The world of online publishing is rapidly changing, and one of the biggest shifts on the horizon is the move towards a world without third-party cookies. This shift has seismic implications for publishers, and it’s important to understand what it means and how it will impact the industry.
We’re not going to sugarcoat it: a cookieless world is going to have a somewhat negative impact on publishers, at least in the short term while publishers and advertisers figure things out.
That’s the bad news.
The good news is that there is plenty of room for optimism.
New technology and strategies are being developed to adapt to this new reality and to ensure that publishers continue getting the most out of their ad inventories.
Why Cookies Are Being Phased Out
In recent years, there has been a growing trend to phase out the use of third-party cookies. This shift is being driven by a number of factors, including increasing concerns over user privacy as third-party cookies allow advertisers to collect user data without their knowledge or consent.
As a result, there has been a growing backlash against the use of third-party cookies, with many users and advocacy groups calling for more transparency and control over how their data is collected and used.
The General Data Protection Regulation (GDPR) is a data privacy law that was adopted by the European Union in 2018. GDPR sets strict requirements on how companies can collect, use, and share personal data. GDPR applies to any company that processes the personal data of individuals who are located in the EU.
In terms of cookies, GDPR requires that companies obtain a user’s explicit consent before they can set cookies on the user’s device. This means that companies must provide clear and transparent information about how cookies are used, and they must obtain the user’s consent before setting cookies on the user’s device.
GDPR also gives users the right to access, rectify, erase, or restrict the processing of their personal data. This means that users can request that companies delete any cookies that have been set on their device, or they can opt out of tracking by advertisers.
Similar to GDPR, the California Consumer Privacy Act (CCPA) is a data privacy law that was enacted in the state of California in 2018. While the CCPA only applies to companies that do business in California and that collect personal data from California residents, it has been influential in shaping other states’ privacy laws.
To date, several other states have adopted privacy laws that are similar to the CCPA, including Connecticut, Colorado, Virginia, and Utah.
Which Companies Are Phasing Out Cookies?
Apple was the first major company to go cookieless.
With the release of Safari 12 and iOS 11 in 2017, Apple began blocking third-party cookies by default via its Intelligent Tracking Prevention (ITP) technology.
By 2020, Safari was capable of blocking all third-party cookies, and in 2021, Apple’s iOS 14 went completely cookieless.
In 2019, Firefox began blocking third-party cookies by default via its Enhanced Tracking Protection.
Cookies can still be enabled, but it needs to be done manually on Firefox’s browser.
In January 2020, Google sent shockwaves through the advertising world when it announced that Google Chrome would phase out third-party cookies by 2022. However, Google later backtracked on its announcement and now says it will go cookieless in 2024.
There is good reason for Google’s hesitation: Google operates the world’s largest advertising platform and it doesn’t want to jump into anything that will harm its revenue.
Google is currently developing its Privacy Sandbox that will enable it to adapt to a cookieless world. Until the Privacy Sandbox is fully developed and tested, it will not jump into the cookieless waters.
Why Going Cookieless Will Affect Publisher Revenue
The amount of revenue generated by publishers is directed correlated to the prices that advertisers are willing to pay.
The more users engage with an ad the more advertisers are willing to pay for a publisher’s ad inventory. Without third-party cookies, publishers will have a harder time serving targeted ads which will impact the effectiveness of the ads.
This will cause advertisers to reconsider how much they are willing to pay to have their ads shown, which will directly impact publishers’ ad revenue.
In fact, a 2019 study conducted by Google on 500 top publishers showed that disabling third-party cookies led to a 52% decrease in revenue, with a median decline of 64%.
How Publishers Can Adapt
You’re probably feeling pretty anxious right now, and for good reason.
But take a deep breath and remember this: advertisers still want and NEED to advertise!
Advertisers still need your ad inventory to sell their products, and going cookieless won’t change that. What will change is the method through which your ad inventory is utilized.
There are already several alternatives to cookies, with more surely to come.
The Privacy Sandbox is Google’s alternative to cookies. It’s a set of open standards and technologies developed to enable personalized advertising while also protecting users’ privacy.
The Privacy Sandbox consists of several different technologies and initiatives, all of which aim to provide users with more control over their data and how it is used by advertisers and other third parties.
This includes things like publisher provided identifiers (PPID), which uses hashed or encrypted identifiers that maintain user anonymity, and the Trust Tokens API, which allows websites and apps to verify users without collecting personal data.
The Privacy Sandbox is currently in the development stages, and Google will not disable third-party cookies until it is fully developed.
Increased First-Party Data Solutions
First-party data is the best and most trusted way to gather more information, because it’s the users themselves who are willingly providing their information.
A login system is a great way to collect and store information about users directly on your server. This information can then be used to personalize the user experience and improve the relevance of the content and ads that are shown to them.
Interactive content like surveys or polls is also a great way to collect first-party data. For example, using surveys or polls to ask users about their interests, preferences, and demographics can aid you to build user profiles that can be used to provide more personalized ads.
Utilizing Second-Party Data
Second-party data refers to data that is collected by one source and shared with another source.
For example, an e-commerce website collects first-party data about the items that users view and purchase on their site. If this e-commerce website shares this data with another website or third-party advertiser, it would be considered second-party data.
Second-party data is valuable for publishers because it allows you to access larger and more diverse data than you would be able to collect on your own. This can help improve the relevance and effectiveness of the ads that you show.
However, it is important that you only share and receive data from trusted partners and comply with all the relevant privacy regulations.
Alternative IDs are unique identifiers that are used to replicate the information provided by third-party cookies.
These identifiers are typically assigned by the website or app that collects the data, rather than by a third-party advertiser or tracking company. There are many different types of alternative IDs, and the specific identifier used will depend on the context and the specific needs of the publisher.
One of the leading alternative IDs is ID5 ID, an encrypted first-party data ID used to track the user’s activity across multiple devices and platforms. ID5 ID is based on a user’s consent and can be reset or deleted at any time. It is also compliant with GDPR and CCPA.
Contextual targeting is a method in which ads are showed to users based on the context of the content they are currently viewing. This can include things like the keywords on a page and article topic.
Contextual targeting focuses on the content of the page or app that the user is currently viewing and doesn’t rely on third-party cookies. This can help to improve the relevance and effectiveness of the ads, and can also help to reduce the number of irrelevant ads that users are shown.
The Bottom Line
The move towards a cookieless world won’t be easy and will require publishers to adapt, but there is much to be optimistic about.
Necessity is the mother of all invention, and the aforementioned alternatives are just the tip of the iceberg. The digital advertising world is knee-deep in developing alternatives to third-party cookies. This includes Google that is being very careful not to disable its third-party cookies until a viable alternative is created.
If you’re interested in learning more about adapting to a cookieless world, or are interested in a free consultation, don’t hesitate to get in touch with our monetization experts.