It all started from 2017 onwards, when Apple’s Safari, Mozilla’s Firefox, and Microsoft’s Edge started cutting their ties with third-party cookies. Around the same time, Google witnessed more than 160 million users visiting their accounts to manage privacy settings across Google’s products. The picture was clear – it was time to pull the plug.
As of now, Google is all set to wipe out third-party cookies by the end of 2024. This is huge for the digital advertising industry and a game changer for its two players – advertisers and publishers, as Chrome holds a massive 62.82% of the global market share.
Losing access to third-party data might translate into lesser-targeted content and ads, a low conversion rate, and unhappy users. But is the post-cookie era all gray and gloomy for digital advertising? Let’s find out.
Why Do Digital Advertisers Crave Cookies?
You walk into your favorite bakery shop, and the baker serves your favorite freshly baked chocolate cookies with a glass of fresh milk. That’s the power of information, aka data, aka cookies.
Cookies act like tiny memory boxes. Whenever you visit a site, these cookies remember bits of your choices – like the articles you read or the products you browsed. They also gather basic details about online users like age, gender, favorite products, and past searches. Cookies are the secret code-breakers of the digital world, decoding a user’s preferences and interests.
Brands have been using third-party cookies to track website visitors, enhance the user experience, and gather data to target ads more effectively. The main advantage of third-party cookies for advertisers and publishers is that they enable tracking of what users were browsing throughout the entire web within a specific browser, not just on the site on which these cookies had been installed.
In recent times, the pendulum has swung in the direction of privacy. Users have become increasingly skeptical of third-party cookies, primarily because they do not allow the user to control how their personally identifiable information (PII) is used. These growing concerns led to anti-tracking measures in web browsers and the emergence of data privacy regulations like Europe’s GDPR, California’s CCPA, and more.
Cookie Withdrawal Aftermaths
The world of digital advertising has been on a cookie diet for years. However, recent privacy-focused shifts have meant an abrupt halt to this diet, leading to some significant ‘withdrawal symptoms’ in the ad tech industry.
- The disruption of ad frequency control: Cookies ensure a user wouldn’t be repeatedly overwhelmed with the same ad. They remember user interactions, preventing ad overexposure. Without them, there’s a heightened risk of serving the same ad incessantly, possibly irking users and diminishing engagement.
- Loss of precision in audience segmentation: One of the biggest strengths of cookies is their ability to help advertisers and publishers understand their users. They can group users based on interests, behavior, or past interactions. Without this insight, creating detailed audience segments becomes challenging, reducing the potential for tailored content and advertising.
- A gap in re-targeting efforts: You looked at a product online but didn’t buy it immediately. Later, an ad for that product appeared, reminding you of your interest. That’s the power of cookies. They allow advertisers to ‘follow’ users across the web and serve relevant ads. Without cookies, this re-targeting strategy will be severely hindered.
- Blindfolded assessment of ad performance: Cookies serve as a performance tracker for ads. They indicate user engagement levels, conversion rates, and cross-device interactions. Without this data, it will be difficult for advertisers to evaluate their strategies or make informative decisions.
The result will be unhappy users, a decline in traffic, and a loss of revenue. As the ads won’t resonate with the audience’s preferences, sales revenue will dip, forcing advertisers to reduce their digital advertising spending.
Apart from advertisers, publishers who depend on ad revenue and other programmatic advertising vendors, including supply-side and demand-side platforms, ad exchanges, and data management platforms, will also witness a significant drop in their revenue. As per IAB’s analysis (2021), publishers might witness a $10 billion loss in revenue without third-party cookies.
However, some reports also suggest that things will not be that bad for publishers. One study observed no unfavorable effects on business results for publishers when displaying ads to users on browsers that prevent tracking compared to users on browsers that permit third-party cookies.
Loss, or no loss, the fact remains that now is the right time to innovate and adapt.
How Can Publishers Survive in The Post-Cookie Era?
From building a treasure trove of first-party data to building direct relationships with advertisers, publishers can implement many actionable strategies to survive the apocalypse.
Bridge the gap with Cookie alternatives:
- Seller-Defined Audiences (SDA): A privacy-friendly alternative to third-party cookies, SDA helps publishers define and segment their audiences based on first-party data and behaviors. SDAs offer advertisers targeted access based on specific attributes and behaviors observed directly by the publisher. This leads to more precise targeting and potentially better conversion rates.
