The Future of Cookie-Less Advertising

Introduction

With Google once again delaying its deprecation of the third-party cookie until the second half of 2024, the question of how a cookie-less online advertising landscape will operate arises once again, as advertisers and technology platforms are crucially given more time to build and implement their alternative solutions. 

Amidst growing concerns surrounding data privacy, popular browsers such as Safari and Firefox have already blocked third-party cookies and cross-platform tracking, however Google’s decision is far more significant from an advertising perspective, as roughly 65% of global web traffic runs through Google’s Chrome web browser. Google plans to use this extra time to build upon their new ‘Privacy Sandbox’ initiative, which replaces arguably invasive third-party cookies and unique user identifiers, with ‘interest cohort’ based targeting. 

Despite solutions from Google and other technology platforms still having a long way to go before widespread adoption, there are currently highly effective profiling and targeting options available, which can benefit advertisers both now and after the demise of the third-party cookie. 

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What are cookies and how are they used in advertising?

Cookies are small files downloaded onto a user’s device after visiting a specific website, containing data relating to their activity on said site.

There are two main types of cookie: 

First-Party Cookies:Used to collect data pertinent to a single site only, such as login details, site preferences and analytics data.

Third-Party Cookies:Track user activity and collect data across different sites using unique identifiers, allowing advertisers to accurately identify and target audiences using real browsing behavior.

As third-party cookies track individual users across their entire browsing session, there is increasing concern surrounding the collection of this private data and its far-reaching availability amongst advertising partners. In response, governments have enacted new policies to restrict data collection by advertisers, such as GDPR in Europe or COPPA in the United States. 

This is an especially pertinent issue in the case of open-market programmatic advertising, which relies heavily on third-party cookies for the accurate profiling and hyper-targeting of users for marketing campaigns across the web. With the inevitable demise of the third-party cookie on the horizon, advertisers must embrace alternate techniques and technologies to ensure advertising spends are best optimized towards  intended audiences, without relying on an abundance of user data to do so.

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Alternatives to the Third-Party Cookie

1) Google’s ‘Privacy Sandbox’

Google have hedged their bets on their new ‘Privacy Sandbox’ initiative, which aims to ‘help build new digital advertising tools to protect people’s privacy and prevent covert tracking, while supporting a thriving ad-funded web’. Google plays a major role in the online advertising landscape, so they must ensure their replacement for third-party cookies is adequate to fill the gap in user tracking they will inevitably tear open, and with potentially billions of ad revenue on the line, it’s essential the switch is seamless.

Google’s ‘Privacy Sandbox’ uses an in-browser algorithm to place users in targeting groups based on browsing activity, called ‘interest cohorts’, which ensures users are managed in groups, rather than individuals. Interest cohorts are then assigned a ‘privacy-preserving ID’, which can be used by advertisers to target their desired audiences. Despite Google’s efforts, critics were quick to claim the Privacy Sandbox is “the opposite of privacy-preserving technology” and akin to “behavioral credit score[ing].”

Starting in August, Google aims to increase the number of Chrome users with the ‘Privacy Sandbox’ APIs to millions of users globally and gradually increase this throughout 2023. 

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2) Direct-Deal Campaigns and Contextual targeting

Direct-deal campaigns and contextual targeting offer an important alternative to open-market programmatic advertising, with scale and accurate audience targeting for advertisers, yet omitting the need to collect an individual’s user data. Instead of relying on programmatic marketplaces to facilitate the exchange of advertising budgets and distribution of impressions, direct-deal campaigns (as the name suggests) are made directly with web inventory owners or representatives, and optimized by dedicated ad-operations teams. This allows advertisers to better utilize their ad-spend by cutting out the programmatic middle-man and also achieve better campaign performance through continual monitoring and optimization. 

Contextual targeting considers the content of a particular inventory source, such as a website, to place ads which are best suited to that content. For example, a niche coffee brand may want to place ads on an online coffee forum, to target audiences with a predetermined affinity for coffee. Contextual targeting can be done manually by picking out suitable inventory, or using technology such as ‘crawlers’ which scan web pages for keywords and semantics, in order to categorize them. 

Contextual targeting is beneficial to advertisers by targeting users who are already interested in a specific subject, rather than using data to target users who may be interested, but are browsing something completely unrelated. This helps reduce ad-fatigue and boost awareness and engagement rates. It’s important to note contextual targeting is not exclusive to direct-deal campaigns and can be utilized to target defined audiences across programmatic campaigns without third-party tracking too. 

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3) Leveraging first-party data collection

With the accuracy of third-party data steadily declining as more browsers disable third-party tracking, this gives an opportunity for advertisers to leverage first-party data collection, to derive better campaign performance from their desired audiences. 

Demographic data such as age, gender and location can help when audience profiling, ensuring advertisers are reaching the most relevant audiences contextually. By better understanding the needs and desires of audiences prior to advertising to them, advertisers can benefit from increased brand affinity through the increased relevancy of ads targeted towards users. This is advantageous compared to behavioral targeting, which ignores the contextual background of an ad and therefore may seem out-of-place to users, in-turn making them less likely to acknowledge or engage with the ad. There is also strong growth in AI and algorithmic based targeting tools, which can help fill in gaps left by first-party data collection. 

The availability of weather and precise user geo-location data also allows advertisers to target users when they are more likely to require or engage with specific products. For example, on a sunny day in a given city, advertisers might use geo-location to advertise ice-cream to users who may be more inclined to buy one to cool off whilst they’re out and about. In this respect, savvy advertisers can nudge users towards a desired conversion, by advertising at a time or place when they are far more likely to do so. 

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4) Authenticated Targeting

Authenticated targeting is not too dissimilar from current third-party cookie systems, however requires explicit consent from users in order to track their activity, rather than assuming consent from the beginning. However in a post third-party cookie world, the issue of porting this identifier between ad-platforms will become much more difficult, without unique identifiers for each user. 

To combat this issue, advertising technology platforms have been developing more privacy conscious ID solutions. The Trade Desk’s ‘unified ID’ system matches logins from different opted-in websites and connects them together to build a user profile. Alternatively, LiveRamp’s ‘IdentityLink’ software focuses on matching all of a user’s IDs across their devices, creating an identity graph for each user; amassing over 200m user profiles to date. 

Although these technologies are still in their infancy, they show great promise in delivering targeting solutions for the post third-party cookie world. 

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In Summary...

Whilst Google’s inevitable deprecation of the third-party cookie will undoubtedly shake up the online advertising landscape, advertisers have the chance to act proactively using the tools available now, to better understand their target audiences prior to the demise of third-party tracking. With solutions such as contextual targeting and first-party data collection already offering great value to advertisers and more privacy-first tracking solutions currently under development, there is no reason for Google’s decision to significantly impact the campaign performance of forward thinking advertisers.