Cookie is an important technology in identifying users within a website and providing them with a consistent experience. Cookie is also important for displaying ads on the Web that match their interests and measuring the results of advertisements. However, from the privacy protection standpoint, many companies are starting to take action on using Cookies in advertising. In this post, we interviewed Mr. Shun Harada, a member of the Digital Advertising Consortium, Inc. (DAC) and a specialist in privacy, about the privacy protection trends, efforts of various companies, and how companies should deal with privacy protection.

Global Trends in Privacy Protection

– Let me first ask, what is the global trend in privacy protection?

Harada

Sure. First of all, one of the reasons that corporate privacy protection became a huge topic was the Cambridge Analytica*1, which said that data acquired on Facebook was used during the election. Cambridge Analytica prompted platformers (e.g., Apple and Google) to put more effort into preventing third-party companies from collecting and using data that users give to them through their services (devices, operating systems, browsers, web services, etc.), not just disclosing them to users. Privacy protection has been a prerequisite for providing services for some time. But with arising discussions, new ways of privacy protection are becoming a differentiating factor for services and products.”

*1: An incident in which is said that during the 2016 U.S. presidential election, Cambridge Analytica, an election consulting firm based in the U.S. and the U.K., allegedly created psychological profiles of 87 million U.S. voters based on data collected through a psychological quiz app, and then manipulated floating voters by Facebook targeting ads. Facebook was held accountable for its data management.

Efforts to Protect Privacy on the Web

– So it has become crucial for huge platformers to structure more detailed policies on handling user data to continue providing their services. What are companies doing to protect privacy on the Web?

Harada

The most famous one is by Apple, which restricts the use of Third-party Cookies and other tracking technologies in Safari (Intelligent Tracking Prevention, ITP). Following Apple, Google also announced the suspension of Third-party Cookies in Chrome (Privacy Sandbox; the suspension schedule was updated to late 2023). This is the same for other browsers, such as Mozilla Firefox’s ETP (Enhanced Tracking Protection) and the anti-tracking feature for Microsoft’s Edge.

Impacts to consider with Cookie restrictions

– So many browsers have added anti-tracking features to protect privacy. What will be the impact of restricting Cookie tracking on businesses?

Harada

As for Third-party Cookies, tracking (including effectiveness measurement) and retargeting across multiple websites will no longer be possible. And for DMPs (Data Management Platforms) that have been using Third-party Cookies as the basis for user IDs, there is a risk in providing their services because the link between user IDs and segments created by analyzing behavioral history could disappear. However, the impact will be limited to audience targeting, and other targeting methods will still be available.

Business and media companies using these Third-party Cookie-based ad technologies will also see a decrease in the efficiency of digital ads and in the profitability of audience-targeted ad products.

Actions by tool providers

– I believe that DAC is developing tools and services based on the trend, but what measures are being taken by the companies that provide tools?

Harada

They are developing:

• User identification methods that do not rely solely on Third-party Cookies
• Advertising products other than audience targeting
• Support for “data cleanrooms” and new frameworks (e.g., Privacy Sandbox) provided by platformers
• Support for First-party data utilization for businesses

Especially for the 1 above, there are common ID solutions for advertising transactions, such as Unified ID 2.0 and LiveRamp ATS. These are becoming de facto standards overseas, but not yet in Japan. Since this is not an area for competition, we need to promote hand-in-hand with a long-term perspective for the continuation and development of the industry.

– In terms of not solely relying on Third-party Cookies, Facebook CV API for more accurate conversion measurement has been announced. And in terms of utilizing First-party data, server-side tagging technology has been announced. This technology manages tags and data on a server built in the companies’ subdomain on the Google Cloud Platform. It is becoming increasingly essential to keep up with the latest information and technologies released by platformers and take them in with a long-term view. Irep has started a service that combines Google’s server-side tags with the Facebook CV API and supports everything from environment construction to distribution.

Prospects for privacy protection and how companies should think

– How should companies think about privacy protection in the mid-long term?

Harada

First of all, companies should think that this change is inevitable. Platformers were only the first to respond to the shift of consumers and society. Whether a third-party company or not, the world is against collecting consumers’ data for marketing and advertising without agreement. Companies must explain the purpose and means of data collection and utilization before doing so.

Actions to take upon utilizing data

– Last but not least, what kind of actions will companies need to take in light of the trend changes and the future outlook we have discussed today?

Harada

The industry is not yet keen on balancing data utilization and privacy protection. I think advertising companies must take the lead in changing the mindset because the trend is not limited to digital marketing and online advertising.

If the essence of “Digital Transformation (DX)” is to provide new values to consumers through the power of digital technology by attending to their essential changes, data collection and utilization considering privacy is also critical in promoting DX. Consumers would not entrust data, the most crucial element of DX, to companies that fail to do so.

To be specific, companies should review their communication with customers. In addition to modifying the Terms of Use and Privacy Policy, companies should design so-called “Value-Exchange” – what a company returns to its customers in exchange for collecting and utilizing their data.

As part of it, companies should obtain consent from customers through the Consent Management Platform (CMP) and reflect those given data to utilizing one’s own data or in the collection and use of data by linked marketing techs and ad techs.

Consumers are sensitive to the distribution of their data. Even if it is written in the Terms of Use or Privacy Policy, it is “out of the question” if they think their data is being used unexpectedly. It will become increasingly important for business and advertising companies to be close to consumers and provide new values.

– With the massive trend of privacy protection, companies will have to deal with more and more things to utilize data for their services. Thank you very much.

Summary

We asked Mr. Harada about the actions of platform companies and the ideas and activities that companies using the data should do regarding privacy protection. It will become crucial to make long-term efforts across domains, from developing data infrastructure such as introducing data acquiring tools to marketing activities and providing services using data. As partners, Irep and DAC will provide extensive technical and marketing support. Feel free to contact us if you want to discuss data utilization.

Shun Harada
Joining Digital Advertising Consortium in 2008, Shun was involved in developing and operating infrastructure systems for in-house systems and ad delivery solutions. Since 2012, he has been engaged in marketing research and business planning for domestic and international advertising technologies and cutting-edge technologies at the Advertising Technology Research Office. Shun also promotes the protection of consumer privacy at the Japan Interactive Advertising Association (JIAA), the Data Driven Advertising Initiative (DDAI), and the Japan Institute of Law and Information Systems (JILIS).

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