Programmatic advertising is on the verge of a major shift as the depreciation of browser cookies looms. With Google Chrome, the world's most widely used browser, set to phase out third-party cookies in Q1 of 2024 with an initial roll-out to 1% of its users, the industry is searching for alternative solutions to maintain effective targeting and user personalization. Chrome is finally following the path set by Safari and Firefox after multiple delays in the past years.
In this article, we will delve into the emergence of cookieless browsers, challenges with proposed alternatives, and consumer reactions thus far and examine their implications for publishers in Adtech.
Regrettably, certain entities discovered unethical methods to exploit cookies' mechanisms, compiling user profiles without consent for financial gain. They acquired unauthorized access to users' demographics, interests, lifestyles, and financial data, resulting in significant privacy breaches.
Over the years, major platforms have encountered controversies concerning cookies and privacy breaches, causing more than 90% of customers to express concerns about their information being collected and shared by industry players. Consequently, users and policymakers have started endorsing cookieless advertising as a prominent trend in programmatic advertising for 2023.
Amidst the commendable push for transparency and user privacy, recent findings from a survey in the United States reveal that over half of top marketers still consider cookies essential for their marketing strategies. Additionally, another report suggests that at least 80% of all marketers currently utilize cookies.
The transition towards cookieless advertisements, cookieless attribution, and cookieless web analytics will not occur without some challenges and setbacks. Embracing transparency comes with a cost, and publishers are paying the price. How? Let's delve into how these trends are making publishers lose money!
When Google announced the shutdown of third-party cookies in Chrome in February 2020, they explained that the primary motivation behind this move was to protect users who had expressed concerns about data privacy.
Given that Chrome commands over 62% of the total browser user base and is widely recognized as the most popular web browser, the shift to a cookieless environment will have a profound impact on the marketing industry, the revenue streams of typical publishers, and the landscape of technology itself.
A Google study on the effects of cookieless targeting found that the top 500 global ad publishers in Google's programmatic ecosystem experienced a substantial 52% decline in ad revenue, clearly indicating that publishers are already facing the consequences of a cookieless world.
Over the past few years, various products and strategies have emerged as potential replacements for browser cookies. These alternatives include UserIDs in Prebid, FLoC ID (Google Chrome’s Federated Learning of Cohorts), others that already got rejected as Google Topics, and many other anonymized personal data collection solutions. Despite having encountered challenges, they’ve achieved varying degrees of success in their implementation.
Unfortunately, many of the alternative solutions are seen as more privacy-intrusive than cookies themselves. Clearing these alternatives becomes more challenging, and some methods, such as generating TCF strings without user consent, raise concerns about transparency and user control. Consequently, users have less control over their data, potentially leading to an increase in privacy violations. According to Zdnet in the article "Best secure browsers to protect your privacy online" Researchers from Firefox-maker Mozilla conducted a study in 2020 with 52,000 Firefox users that revealed "it is more complicated than ever to ensure total privacy online," They warned Google and Facebook's tight grip on online advertising makes re-identification through browsing histories an even more pressing privacy problem today.
In the absence of cookies, targeting becomes less efficient. Fingerprinting and other techniques make it difficult for users to clear their data, resulting in a persistent profile that is not easily erased.
Additionally, the utilization of email addresses collected through login portals has become prevalent, allowing for broader user-matching capabilities. However, these practices can compromise user privacy and lead to less effective targeting overall. And they also put a lot of advantage over publishers with login data, and may also force some to start collecting emails - resulting in tracking more information about the users, as compared to Third-party cookies.
“Since the inception of this cookieless concept, we find ourselves in a rather unfavorable position at present. Previously, when cookies were in use, there was the option to simply clear them, resulting in a completely fresh browsing experience. However, with the emergence of various systems, such as fingerprinting, the ability to clear cookies has been rendered ineffective. We are now faced with a situation where we are unable to eliminate or eradicate the accumulated data, which significantly hampers our ability to start anew." said Nils Lind, CEO/Founder of Assertive Yield in a podcast “2023 Trends and Predictions In Programmatic” released earlier this year.
Privacy-centric browsers like Brave, Firefox, The Tor, and Duckduckgo which prioritize user identity protection, further complicate the landscape. While these browsers promote user privacy, they limit the amount of user data available for advertisers, which has implications for market dynamics. The hope lies in finding a balance that ensures user privacy while still facilitating growth in the advertising market.
However, according to the CNN article Private browsing may not protect you as much as you think, Albert Fox Cahn, founder and executive director of the Surveillance Technology Oversight Project and a fellow at the New York University School of Law said “We have to recognize that oftentimes simply toggling on a private mode does very little to prevent third-party tracking and especially law enforcement tracking”
With the shift away from user-specific data, publishers face a dilemma in maximizing revenue. Alternative to some of the solutions replacing third-party cookies, we are also seeing an uprising in the older method of contextual advertising. Years ago if you were a car insurance manufacturer it made sense to put an ad on a website about cars, because there was a higher chance a reader there would own a car and be in need of car insurance. With programmatic and contextual this shifted to buying an ad next to articles related to cars in non-niche websites. And then with the third-party cookies various techniques were used to show ads to people who were recognized as car owners - no matter what the surrounding content was.
Now we are seeing a shift back to showing ads next to the right content, which may cause a shift in how editorial decisions are made - using context and topics for targeting may lead to a skewed focus on commercially viable subjects, potentially sidelining critical news and niche content. Striking a balance that allows publishers to monetize while supporting diverse content creation is crucial for preserving real journalism.
So what does this mean for publishers in adtech? So what does this mean for publishers in adtech? How can they position themselves for success in this fast-changing landscape?
Find out when you Explore New and Effective Alternatives to Cookieless Browsers for Publishers.
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