What now for news publishers as the cookie crumbles?

Credit: Photo by Vyshnavi Bisani on Unsplash

When Google announced in 2020 that it would be phasing out third-party cookies, news publishers started worrying about the impact on ad revenue.

Third-party cookies are the backbone of digital advertising. Limiting, and ultimately getting rid, of cookies sought to protect personal privacy of online users, while making it harder for advertisers to target readers.

Then came first-party data strategies. News publishers responded by gathering data on their own readers using in-house platforms and brokering exclusive deals with advertisers.

Only, after years of stalling, Google last week reversed the decision to phase out third-party cookies. According to media analyst Thomas Baekdal, it was because it could not get an acceptable replacement, FLoC and Privacy Sandbox, approved by the EU. But the last four years have not been in vain, publishers must continue to "define their own market".

It's first-party time

News UK was one of the first to launch a first-party data strategy with its Nucleus platform in 2021. It makes a lot of sense for its national title The Sun, which is a magnet for online readers, attracting some 23.5m monthly visitors.

Three years on, the platform collects granular basic demographic data on its readers and also monitors their hobbies, ad behaviour, scroll depth and much more.

Unsurprisingly, personalised ads are more effective than programmatic ones. News UK has A/B tested the two and found Nucleus targeting on average boosts clickthrough rate to advertisers' homepage by 17 per cent, commands 58 per cent more attention and improves brand affinity by more than 7 per cent.

Last September, Nucleus also launched a recommender system for campaign clients, so they know the best formats, sections and emotions to lead with. It is these types of powerful insights that are driving Nucleus to 17 per cent revenue growth year-on-year.

Charlie Celino, head of strategic development at News UK, says whatever Google does with its cookies has little bearing on the newsgroup.

"Ultimately, we’ve shown that first-party data is king and the only way to achieve it is going to the source," he says.

It is a similar story at Reach plc, which embarked on a 'customer value strategy' in 2020 focusing on first-party data and getting logged-in users. AI-powered audience engagement tool, Mantis, came next and it has proved effective at contextual targeting for campaign partners.

Again the Google cookie strategy is of little concern to managing director Jim Mullen, who said in an investor webinar this week (31 July 2024) that the development was welcome.

"Our strategy still stands strong, we welcome the news, the question is: can you rely on the platforms [or] will it change in six months? We will continue to build direct relationships in the event something else occurs," says Mullen.

"We are competing with all other online publishers in the UK, we need to win over businesses [by delivering] better yield because we know our customers better - whether that’s through cookies being there or not."

Reach expects further changes, which would effectively reinstate the cookie phase-out. This justifies even more the need for first-party data strategies in the meantime. Data-driven revenue is up nine per cent and is now making up 45 per cent of its digital revenue.

Consent, pay or we'll take it away

The remaining headache for News UK is what to do with fly-by readers.

"A huge drive over the next few months is to get logged-in users and to capture more one-and-done users," explains Celino.

Here is one method: The Sun is the latest news publisher rolling out 'consent or pay' walls across its site. It follows the likes of The Mail, The Independent and Reach plc national titles like The Express and The Mirror.

It is a model where users are given three broad options: consent to being tracked, pay a subscription fee, or be denied access to the site. There are some variations on this.

At the time of writing at The Sun, readers can accept personalised ads by sharing data with 372 first-party partners, or pay £4.99 a month for access and still receive generic display advertising (which runs separately from any other subscriptions on offer).

'Pay or consent' wall on News UK website The Sun

Conversely at Reach plc title The Mirror, readers can consent to a lot more data sharing (1443 partners), or subscribe to its cheaper Privacy Plus subscription for £1.99 a month and get an ad free experience.

To its credit, the ad-free experience addresses a major fault with local news sites and Reach in particular, which is that excessive advertising hurts website experience and leads to user frustration.

'Pay or consent' wall on Reach plc website The Mirror

However, the true backdrop of these moves is the UK government's Information Compliance Office (ICO), which ruled at the start of the year that websites' cookie consent banners should make 'accept all' and 'reject all' equally easy to select.

Many websites either automatically opted users into an 'accept all' consent, or offered an obscured route to 'reject all' through a series of 'manage all' buttons and the like. ICO deemed this unfair and warned fines would be issued for non-compliance. You will now see past offenders like Autotrader offering a more user-friendly option.

A view from Europe: taking news consumers hostage

It is a situation that Baekdal says is bad for consumers across the board: either they part with loads of data (knowingly or unknowingly), they are forced to pay for content, or they cannot access the content they want.

The 'pay or consent' model has been adopted beyond the UK, he continues. European news organisations, especially in Germany, have deployed similar models which Baekdal says is "questionable" in its compliance with EU GDPR law.

Meta too rolled out an ad-free subscription tier where users paid for privacy, which was met with widespread criticism and is still in a stalemate with the EU over privacy breach fines. Baekdal adds that news organisations are no better by adopting the same "aggressive" strategies.

He pointed to data in the latest Reuters Institute Digital News Report 2024 which found that in the UK just eight per cent of people pay for news.

"The problem is 92 per cent of Britons do not believe the news is worth paying for," he explained, adding that it is a strategy that is unlikely to work and could further entrench a negative view of the news media.

Thomas Baekdal

"I don't understand why newspapers are doing this because we want to be encouraging people to have good relationships with us and become subscribers.

"We've spent the last decade writing about how bad tracking is. So for a newspaper to come out [and do the same thing] and say either accept it or pay us, is a deeply immoral way to run a business. That's why I call it the mafia method, it's not done because we think it's a good option, it's done as a form of extortion."

The alternative? A massive gamble

One ambitious local news startup has just launched this week washing its hands entirely of first- or third-party data strategies.

You will not see any cookie consent banners on the website of Ipswich.co.uk - nor will you see any ads, paywalls or datawalls. At least not in the traditional sense.

Oliver Rouane-Williams, founder of Ipswich.co.uk, used his life savings to launch the news site.

Speaking on the Journalism.co.uk podcast, Rouane-Williams admits that the move was a massive risk, as his vision for sustaining local news is experimental. But he is confident enough to "put his money where his mouth is".

Rouane-Williams is lining up funding partnerships with local businesses that make annual contributions in exchange for services that will grow their brand and reputation in the community. These partners then fund sponsor sessions, so readers - whether they have visited the site for 30 seconds or 30 minutes - will see a single local business message featured throughout the user journey, but only at an attention break, never mid-article.

"Display advertising detracts value from the reader's experience, advertisers are literally paying to make readers enjoy news less. We wanted to flip that model and find ways for local businesses to create value for readers.

"In this world, a local reader knows point blank that the journalism they're reading wouldn't be free and accessible without the support of a local business. And all of a sudden you move away from the transactional advertiser-publisher relationship, and more importantly, you remove the link between page views and revenue. Instead, the [priority] becomes about sessions."

Rouane-Williams knows the ad tech world well, as he held three different commercial roles at News UK in three years. And even he believes that programmatic advertising cannot support good quality journalism, especially on a local level.

"Programmatic ads are a scale game," he explains. "It’s an equation, page views times ad slots per page times yield. It forces all these bad behaviours that detract from your core product - which is your content - and it creates a conflict of interests between editorial and advertising."

Google's u-turn on third-party has little consequence on him as a result, and he has no intention to enter the first-party cookie game either. He wants to prove the editorial model works, and then call upon the support of local businesses.

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