We’re already seeing the fallout from Apple’s war on cookies

The predictions are now a stark reality. With its Q3 earnings release in early November, Criteo confirmed what until then had been only speculation: Apple’s new Intelligent Tracking Prevention feature, rolled out with the latest version of its Safari browser in September, is taking a heavy toll on retargeters and industry players that rely on third-party cookies to track and place advertisements.

Criteo said during its earnings call that the feature negatively affected its third-quarter revenue by less than $1 million. In Q4, Criteo expects the feature to have a significant negative impact of 8 to 10 percent, or around $20 million, on revenues. In 2018, the negative impact could increase to 9 to 13 percent of revenue. In December 2017, Criteo admitted that Apple’s iOS 11.2 update patched the workaround it had devised for Safari, sending shares plummeting once again.

Without a doubt, Criteo is only the first of many industry players that are likely to feel the pinch of Apple’s unequivocal move to ouster the cookie. The software updates to Safari, which accounts for roughly a third of mobile browser traffic, catapult yet another advantage into the walled gardens of Facebook and Google.

As I noted in a previous column, large swaths of the digital ad industry are still tied to the cookie as a primary means for identifying audiences and measuring campaigns. But the cookie is rapidly losing value.

At our company, we’re already seeing businesses reporting a significant reduction in conversions on Safari since iOS 11 was released. This is in addition to cookie blocking and deletion occurring prior to the iOS change. Our research indicates that cookies overstate reach by 108 percent, understate frequency by 45 percent and understate media attributed conversions by more than 41 percent.

Are people truly no longer converting from that browser? Of course not. Such conversions simply cannot be tracked anymore. This is a notable blow to many already-struggling publishers and retail advertisers that depend on accurate conversion data to drive and guide their businesses.

Now that Apple’s long-forewarned war against the cookie is starting to hit online players where it hurts (the wallet), the main question is whether the industry will absorb the consequences of Apple’s new reality and carry on — or whether this is just the first move in what will ultimately cause an industry sea change that cannot be ignored.

It pays to be a student of history when it comes to such matters. Apple’s size and dominance in the mobile industry yields enough influence to broadly and permanently shutter a standard like cookie-based tracking. Just look at Apple’s well-documented crusade against Adobe Flash.

Apple’s refusal to support Flash on its devices wasn’t an instantaneous death knell for the product. But it was the first domino to fall on a years-long road to Adobe finally admitting that Flash had reached a point of obsolescence, both in the mobile and desktop space.

So, too, might we see Apple’s Intelligent Tracking Prevention feature as the first concrete evidence that the cookie’s time is truly limited. Choosing to ignore and adjust for the implications of Apple’s move, and other potential wide-ranging cookie-blocking efforts to come, would represent a dangerous level of stubbornness that could ultimately tank companies and upend online advertising more broadly.

Adapting to a post-cookie world

Here’s the bright spot in what otherwise sounds like a doomsday prophecy: There are better mechanisms for ad targeting. In fact, in a cross-device world, cookies are hardly ideal. Advertisers and ad tech players that adapt — however painfully — for a post-cookie world may well find themselves someday thanking Apple for showing them the light.

Many advertisers today are starting with cookie-derived data and looking to bridge that data to mobile IDs using probabilistic methods. This approach essentially creates a lookalike audience, rather than a one-to-one match to a device.

Instead of building a targeting strategy around cookie-driven data, advertisers must turn their attention to other factors, like device IDs themselves, as well as operating system, browser, IP address and so on. Together, these signals can identify audiences with much greater accuracy and reliability than any methods built on cookies.

The long-prophesied death of the cookie is finally underway. And while its grave will take time and more shovel-fulls of dirt to complete, it would be foolish to wait around for the tombstone to be engraved and erected. Advertisers and ad tech players that take a page from history and adapt sooner rather than later will ultimately find themselves stronger on the other side of the coming funeral.

[Article on MarTech Today.]

Opinions expressed in this article are those of the guest author and not necessarily Marketing Land. Staff authors are listed here.

About The Author

Joe Sabol

Joe Sabol oversees Flashtalking’s Sales and Account Management teams in the US. As one of the original Co-founders of Flashtalking US operations, Joe has been instrumental in growing the business from three people to over 200 across six offices across North America. Prior to Flashtalking, Joe held several senior roles at Pointroll overseeing National Sales, Account Management, and Publisher Sales. Joe has over 20+ years of digital experience ranging from Search to Mobile to Rich Media. Sabol resides in NJ with his wife and 3 young sons where he coaches high school wrestlers and prepares his sons for the 2032 Olympics and UFC 420.