The Death of 3rd-Party Cookies: How Websites Can Adjust [Updated]
Web publishing is an industry in transition, yet to grapple with the rise of web traffic, third-party cookie phase-out, and new marketing 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.
- What are 3rd-party cookies?
- Transition to the post-cookie world
- What is Google’s new policy on 3rd-party data?
- What makes third-party cookies so important?
- How will the lack of 3rd-party cookies impact websites?
- What tools do websites need to get ready for the post-cookie world?
- 1st-party DMP
- Direct deals
- Contextual targeting
- Universal ID
- Wrap up
What are 3rd-party cookies?
Third-party cookies are user identifiers set up by the external platform on the site. When a user enters the site, the cookies are saved on their computer.
If a user enters website X but his computer stores a cookie from website Y, we’re talking about 3rd-party cookies. In this case, an advertiser shows ads through 3rd-party advertising platform Y.
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 blocked 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). Apart from Chrome itself, all browsers that use Chromium engine will also get rid of third-party cookies. The block of tracking cookies 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 and will practically reach zero in 2022. Thus, the issue of leveraging unidentified users is extremely pressing, and many companies strive to find an optimal technical solution for behavioral tracking.
What is Google’s new policy on 3rd-party data?
In 2022, Google will block 3rd-party cookies for the sake of user privacy and growing public concerns over the abuse of personal data.
Besides, on 3 March 2021, Google announced that it won’t support any user-centric ID solutions in its products after the phase-out of third-party cookies and will instead concentrate on cohort-based algorithms for targeting. Such a take on privacy became the cornerstone of Privacy Sandbox, a framework Google is developing to replace 3rd-party ID solutions in targeted advertising.
We’ve recently explained what Google’s decision on third-party data means for advertisers, publishers and adtech companies.
What makes third-party cookies so important?
There are two main types of 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 ad networks to advertiser’s pixels.
A 3P-cookie is the universal anonymous identifier in digital marketing, 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
After browsers block tracking cookies, campaign planning and targeted advertising 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 third-party cookies will rewire paid marketing, 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).
- According to industry studies CPM of the unidentified user (after blocking third party cookies in Chrome), is, on average, 50% lower.
- Marketers will focus on controlling frequency capping and reach and limit the number of websites and platforms where they place targeted 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.
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 after blocking cookies, as advertisers will value partnerships with trusted publishers who have technical capabilities to provide advanced user segments for targeting. 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 the 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. Forebes USA is a great example how to mark up the website correctly: w
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 3rd-party cookies. For instance, ads of sneakers can be placed on the web pages dedicated to sports, sports equipment, or the history of marathon runners.
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: 1st-party website cookies and permanent user identifiers, such as e-mail (hashed) and phone number (hashed).
Germany, France, and Portugal have already implemented universal ID solutions that operate effectively. In the CEE market, Admixer ID is up and running.
However dramatic blocking third-party cookies sounds, there’s no reason to worry. The industry has 1 year 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.
If you have any questions regarding data collection, DMP or Admixer ID, please contact Ivan Fedorov, New Business Director at Admixer: firstname.lastname@example.org.