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What are the alternative options with the impending demise of the third party cookie?
October 27, 2020
Google's announcement that it will phase out the third-party cookies on Chrome browsers by 2022 has sent shockwaves across the advertising world and is already being termed the ‘end of third-party cookies’. This is probably no surprise, since a study conducted by Google showed that average revenue in a world without third-party cookies would decrease by 52% for the top 500 global publishers.
Although Firefox and Safari have already phased out the third-party cookie, Google’s changes are the most significant, with Google Chrome making up 56% of the web browser market and accounting for more than half of global web traffic. Acknowledging this, changes will happen over the course of two years as the tech company works with advertisers to ensure that this pivot doesn't destroy the online advertising business.
The increase in awareness surrounding user privacy has largely dictated the end of the third party cookie, where the future remains unclear regarding an effective replacement. At mediarithmics, we choose to remain positive and continue to propose bespoke solutions to our clients — ensuring their businesses continue to grow as we move into a post third party cookie world.
What is a third-party cookie?
Third party cookies are set by “third party” ad tech companies, affiliate networks, e-commerce personalisation businesses, etc. whose tracking code can be found on millions of sites. This differs from first party cookies, which are set typically by the sites themselves.
The third-party cookie allows the user's journey to be followed on several sites to learn more about their profile and interests. The entire online advertising sector has developed over the past fifteen years through the use of third-party cookies to optimise user targeting and tracking from one site to another, capping, measurement of attribution, etc.
Traditionally, third party cookies were used by brands to activate large audiences — this is good for reaching volumes but the result was that limited data or insight (1st party data) on audiences was gained. This meant it was difficult for brands to follow up with the same audiences with new campaigns, as cookies are quickly perishable and also other brands would be targeting the same audiences using the same approaches — so great for volume but limited ROI.
Why are third party cookies disappearing?
Increasing awareness regarding the protection of personal data over the past three years has prompted regulators and browsers to restrict the use of third-party cookies in the online advertising industry. Three key factors affect the volume and quality of disposable audiences:
1) Legal — GDPR, CCPA and other privacy regulations
2) Tech — Browsers blocking third party cookies
3) Customer attitudes and expectations — attitudes to privacy and high expectations towards brand expectations
With the above in mind, publishers, retailers and brands need to change their approach if they want to continue to operate effective and efficient marketing campaigns.
To adapt to these new challenges, all media and online advertising organisations must find alternatives to third-party cookies to identify and target a user or enhance the context of advertising distribution to brands. Some of the alternative options include:
The online advertising ecosystem has found workaround technical solutions, such as fingerprinting, subdomain delegation and local storage. All of them have gradually been targeted by regulators and browsers, as they are deemed to have little respect for the online privacy of users. While fingerprinting appears to be the most used solution in the short-term, methods such as local storage could be a mid-term solution for clients and publishers. Relying on local storage means storing the navigation of a given user “inside” the browser. The navigation data is used to determine whether the user enters or exits a segment. Navigation data storage and segment computation is performed each time a tag is fired, on each page.
Contextual targeting is an option advocated by publishers and some advertising partners. They offer to target an ad based on content preferences (thematic and semantics of the articles or URL, device used, time of browsing etc.), and not on personal data related to one user. Machine learning helps to predict what will be the best places / timings / … to reach the users a brand wishes to target. Some publishers could decide to rely on external companies who create & execute the machine learning functionalities (e.g. mixing the data of all clients) or could also decide to build their own machine learning functions.
The disadvantage of contextual targeting is that it works best on a type of publisher with highly themed content and remains less valuable than large-scale data targeting.
Registration of Internet users
To continue to collect and be able to use data without third-party cookies and in compliance with regulations, publishers seek to encourage users to create personal accounts in their domain by registering their email. This allows them to retrieve deterministic data — such as emails, location, areas of interest, phone number — which allow them to build valuable profiles with advertising buyers.
TV channels implemented mandatory logs relatively early. In the online press, the advent of paid offers and related tools (dynamic paywalls) has prompted the media to set up registration walls — registration required to access free content — which allows them to generate potential subscriptions but also collect valuable data.
Google's Privacy Sandbox
The alternative proposed by Google is a suite of APIs stored in the Chrome browser, to which advertisers will have access to respond to all cases of cookie use: fight against fraud, conversion and attribution, advertising targeting, etc.
Due to Google's hegemonic position, Google's Privacy Sandbox is set to play an important role in targeted advertising in the coming years. However, many online advertising players fear that Privacy Sandbox may pose as a “black box,” and allow Google to further consolidate its dominance.
The definitive version of the Privacy Sandbox is yet to be published, as companies still can contribute to the project by submitting their own pieces of code that will be reviewed by peers and the W3C consortium.
Unique identifiers are increasingly positioned as an alternative to third-party cookies. They are dependent on the collection of first party data by publishers via the recording of their audiences (most of these technologies are based on the use of a hashed user email).
Android and Apple have launched their own advertising identifiers, and the players in mobile advertising are still very dependent on the policy of the two companies in terms of the protection of personal data. However, as Apple is also set to launch a new privacy feature in its iOS14, it's not yet sure if the unique identifier will be viable...the launch of iOS 14 continues to be delayed.
Here at mediarithmics we believe that there is no one fixed solution to the problem. We are unable to predict the future, which we have learnt over the past six months more than ever, and instead have developed customised solutions for each of our customers, depending on their individual challenges or needs.
In a world where publishers are forced to protect their advertising revenue in the short term, we have deployed local storage solutions that enable our publisher based clients to multiply specific segments by up to 4 times. We have also helped clients leverage contextual targeting, using their own machine learning functions without mixing their data with other client data pools. Additionally, nearly all of our publishers & retail media clients are prioritising the collection of first party data (e.g. one of our UK based clients, Channel 4, has over 22M registered users via single sign on).
This approach allows us to accelerate and future-proof our ambition to drive personalised communication through an audience-first approach across media that is both efficient and effective.
To build a 360 customer view that is not based on cookies, we strongly believe marketing teams need to rely on a Customer Data Platform which links media with CRM and multiple IDs to collect more data per user. The benefits of this approach means that audiences can be activated on multiple channels, including email campaigns with no reliance in 3rd party cookies. However we can still scale and control 1st party data in order to maximise it – working with our customers and with partners.
This bespoke approach will guarantee a stronger future for marketing with consumer and brand trust developing through personalised approaches. Customers are demanding greater privacy — including transparency, choice, and control over how their data is used — and it’s clear the web ecosystem needs to evolve to meet these increasing demands.