Good riddance to cookies, it's all about apps now

The notorious internet cookie that is used to help keep tabs on all your internet activities is about to find itself going down the cookie monster gullet of privacy. And it’s about time too.

The likes of Apple, Google and Mozilla are moving to augment privacy on their browsers and are also implementing new controls to limit third-party data collection. Google announced measures back in May, and Apple recently detailed a new set of anti-tracking measures designed to stop platforms and ad tech players from using cookies for cross-site targeting purposes.

Some are crying foul over the crumbling cookie. But the new measures may just be an extra couple of nails in a coffin that should have been buried quite some time ago.

Tracking cookies have long been the default method that advertisers use for tracking and targeting users online. However, if one was to look at the data, it becomes clear that cookie tracking is no longer working for advertisers.

According to data from Flashtalking, 64% of tracking cookies were already being blocked or deleted by web browsers back in 2017. When you look at mobile, the figures are even higher—three-quarters of mobile cookies don’t make the cut.

Putting aside the rates of cookie rejection for a moment, let’s consider perhaps a more alarming statistic put forth by Flashtalking. Reliance on cookies leads to a 36% decrease in return on ad spend. And this was before stricter restrictions came into play.

But it’s not just the latest privacy plays from popular web browsers that are chipping away at the cookie’s long dominance in the advertising industry.

Consumers have shifted their time spent online into the mobile domain, specifically to in-app environments. This shift is especially apparent in the Asia Pacific region. According to Smaato’s Global Trends in Mobile Advertising H1 2019 report, countries such as India, Japan, and Australia have seen impressive mobile ad request growth of 201%, 40%, and 38%, respectively, over the past year. Advertisers have already started taking notice of this trend and are beginning to move their money to where their consumers are.

Consumers quite often aren’t using the same browser across desktop and mobile, which means advertisers can’t use cookies to track them across devices. To add to that, apps now account for more than 90% of consumers’ mobile time in most developed countries worldwide—and the in-app environment is a cookie-free zone.

New and enhanced data privacy regulations such as GDPR and the upcoming California Consumer Privacy Act (CCPA) are also taking a bite out of the cookie. In short, relying on cookies to ensure ads are targeted appropriately will prove to be unsustainable in the long run.

So the question is, what can we do? The first step would be to chuck the cookie into the bin. After that, brands can start building out their first-party databases and begin looking to leverage publishers that can supplement their efforts through second-party data.

Unless a new means is found to track users within browsers, in-app advertising looks set to be the new poster child for advertisers looking to run campaigns with a greater emphasis on engaging a targeted audience.

We recently noted in the Smaato H1 2019 Global In-App Advertising trends report that global eCPMs for in-app ads have risen 27% over the past year, indicating increased demand from marketers.

Beyond the advantage over cookies, in-app ads also have an advantage when it comes to fraud, as compared to its more mature cousin, mobile web ads. According to Protected Media, in-app advertising had 25% fewer fraudulent attempts than mobile web advertising in the second half of 2018.

Mobile game in-app ads, in particular, may also have an edge when it comes to brand safety. Gaming environments often tend to be very controlled with minimal user-generated content, even in the in-app world. This equates to a lower probability of ads appearing next to questionable content.

The cookie may not be dead yet, but its time is likely coming to an end. Advertisers must embrace alternatives should they wish to continue to build a personalized relationship with key audiences. Only the marketers who cling to cookie crumbs will find themselves in hot water.

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Delynn Ho is general manager APAC at Smaato.