The cookie is finally crumbling

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The demise of the third-party cookie has been on the table for years. Browsers such as Firefox and Safari have long blocked the third-party cookie by default, but it has taken behemoth Google much longer. But finally, it seems that this will be the year that the death knell will finally sound for the third-party cookie. The advertising industry has had plenty of warning, given the fact that Google has postponed the end of the cookie twice. But are we ready?  

A clear path to a cookieless future 

Google originally announced that it would phase third-party cookies out by early 2022, mainly due to the huge demand for user privacy and increased scrutiny by regulators. This was seismic news – although other browsers had already done the same, Google’s Chrome browser has by far the biggest market share, more than three times that of the next biggest, Safari. It was such a big deal, in fact, that Google itself couldn’t quite seem to get to grips with it, and pushed the date out to late 2023 and, finally, 2024.  

Now, at the start of 2024, Google has already started showing that it means business. It has disabled cookies for 1% of Chrome users worldwide – a small step for the tech giant but a giant leap into uncertainty for the online advertising industry. However, there could still be delays – after this initial test, the process will be paused for regulators to confirm they are happy with Google’s own proposed alternatives to the cookie. These regulatory hurdles and general technological readiness (or lack thereof) by the industry could lead to further delays so that the cookie isn’t finally killed off until Q4 (less than ideal for an industry which sees so much investment around the all-important Christmas period) or even into 2025. 

Regardless of when it happens, one fact remains inescapable – we are witnessing the end of the cookie, and the advertising industry – including brands – must accept that they can’t rely on the third-party cookie for much longer. 

What does a cookieless future look like? 

Since Google first announced its plans, the online advertising industry has been exploring alternative targeting strategies, with increasing urgency. These can loosely be split into three areas – identity solutions, targeting strategies and ‘other technologies’.  

Identity solutions include first-party data – the ‘holy grail’ of the cookie-less world. Data is collected directly from users with their consent, and therefore provides valuable insights without the privacy concerns. Universal IDs, created by tech companies, bridge the gap between publishers and advertisers, allowing identification across platforms in a privacy-complaint manner, while PPIDs (Publisher Provided Identifiers) are IDs created and managed by publishers for their own users, giving them more control over their data and offering advertisers a targeted audience within their platform. An identity solution that is gaining significant traction is Unified ID 2.0, an industry-supported solution which uses a user’s email address or phone number (with their consent); many key industry players such as Warner Bros. Discovery’s streaming services, Walmart, The Washington Post and Buzzfeed have signed up. Around 75% of the third-party data ecosystem is leveraging Unified ID 2.0 on their platforms, according to The Trade Desk’s Jeff Green – continued uptake could make it the industry standard. 

Targeting strategies include contextual targeting – where ads are matched to the content of the website or app in which they appear; cohort-based targeting, where users are grouped into anonymized cohorts based on shared characteristics, which allows advertisers to reach relevant audiences without identifying individuals; and interest-based targeting, which relies on users declaring interests and ensures transparency and control for users.  

Other technologies that are providing solutions for a cookie-free advertising industry include data clean rooms and privacy-preserving APIs. Data clean rooms are secure environments where datasets from different companies can be analyzed without sharing raw data, while privacy-preserving APIs allow limited access to user data while protecting individual privacy. Google’s Privacy Sandbox explores various API proposals.  

The most successful advertisers will likely use a variety of identity and targeting solutions in place of the third-party cookie – indeed, tests carried out by Havas revealed that the right combination can produce similar or better results than cookies most of the time.  

Google’s Privacy Sandbox – what is it? 

All eyes have been on Google as it develops is proposed alternative to the third-party cookie – a collection of technologies that aim to balance effective advertising with user privacy, under the umbrella of its Privacy Sandbox initiative. Key components of the Privacy Sandbox include interest-based advertising without individual tracking; privacy-preserving measurement; and attribution API. There are concerns around competition – some industry players say that the changes will reinforce Google’s dominance by making its own browser necessary for critical functionality. There are also fears that the proposed solutions will be technically difficult to implement. Furthermore, Google’s Search business is likely to benefit as it isn’t heavily dependent on cookies, so will be a safe destination for ad dollars during the transition to a world without cookies. That said, even the dominance of Google Search will likely be challenged in the coming months and years by the proliferation of AI-driven natural language processing tools. 

What should advertisers be focusing on right now? 

While the cookie is still alive, even if only just, it’s tempting to keep relying on it – but the time to get used to the alternatives is now, to avoid being caught out when it isn’t an option anymore. Most advertisers will already have a plan of action well underway, but it’s worth clarifying where opportunities lie. 

Prioritize first-party data, the holy grail of a cookie-less world. Data collected directly from users, with their consent will allow for valuable insights and effective targeting without privacy concerns.  

Focus on contextual advertising, which leverages the user’s natural interest without the need for individual user tracking. 

Explore consent-based data solutions. New technologies such as privacy-preserving cohorts and contextual APIs provide insights based on aggregated user data.  

Diversify your channel mix – alternatives such as contextual, social media and email allow for effective targeting whilst bypassing privacy issues. 

Build strong customer relationships: offering valuable content and incentives will encourage customers to share their data willingly, as well as driving brand loyalty. 

Stay informed. This is a rapidly changing and evolving landscape, so marketers will need to ensure they and their teams keep up with the latest developments in privacy regulations, technology solutions and best practices.  

The cookie-less future is inevitable – the way to win is by embracing the opportunities that it presents. Consumers almost universally hate cookies and having their privacy intruded upon; the death of the cookie could usher in a golden age of advertising.  

value@ecimm.com

Image: Shutterstock/PopTika

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