MAdtech Point: What will happen when third party cookies get totally deprecated?

Digital advertising is at the crossroads in fixing the ownership for "the device" that collects consumer data

5 min read

Published: Sep 27, 2023 01:07:44 PM IST

Updated: Sep 27, 2023 02:41:52 PM IST

Digital advertising is at the crossroads in fixing the ownership for this device. For more than three years, many solutions have been tabled, but a FREE all-purpose device offered scale, which none of the many other owners can match up to. Image: Shutterstock

When something is free, it avoids the price system. It avoids the related liabilities to the customer they serve. It avoids the requirements of security. It avoids the obligations of security. It also prohibits learning. Key to capitalism is learning curves. Knowledge is wealth. Economic growth is from learning. One of the key instruments of learning are the signals of prices, said George Gilder during the launch interview of his book, Life After Google.

Imagine when your nearby shop owner makes this offer to you. That they will insert a device at your home to only listen to all the discussions at your residence. They also commit to you that they will only pick the relevant discussions that give them insights on your cooking needs. And in return they will offer a 50 percent discount to all the cooking related goods you will buy from them. They also offered to give this device for FREE! Third party cookies were one such free item. It not only avoids all the requirements of security and its related obligations; it does not pass back the learnings to you, for your own benefit.

Well, there is always a tradeoff. We reject some such offers; but also take a chance and bite into a few other offers. Accessing content for FREE is one such trade off! In a price conscious market like India, this was a no brainer. Content, commerce and communications all freely flow through this device, today. The business model of the media and entertainment industry is built on top of this value exchange. Prima facie, the value exchange in offering goods or service, in return for insights from your data, is NOT the issue. Giving away the device for FREE is not the issue, either. When a very large ecosystem – like the entire digital advertising industry – gets built around this device and multiple players start offering many different services, it begins to cause strain in the system, in the form of poor accountability and rampant abuse of the insights. This is where the proverbial cookies crumbled.

By the end of the year, nearly 75 percent of the world’s population will be protected by sovereign regulations from their respective countries. Technically, the insights that are being collected by the device belong to the consumer, as the data principal; and without his/her consent, these insights must not be used beyond the purpose for which the consent is given. Privacy regulations are now meaning to ensure that the purpose of the device is decoupled from all other services that are being offered to provide transparency. And to drive this, essentially the device needs an owner. Digital advertising is at the crossroads in fixing the ownership for this device. For more than three years, many solutions have been tabled, but a FREE all-purpose device offered scale, which none of the many other owners can match up to.

There are two ways in which this can be addressed now:

1. Distributed ownership in a Web2 way: Privacy regulations across the world have clearly identified the stakeholders, their roles and their responsibilities. We, the consumer, is the sole owner of our data as its principal and we now have the obligation to offer consent to use our data. The device will now belong to each data fiduciary who will take the responsibility to use this information, for the purpose that it is meant to be. India has gone one step further with the creation of a Data Protection Board, where the consent and its usage is maintained in a unified manner and made available for the consumer to check and verify. In this approach, data fiduciaries can come together in creating a scaled-up marketplace based on specialisms or segments like sports, young mothers, education etc., and share insights and consent in a federated manner.

Also read: India can lead the Web3 revolution, but lack of regulations can be a business-killer

2. Tokenized ownership in a Web3 way: Here, there is no device. It becomes a wallet in the hands of the consumer. As the data principal they have full control over their data, stored in their wallet. Depending upon the nature of the value exchange, they can share relevant details in return for enterprises to airdrop their services into the consumers’ wallet directly. This is totally secure, safe and compliant. While this approach ticks all the privacy related regulatory requirements, there is still some friction in the form of taxation, as tokens are treated as assets. There are some strong enablers in the form of a unified payment interface for ease of payments and in my view, it is not far off, when some of the enterprises start offering token gated commerce for exclusive content. E-sports, luxury goods, premium automobiles, timeshare holidays etc., are already exploring this approach.

Whether it is distributed or tokenized ownership, the common theme is around the need for clear declaration and/or sponsorship of this ownership of data and its insights, that drives accountability and offers transparency in the value exchange across the digital advertising supply chain. On last count, every enterprise, at an average, deploys more than 15-20 Martech and Adtech tools in a fragmented manner. Firstly, they all need to be synced up. Secondly, they need to ensure that they are made available for collaboration in a compliant manner. Well, that is for another week.

Gowthaman Ragothaman is a 30-year media, advertising and marketing professional and CEO of Aqilliz, a blockchain solutions company for the marketing industry.