Technologies evolve and some things die a natural death. Third-party cookies have been declining since quite a few years and Chrome has decided to euthanize it. This will have some impact on display and native advertising campaigns, to put it mildly. In order to understand this one must understand what third party cookies are and how they work, especially references to programmatic advertising.
The cookie in web terminology actually has its basis in the Dutch word Koekjie which means small little cake, possibly baked as a test case before throwing the larger cake into the oven. Lou Montulli, a web browser programmer, adopted it to web technologies. The cookie is a small packet that a website places on the system of a visitor to the web page and it sends back information about the browser, browsing behavior, page visited, time spent and so on. It is innocuous but gives a wealth of information to website owners about visitors to their pages. This may be used to drive advertising or to improve web contents.
Third-party cookies in native and display advertising
- Website owners who wish to monetize operations will usually opt for third party advertisers to place ads on their sites. They may even place their own ad on their site. When a visitor visits that web page the website places a cookie on the user’s device. If there is a display or native ad on the page then a request is also sent to the third party advertiser or its ad tech platform which, in turn, places the ad on the page and a cookie on the user’s system. This is a third-party cookie. This third party cookie is instrumental in firing off a variety of advertising processes:
- The platform uses the cookie to attribute ad views and conversions.
- It leads to audience activation in which the data management platform creates audiences that, in turn, are ported to the demand side platform through synchronization of cookies in order to target audiences across various sites.
- It is used to target and retarget ads based on visitor’s behaviors and interests.
- The cookie also helps advertisers limit the number of ads shown to the same user.
This is insidious and naturally led to reactions that led to the decline of third party cookies.
Not just Chrome but even Safari and Firefox started implementing tech that would help users block third party cookies. Users became smarter and installed ad blockers. Just as a matter of interest, Chrome has 64% of the market share. Safari and Firefox account for 22% of the user base across desktops and mobiles. This means third party cookies simply are left out in the cold. Programmatic needs to look at other ways.
Display and native advertising without third party cookies
Programmatic advertising is high-tech advertising. The route towards advertising without relying on third-party cookies is for ad tech companies to use technology to obtain data through APIs that link to click through conversion and ad campaign reports. The APIs may link a click or ad view to a particular user.
- Google’s Chrome has its privacy sandbox in which three methods for ad targeting are proposed: interest-based, first-party data and contextual. These three methods do not have to rely on identifiers so far provided by cookies but work similarly to API reporting. However, using first-party data entails more work such as the use of persistent ID to tie data to a user and identify such users.
- Since the majority of users now prefer to use mobile devices to browse and buy, this paves the way for mobile Ad Ids or MAIDs, which serve as better and more efficient identifiers compared to cookies.
- An ad-tech world without third party cookies will mean that providers of programmatic ad tech platforms will have to repurpose their tech to rely more on first-party offline and derivatives to identify track users such as using hashed email/phone numbers with digital identifiers.
- Ad tech platforms will now need to introduce universal ID and make it part of their solution.
- Publishers will focus more on permitting users to go through their contents only on payment or after login – which means registration and providing details like phone number and email ID. The first-party cookie becomes a valuable currency.
As a side note: the third party cookie worked surreptitiously. Now with that on its way out, publishers are likely to insist that each visitor register and provide details. Ditto for advertisers to whose sites the visitor clicks through.
As they say, if one door closes, more doors open up. This is likely to be the case in a future world where third party cookies are a distant memory and alternative tech powers the display and native ad space. The writing is on the wall and existing ad tech providers will be rushing to upgrade their platforms and new developers naturally will consider alternatives during the development process.