On Tuesday the 14th of January, 2020, Google made an announcement that most people in the online advertising industry never thought they would hear — Google will kill off third-party cookies by 2022.
Then, on Thursday June 24, 2021, Google Chrome announced that it would be extending its planned sunset of third-party cookies by 2 years. It’s currently expected that Chrome will shut off support for third-party cookies starting from the middle of 2023.
Third-party cookies have been the backbone of online advertising for over a decade and power a number of key advertising processes.
But what will this mean for the digital advertising industry and what impact will it have on publishers, AdTech companies, and advertisers?
Check out our infographic to find out!
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A Timeline of Google Chrome’s Recent Privacy Changes
May 7, 2019: Google announced that they would introduce a set of new privacy and transparency features to their Chrome browser to give users more transparency, choice, and control over personalized digital advertising.
October 23, 2019: Google Chrome introduced its “SameSite” attribute whereby website developers have to state whether the cookies they set are to be used only by the current site or current URL that the user is on, and which ones are cross-site cookies. This is to allow users to delete third-party cookies and keep first-party cookies intact.
August 22, 2019: Google announced its Privacy Sandbox — a new initiative that aims to make the web more privacy friendly, but still allows online advertising to work in a limited capacity. Read more about Privacy Sandbox below.
January, 2020: Google announced that it will shut off support for third-party cookies by 2022 and replace the programmatic advertising processes currently carried out by third-party cookies with its Privacy Sandbox.
June 24, 2021: Google Chrome announced that it would be extending its plan to shut off third-party cookies by an extra 2 years.
What processes are powered by third-party cookies?
The main goal of third-party cookies is to identify users across different websites to power:
- Behavioral ad targeting — showing ads to users based on their behavior across different websites.
- Audience targeting via cookie syncing — exporting audiences to DSPs for targeting.
- Ad retargeting — showing ads to users across the web who have previously visited your website.
- Frequency capping — limiting the number of times an ad is shown to the same user in a given time frame (e.g. max 5 ad impressions in a given 24-hour period).
- Audience extension — showing ads to a publisher’s audience across different websites.
- View-through attribution — attributing an ad view with a conversion.
The impact on AdTech
Here’s what Google Chrome’s changes to third-party cookies mean for:
Publishers will see a big drop in ad revenue as advertisers won’t be able to identify the publisher’s audience, meaning they won’t pay as much for the impressions.
Other revenue-making activities like audience extension will also be heavily impacted.
Because most SSPs and ad exchanges make money by adding a margin on top of the price of media, when publishers earn less, so do they.
When Chrome stops supporting third-party cookies, SSPs and ad exchanges won’t be able to identify users on a publisher’s website, which will impact behavioral ad targeting, attribution, and measurement.
Although ad networks will still be able to display ads on different websites, things like behavioral targeting, attribution, and reach will be affected.
Showing ads to an advertiser’s target audience will be much harder to do because DSPs won’t be able to identify whether a publisher’s audience matches the advertiser’s target criteria.
Things like behavioral targeting and retargeting won’t be possible.
A majority of DMPs use third-party cookies to identify users and build profiles about them, which advertisers and DSPs then use for ad targeting.
Advertisers and publishers won’t be able to use these audiences after 2023, meaning the core business offering of most DMPs will be severely impacted.
Because SSPs and DSPs won’t be able to identify audiences on websites, advertisers won’t be able to run behavioral and retargeted ad campaigns, which will lower the reach and performance of their campaigns and lead to less conversions, sales, etc.
It’s not game over for AdTech
But it will just have to play by a different set of rules.
Successful AdTech companies of the future will focus their attention on one or both of the following:
Google Chrome’s Privacy Sandbox
Google Chrome’s Privacy Sandbox provides a secure environment for personalization while still protecting user privacy.
It contains a number of standards and APIs that will replace the processes currently carried out by third-party cookies.
The standards are being discussed and worked on between AdTech companies, agencies, publishers, Google Chrome and Google’s ad teams via the W3C Improving Web Advertising Business Group.
Privacy Sandbox will likely be released sometime in 2023.
First-party data (and cookie) approach
Even though the third-party cookie will die off, there’s an opportunity to breathe new life into first-party cookies.
Although first-party cookies lack the scale of third-party cookies — i.e. they can’t track and identify users across multiple websites like third-party cookies can — they can still be used for behavioral ad targeting, attribution, and measurement.
The caveat is that these processes will be limited to one website (i.e. the one the user is visiting) and will require publishers to implement logins so they can identify their audience.
There are a number of ID solutions that can help advertisers and publishers transact using first-party cookies.
Where there’s change, there’s opportunity
Despite the challenges on the horizon, there are numerous opportunities to be had for each player in AdTech.
These changes, and other privacy changes (GDPR, Safari’s ITP, etc.), don’t spell the end of AdTech, but AdTech vendors will need to change the way their platforms work to survive the next decade and prosper in a privacy-focused world.