- Universal IDs: The Universal ID is a shared user identifier designed to recognize users across different points in the supply chain without the need for cookie syncing. It is one unique identifier assigned to each user, collecting information and passing it on to approved partners in the supply chain. It eliminates the need for cookie-syncing across platforms for targeted ads. Usually, during cookie syncing, advertisers lose a percentage of audience recognition data, impacting their revenue generation.
Universal ID emerged as a remedy here, helping the industry bypass cookie-syncing and replacing third-party cookies with a unified, consent-based identity solution across platforms.
- Device Graphing: Often referred to as “identity resolution” or “cross-device tracking,” it involves creating a map of devices (like smartphones, tablets, laptops, and smart TVs) that are likely to be associated with a single user or household. This map is formed by analyzing numerous data points, such as IP addresses, device IDs, login data, and behavioral patterns, to infer which devices are used by the same person or set of people. This map further allows advertisers to understand user behavior across devices without third-party cookies.
Win advertisers’ trust:
- Collect First-Party Data: First-party data remains an untapped gold mine for many publishers. Unlike third-party data collected by entities not directly involved in user interactions (e.g., cookie-based advertisers), first-party data is gathered directly by the publishers from their audience. This includes data collected directly from newsletters, user profiles, and on-site activities.
Prominent publishers like The Washington Post, Wall Street Journal, and The Telegraph have harnessed first-party data to target their audience. More authentic and precise than third-party cookies, this data offers advertisers direct insights into audience behavior and preferences. Publishers can also:
- Leverage Contextual Data: The content and layout of a webpage itself offer a wealth of data. For instance, an article about “vegan recipes” can be contextualized to target audiences interested in veganism or healthy eating. Beyond the content, the structure and style of a page (like multimedia elements, interactive features, or the prominence of certain content) can also provide hints about user engagement and preferences. Passing this contextual information to buyers can significantly boost the appeal and relevance of a bid. Publications like The Washington Post and The New York Times have invested in this method. AI-powered solutions can further refine targeting. Advertisers are more likely to bid higher when they have a clearer understanding of the content environment their ads will appear in.
- Use Prebid Adapters: Prebid is an open-source tool many publishers use to integrate multiple demand sources into their programmatic advertising stack. It levels the playing field in header bidding, ensuring publishers get the best price for their inventory. With Prebid Adapters, publishers can decide which data attributes they want to share with potential buyers. This control is essential for maintaining user trust and ensuring compliance with privacy regulations. Additionally, these adapters allow publishers to specify which advertisers or networks can access their data, further refining and optimizing their ad monetization strategies.
Bond with your audience:
- Streamline User Experience with Single Sign-On (SSO): In the digital age, ease of access is paramount. One way to enhance the user experience is by implementing Single Sign-On (SSO). SSO allows users to access multiple platforms or services with just one set of credentials, effectively minimizing login fatigue and streamlining the user journey.
This not only eliminates barriers to content, but also serves as a strategic tool for publishers to augment data collection efforts. A simplified sign-in process encourages more users to create accounts, increasing the depth and breadth of data collected.
- Personalization is Key to Engagement: Modern readers expect content to resonate with their interests and preferences. By harnessing the insights drawn from user profiles and behavioral patterns, publishers can curate a more personalized content and ad experience. Readers are likelier to revisit a platform that ‘understands’ and ‘speaks’ to them. The ripple effect? Enhanced reader loyalty, longer site visits, and improved ad engagement rates.
- Build Trust with Anonymization: In an era of heightened data privacy concerns, winning a reader’s trust is half the battle. One effective method is anonymizing user data using IDs and identity obfuscation techniques. While on the surface, readers are assured of their privacy; publishers can still analyze patterns and insights from this anonymized data. It’s a win-win: readers can confidently engage with content, knowing their identities are protected, while publishers still have a rich dataset to inform their strategies.
Harness the power of platforms:
- Consent Management Platforms (CMP): With Consent Management Platforms (CMP), publishers can transparently communicate data collection objectives and methods to their audience. This transparency facilitates adherence to evolving data protection laws and fosters a climate of trust between publishers and their user base. Readers will willingly engage and share their information When they comprehend and control how their data is leveraged.
- Customer Data Platforms (CDP): In the age of big data, CDPs have emerged as quintessential tools for publishers, acting as integrated hubs for collecting, storing, and interpreting first-party data. With these platforms, publishers can capture a more holistic view of their audience, understanding patterns and preferences at an intricate level. This granular knowledge can then be harnessed to create tailored content, ads, and user experiences, driving both engagement and revenue.
