How Will Display and Native Advertising Work Without Third-Party Cookies?

AdTech Industry, Data & Privacy, MarTech Industry

How Will Display and Native Advertising Work Without Third-Party Cookies?

With all the recent news about Google Chrome’s decision to kill off third-party cookies over the next two years, anyone would think it’s the first piece of news the AdTech industry has heard about the end of third-party cookies. But it isn’t.

The decline of third-party cookies has been common knowledge for publishers, agencies, AdTech companies, and advertisers for many years now.

The reason Chrome’s announcement has caused such a stir is that it’s the final nail in the coffin for third-party cookies — and it’s a massive nail at that. 

As the leader in the web browser market, Chrome’s decision to stop supporting third-party cookies will have a huge impact on how display and native advertising campaigns are run and measured.

How Are Third-Party Cookies Used for Display and Native Advertising?

Although the form and function of display ads vary to native ads, they are both served in a similar way. 

When a web page loads, it sends various requests to the publisher’s web server and other servers to retrieve the main content. If the page also contains a place for a display or native ad, then a request is sent off to an advertising technology (AdTech) platform to retrieve the ad.

When the AdTech platform returns the ad, it creates a cookie and stores it on the user’s device. Because this cookie was created by the AdTech platform and not the publisher, it’s called a third-party cookie.

Once a third-party cookie has been assigned to a user’s browser, it can power a number of key programmatic advertising processes, such as:

Identification: AdTech platforms like SSPs and DSPs use third-party cookies to identify users across the web.

Behavioral targeting and retargeting: Once an AdTech platform can identify a user, they can show them personalized ads based on their behavior and interests. 

Audience activation via DMPs: Advertisers can use a DMP to create audiences, which can then be exported to DSPs via cookie syncing and used for audience targeting across different websites.

Frequency capping: Third-party cookies help AdTech companies limit the number of times a user is shown the same ad.

Attribution: AdTech platforms use third-party cookies to attribute ad views to conversions. 

The Slow Decline of Third-Party Cookies in Programmatic Advertising

The decline of third-party cookies has been in free fall for the past decade, and when Google Chrome shuts off support for them, they’ll come crashing to the ground.

Here’s a recap on the decline of third-party cookies:

Ad blockers: First created in the mid-200s, ad blockers have since grown in popularity. A recent report by Blockthrough states there are around 763 million monthly active users of ad blockers on desktop and mobile devices. 

Most ad blockers prevent tags from AdTech companies from loading on a page, meaning they can’t create third-party cookies.

The GDPR: Since the GDPR’s enforcement date of May 25, 2018, publishers have had to ask EU visitors to give consent to collect their personal data, which includes creating and reading third-party cookies on their device. 

Although the GDPR’s impact isn’t as direct as ad blockers or privacy settings in web browsers, it has reduced the number of available audiences, especially in Europe. 

Web browsers: Back in 2015, Safari started allowing iOS users to install content blockers. Then in 2017, they introduced a new privacy feature called Intelligent Tracking Prevention (ITP), which not only blocks third-party cookies by default but also limits the lifespan of certain first-party cookies and data storage. 

Firefox followed suit in 2019 when it started blocking third-party cookies by default. 

Safari and Firefox’s global web browser market share stands at 22% across all devices, meaning that 22% of all website traffic is blocking third-party cookies (not including ad blockers). 

As Google Chrome’s global market share is 64%, when it stops supporting third-party cookies, it will ultimately spell the end of third-party cookies forever. 

Display and Native Advertising: Life Without Third-Party Cookies

Third-party cookies have been the backbone of the display and native advertising industry for over a decade. 

Adjusting to life without them will be hard, but there are options available. 

Google Chrome’s Privacy Sandbox

Instead of simply turning off third-party cookies like Safari and Firefox did, Chrome has proposed a replacement — one that still maintains an ad-supported web but also protects user privacy. 

And no, it’s not a browser ID. 

The replacement is known as Privacy Sandbox, and although it’s still being developed, the concept has been pretty well thought out.

Privacy Sandbox contains various APIs that will replace many of the key programmatic advertising processes currently powered by third-party cookies. 

Ad conversion measurement: There are two APIs that AdTech companies can use to receive data about click-through conversions and ad campaign reports. The key thing about these APIs is that they won’t contain any identifiers that can be used to link a click or ad view to a user. 

Ad targeting: Privacy Sandbox proposes three main methods for ad targeting — contextual and first-party-data, interest-based targeting, and remarketing (aka retargeting). Similarly, with the measurement and reporting APIs, these three ad targeting methods won’t rely on identifiers.

As you can see, identification will no longer be done on an individual basis. Instead, ad targeting will be done in on a cohort level, with reporting done in aggregate. 

AdTech companies should look into how their platforms can utilize the Privacy Sandbox APIs for display and native advertising. 

Other Alternatives

It’s clear that Google Chrome wants to move away from identifying individuals towards a more privacy-friendly solution. But what about the other main web browsers?

Many folks in the programmatic advertising industry have suggested that Safari and Firefox may adopt Chrome’s Privacy Sandbox at some stage, but this is just speculation. 

At the moment, the future of display and native advertising lies in first-party data.

Publishers, mainly premium publishers, are in the best position to weather this storm. They have direct access to users and can collect valuable first-party data about their behavior and interests. 

However, unlocking this first-party data for ad targeting and measurement isn’t as simple as with third-party cookies. 

One of the main ideas being put forward involves using more persistent IDs, such as hashed and encrypted email addresses, to tie a publisher’s first-party data to a user, and even match it with an advertiser’s first-party data. 

This would allow publishers to identify users on their site, which could power ad targeting, measurement, and attribution. 

But using such an explicit piece of personally identifiable information (PII) doesn’t follow the privacy trend in AdTech — in fact, it goes in the other direction. 

Other ideas include utilizing a browser’s local storage to store and retrieve first-party data for targeting, and exploring data clean rooms for measurement.
 
Regardless of which option your AdTech company chooses, one thing is for certain — if you haven’t started preparing your tech for a world without third-party cookies, then now is a good time to start. 

This article was originally published on MarTech Advisor.

Prepare your AdTech platforms for a world without third-party cookies

The end of third-party cookies doesn’t mean the end of AdTech, but companies will need to change how their technology works to survive a world without them.

Schedule a call with one of our AdTech development teams and find out how we can help you.

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