The Death of 3rd-Party Cookies: How Websites Can Adjust
Web-publishing is an industry in transition, yet to grapple with the rise of web-traffic, third-party cookie phase-out, and new advertising priorities. To survive, publishers need to strengthen their programmatic expertise and enhance data capabilities.
Irina Overko, CMO at Admixer Advertising Ukraine, reviewed the main challenges the industry is facing and gave actionable advice.
Transition to the post-cookie world
3rd party cookie phase-out isn’t news for 2020. The advertising industry was gradually abandoning them. For instance, Firefox and Safari banned third-party cookies over a year ago.
Nevertheless, Chrome’s decision to cancel 3rd party cookies, stirred up the market since it is a primary world browser (up to 65% of the world population). Cookie phase-out and the growing numbers of Adblock users triggered the surge in the share of unidentified users.
Admixer data shows that while we recognized 75% of users in 2019, this figure dropped to 60% at the beginning of 2020. Thus, the issue of leveraging unidentified users is extremely pressing, and many companies strive to find an optimal technical solution for behavioral tracking.
What makes 3rd-party cookies so important?
There are 2 main types of cookies (cookies): 1st-party cookies, which are set directly by the website, and 3rd-party cookies, which are set on the web page by third parties: from the advertising network to the advertiser’s pixels.
A 3P-cookie is the universal anonymous identifier in digital advertising, which until today, has helped advertisers to identify individual users. The advertiser had the opportunity to:
- profile audience and set targeting
- optimize campaign performance (for instance, frequency cap)
- measure campaign ROI and build attribution models
Without 3P-cookies, campaign planning and ad placement will no longer be the same, since they currently enable cross-site tuning, optimization, and tracking.
Consequently, the traditional methods of building audience profiles and setting behavioral targeting will soon become obsolete. Both publishers and advertisers need to adjust their business models and embrace new technological solutions that will allow them to work with 1st-party cookies. The technological transition will undoubtedly entail the major setbacks but won’t hamper the growth of digital advertising:
Digital advertising has become a leader in ad spend worldwide, due to its aptitude for precise targeting of individual users, and the ability to optimize campaigns, reduce costs, and save budgets.
How will the lack of 3rd-party cookies impact websites?
The elimination of 3rd-party cookies will rewire the advertising marketplace and will profoundly affect publishers. Based on the available data, the following scenarios seem possible:
- Advertisers will re-allocate their budgets to walled gardens (Facebook, Amazon, Microsoft) if the local market doesn’t offer an effective tech solution for 1st-party data consolidation and trade.
- Advertisers will shift their focus from websites to in-app advertising, where the SDK user-identification system is still in place (though it may change in the future).
- The decline in the website monetization, according to industry studies CPM of the unidentified user (without 3rd party cookie tracking), is, on average, 50% lower.
- Advertisers will focus on controlling frequency capping and reach and limit the number of websites and platforms where they place ads. Small publishers will be the first to suffer.
- Without tracking tools, the importance of panel research will increase.
- Increased interest in ad buying via CPC and CPA models, since they do not require as much control over reach and cap frequency.
- Anti-fraud systems will be rebuilt on new principles without 3P cookies. Until then, advertisers might distrust websites as media channels prone to fraud.
What tools do websites need to get ready for the post-cookie world?
Frankly speaking, nobody can accurately predict the scale of the market shakeup, and if the industry will be able to develop a viable replacement for 3rd-party cookies, a convenient and universal identifier.
However, there are a couple of recommendations that will make the transition to the cookie-less business model easier.
1st party DMP
First-party data (which websites collect themselves) will become the only source of information about users with a one-to-one authentication approach. Websites need to collect and structure their data meticulously, so they can integrate their data-management platform (DMP) with advertiser’s DSP and set up precise targeting.
1st party data can be collected in a number of ways: from “what kind of personality you have” tests and website questionnaires to creating exclusive content and tracking time spent on a particular page.
The role of direct deals will increase substantially, as advertisers will value partnerships with trusted publishers who have technical capabilities to provide advanced user segments. It is worth considering integrating with an advertiser’s DSP through direct deals or connection deals.
A connection deal is similar to a direct deal, except that the technological partner in the former doesn’t know the financial details of the transaction, which remain private between demand- and supply sides.
Due to the fact that any narrow segment of the audience is more expensive than buying the audiences in bulk, contextual targeting will be practically the only way to buy an audience based on interests in open-web. Right now, it is vital to choose the right technology partner to implement contextual targeting and label your content, according to themes and topics:
Contextual targeting allows you to show ads only on relevant web pages, focusing on user intent, interests, and search keywords. Unlike interest or social media targeting (based on the historical data about the behavior of audience segments), contextual targeting is based on the context of a specific page and doesn’t involve cookies. For instance, ads of sneakers can be placed on the web pages dedicated to sports, sports equipment, or the history of marathon runners.
Universal open ID
If the market introduces a sustainable universal ID solution and a lot of local websites adopt it, this may prevent budget reallocation to Walled Gardens. Its technological objective is to identify users cross-site, similar to 3P cookies, but using different identifiers.
In this case, two identifiers will work in conjunction: 1P-site cookies and permanent user identifiers, such as e-mail (hashed) and phone number (hashed).
Germany, France, and Portugal have already implemented unified ID solutions that operate effectively.
However dramatic the changes sound, there’s no reason to worry. The industry has at least 1.5 years until the transition. Publishers need to use this time to test new technologies and approaches and collect 1st-party data.
In any case, technological adaptation and multiple integrations should be a priority. Publishers can approach in different ways.
They can either develop their in-house expertise or find a tech provider with sufficient knowledge, experience, and sensible support.
Admixer will be glad to assist you during the transition. If you have any further questions regarding data collection or DMP integration, please contact Ivan Fedorov, New Business Director at Admixer: firstname.lastname@example.org.