expand at a compound annual growth rate (CAGR) of 15.5% between 2020 and 2024. It also forecasts more - than - doubling of the US identity market in that time, with spend growing from $4bn to $8.2bn – a CAGR of 19.7%. Source: Winterberry Group 17 © Copyright WARC 2021. All rights reserved. The key criteria that any cookie - replacement should aspire to, according to Ian Hocking, VP Digital, SCMP I.e. matching users based on an understanding of attributes to assess their value. Matching is the foundation of a buyer's ability to judge the value of an impression. Without it, media owners would see a significant drop in yield. The ability to enrich an ID with data in a compliant manner – either on the buy - or sell - side – and have that data understood by all parties. Enriching the ID with data helps to increase buying efficiencies and increases the value of that impression. The capability to track individual users across platforms and publishers to facilitate the measurement of performance driving information. The bigger the reach a third - party ID offers, the less fragmentation that marketers and media planners must navigate to accomplish a campaign’s goals. Traceable and verifiable IDs and data means fewer bad actors and more efficient campaigns. Also independence – there should be no intrinsic bias in the ID. Recognition Data syncing Persistence Scale Transparency Source: Ian Hocking, ‘ The state of advertising identity ’, WARC, July 2021 18 © Copyright WARC 2021. All rights reserved. Deterministic Probabilistic Data collected and managed by companies via a direct relationship with the end user. User IDs spanning properties owned by publishers and e - commerce providers. Third - party solutions based on authenticated data provided by the user, e.g. email address. Uses identity graph modelling to infer user ID based on a combination of signals. Audiences grouped – often at browser level – on the basis of online behaviours and interests. Advertising messages tailored on the basis of content, device and user context. Transaction data, CRM, data submitted via online forms. Digital platforms, content publishers, media owner alliances (e.g. The Ozone Project). Unified ID 2.0, LiveRamp IdentityLink , Zeotap ID+, Nielsen ID. ID5, Tapad , Neustar Fabrick ID. Google's Federated Learning of Cohorts ( FLoC ). Many publishers offer contextual targeting solutions; specialist ad tech vendors like Integral Ad Science. Rich and insightful customer data specific to your brand's needs. Authenticated user data, which helps to manage campaign reach and frequency. Privacy compliant. Enables tracking across participating media environments. Helps marketers to join the dots where ID data is patchy or incomplete. Chrome's market dominance means any such initiative would have huge scale. Improved relevancy. Enables marketers to more closely manage suitability of content. Hard to come by, especially for those without direct user relationships. Fragmentation, especially when dealing with multiple smaller media owners. Scalability. Dependent on adoption by users and publishers. Potential flaws in accuracy. Concerns around unconsented ‘fingerprinting’ practices. Prevents user - level targeting. Potential for regulatory complications. Scalability. Makes campaign measurement, frequency capping etc. more difficult. In brief Examples Pros Cons 19 © Copyright WARC 2021. All rights reserved. Publishers’ authenticated user data can help brands to plug any gaps in their audience coverage. The vast quantities of user data within ‘walled garden’ digital platforms like Amazon, Facebook and Google have long appealed to advertisers – and the convergence of content and commerce makes their proposition even more attractive. The deprecation of third - party cookies also provides an opportunity for content publishers to reframe the audience intelligence they can supply to brands. Scale remains a key consideration for brands: publishers including Dow Jones and Mediahuis are focused on boosting audience data acquisition through user registrations and subscriptions. Publisher alliances are also becoming more common. Initiatives like The Ozone Project in the UK and Trusted Media Brands in the US enable advertisers to buy programmatic ads across a range of premium publishers, removing the need to engage with multiple sellers to achieve the same reach. 20 © Copyright WARC 2021. All rights reserved. Jide Sobo , Director, Digital Services & Partnerships Ebiquity