A Glimpse into Future Mergers and Acquisitions

Michael Beebe, CEO of Dstillery, an AI-based audience data and targeting technology company, believes that when the consolidation wave surges, it will be significant companies making strategic bets on technologies that fill their gaps or exploit their competitors’.

However, the list of prospective companies for M&A is likely to be exclusive. Many companies, whether they’re in the business of alternative IDs or contextual advertising, are grappling with their unique challenges.

Public Market Activity: Speculations Abound

Speculations are rife about further potential mergers and acquisitions in the public market. LiveRamp, for example, recently revealed its intention to acquire data clean room provider Habu. The companies claimed that the transaction would help create an “interoperable platform for data collaboration across all clouds and walled gardens globally”.

The Search for Viable Alternatives

As third-party cookies crumble, companies are scrambling for alternative targeting methods. However, many of these alternatives face challenges in terms of scalability, privacy compliance, and effectiveness.

Authenticated IDs: A Stable but Limited Option

Authenticated IDs, such as hashed emails, are stable but raise questions about scalability and privacy compliance. They are also limited by the number of publishers that can support them at scale.

Contextual Advertising: Free from Privacy Headaches but Doubts over Effectiveness

Contextual advertising, which relies on content and device cues like time and location, is free from privacy headaches. However, many marketers are skeptical about its effectiveness and scalability.

Probabilistic Solutions: A Mix of Concerns

Probabilistic solutions, an evolution from cross-device graphing approaches, aim to forge links between different first-party IDs for enhanced cross-domain targeting and analysis. However, they stir up a mix of concerns about privacy, scalability, and effectiveness.

The Impact on Various Sectors

The demise of third-party cookies will significantly affect various sectors, including location-based ad tech vendors, data clean rooms, third-party data vendors, and measurement firms. These sectors have long relied on cookies’ robust data-sharing abilities, but they now face a significant challenge: maintaining their targeting, analytics, and attribution accuracy in a world without third-party cookies.

A Look at Google’s Privacy Sandbox

Google’s Privacy Sandbox, a set of open standards intended to enhance privacy on the web, is one alternative to third-party cookies. However, it has been met with mixed reactions from the ad industry.

Some ad tech vendors see collaboration with the Privacy Sandbox as a strategic move to stay relevant and competitive. However, others voice concerns that it could further solidify Google’s dominance over advertising.

The Trade Desk’s Stance

The Trade Desk, a prominent critic of Privacy Sandbox, has confirmed that it is exploring integrations with several Privacy Sandbox APIs, despite its reservations. The company has been eager to see how interoperable all alternative solutions are.

Google’s Vision for User Privacy

Google is also keen to keep the rest of the industry aligned with its vision for user privacy. It has been funding third parties, including DSPs and supply-side platforms, to conduct tests using the APIs within Privacy Sandbox.

The Road to a Cookieless Future

The transition to a cookieless future will be gradual rather than abrupt. The real shift will kick in only when third-party cookies take their final bow, which increasingly seems more likely in the first quarter of 2025 than at the end of 2024.

However, the downfall of third-party cookies is just one part of the latest consolidation puzzle in advertising. Other factors, such as AI, economic pressure, and cross-media measurement issues, are also stirring the pot.

The Role of Private Equity Investors

Private equity investors are expected to play a significant role in the consolidation wave. After a quiet 2023, they have substantial funds to invest and are looking for opportunities to put this money to work to earn returns for their investors.

The Importance of Data Quality

Data quality is now top of mind for many companies. As more and more companies position themselves to train models, the quality of the datasets from ad tech is becoming increasingly important.

Advertisers’ Struggle to Navigate the Changing Landscape

Advertisers are grappling with the upcoming changes. Their struggle stems from a mix of outdated yet once-successful strategies, a drastic shift needed in data handling, evolving privacy laws, and the complex web of new tech and partnerships.

The Landscape of Alternatives to Third-Party Cookies

The landscape of alternatives to third-party cookies is both promising and complex. These alternatives signal a transformative shift in online advertising. However, they are in a state of flux, beset by challenges in interoperability, privacy compliance, and effectiveness in targeting and measurement.

In the foreseeable future, marketers are likely to rely on a mosaic of methods for ad targeting and performance assessment. This mosaic will likely include authenticated IDs, probabilistic IDs, contextual or cohort-based tactics, and strategic integration of data partnerships and first-party IDs.

Conclusion

The cookieless future of digital marketing is a complex, evolving landscape. As third-party cookies crumble, companies are wrestling with the challenge of finding viable alternatives. Amidst the uncertainty and upheaval, one thing is clear: the industry is in for a period of significant change and innovation. The coming years will undoubtedly shape the future of digital marketing, dictating new norms and strategies. The industry should brace itself for this transformative shift and the opportunities and challenges it will bring.

References & Further Reading

• Nine questions to consider as Google starts its move away from third-party cookies
• Here’s what The Trade Desk actually thinks about Google’s Privacy Sandbox
• As cookies crumble, M&A execs seek viable alternatives