- Integrated Analytics and Ad Management: Even without a dedicated CDP, publishers can still tap into the power of analytics. By bridging platforms like Google Analytics and Google Ad Manager, publishers open a window into a treasure trove of insights. This union lets them discern audience behavior and preferences and optimize ad campaigns precisely, ensuring content and ad synergy. As a result, ad revenues can see significant upticks as content becomes more attuned to audience interests.
How Advertisers Can Survive in the Post-Cookie Era
Advertisers must recalibrate their strategies to navigate a post-cookie world effectively in a rapidly evolving digital landscape. Here’s a roadmap tailored for advertisers:
Prioritize direct partnerships with publishers:
- Engage in Direct Deals: Building and nurturing relationships with trusted publishers is pivotal in the evolving digital landscape. By doing so, advertisers can tap into high-quality, first-party data directly from the source. This provides a granular understanding of audience preferences and behaviors and ensures that ad campaigns align better with audience interests, leading to higher engagement and conversion rates.
- Private Marketplaces (PMPs): Moving beyond conventional real-time bidding auctions, PMPs are exclusive, invitation-only spaces with premium ad inventory up for grabs. These marketplaces serve as a bridge between advertisers and publishers, enabling access to covet first-party data. Such an arrangement eliminates the open market’s unpredictability and potential data dilution. Advertisers can fine-tune their targeting strategies through PMPs, ensuring their ads are showcased in the most relevant and impactful environments.
Invest in data clean rooms:
- Secure Data Environments: Data clean rooms allow advertisers to access aggregated data insights without directly viewing raw, user-specific data. This approach ensures user privacy while granting advertisers valuable insights for campaign optimization.
- Collaborative Analysis: Platforms like Google’s Ads Data Hub allow advertisers to measure campaign performance, optimize bids, and develop audience insights, all within a secure, privacy-compliant environment.
Refine targeting through alternative techniques:
- Contextual Advertising: At its core, contextual advertising is about aligning ads with the inherent content of a webpage, ensuring that the ads displayed resonate with the page’s subject matter. By analyzing keywords, topics, and the overall theme of a web page, advertisers can serve ads that are most pertinent to the content. For instance, a deep-dive article on hiking and outdoor adventures becomes a perfect spot for ads about hiking boots or camping gear. Contextual advertising is appealing in the post-cookie era because it relies solely on the content’s context and not on user-specific data, making it a privacy-friendly targeting method.
- Behavioral Cohorts: As the industry moves from granular individualized tracking, clustering users based on shared online behaviors becomes a promising approach. Instead of tailoring ads based on the intricate details of an individual’s online journey, advertisers can target cohorts or groups of users who exhibit similar online behaviors and preferences. This method respects user privacy, allowing advertisers to serve relevant and engaging ads. It effectively groups individuals who, for example, frequently visit sports websites or show interest in culinary blogs, allowing for targeted yet non-intrusive advertising.
Stay Ahead by Adapting to Emerging Frameworks
Project Rearc:
The IAB Tech Lab’s Project Rearc is working to set a new direction for digital advertising. It promotes the use of first-party data, highlighting the importance of Universal IDs and encrypted logins, such as voluntary email addresses. At its core, the initiative aims to give users full control over their own data. While Project Rearc is still in its early stages, staying updated on its progress will help advertisers and publishers prepare for a world without third-party cookies.
Google’s Privacy Sandbox:
Envisioned as a toolkit of web standards, Google’s Privacy Sandbox seeks to uphold user privacy while allowing for targeted ads and analytical insights into ad performance. Starting from its release on July 2023, Chrome 115 began its journey towards replacing third-party cookies with ‘Topics API’. This mechanism allows Chrome to share generalized user interest topics with advertisers without divulging specific browsing activities. For example, if a user explores content related to ‘sustainable living’, the browser might merely tag ‘sustainability’ as a topic of interest. Subsequently, advertisers would showcase ads aligned with ‘sustainability’ without identifying the content or site accessed.
Navigating the Future of Digital Advertising:
To sum up, the decline of third-party cookies undoubtedly points towards difficult times ahead. But as with any evolution, it brings with it opportunities as much as it does challenges. And both advertisers and publishers are participating actively in this transformation. They’re diving deep, seeking resilient solutions and more direct engagement paths with users.
By fostering collaboration, remaining agile, and investing in emerging technologies and strategies, the industry is poised to navigate these changes successfully. Staying informed and proactive will ensure digital advertising remains relevant, effective, and user-centric in this new era.
