On March 3rd 2020, Google made an announcement that it will not be building alternate tracking identifiers with any other cross-site tracking abilities once third-party cookies are phased out. This change is scheduled to happen by late 2023.
The announcement itself isn’t too big of a shock at this point, however for advertisers and other users, it can be confusing how to make do with the situation.
Instead of using these cookies, Google will shift to using technology that’s been developed from Google’s Privacy Sandbox. From it, the FLoC (Federated Learning of Cohorts) was created and is designed to target individuals based on larger groups of people with similar behaviour and interest.
In the case of advertisers, this means third-party cookies aren’t going to be used when tracking users on Chrome. This will make it harder for advertisers to use targeted ads. Instead, advertisers are left figuring out how to attribute conversions, retarget site visitors, and change the frequency cap of ad placements.
Ad tech companies today are working on finding solutions to maintain the same level of performance now while tracking alternatives for digital advertisers. So far, here is what these companies have come up with for advertisers.
The Situation
At the start of 2020, Google stated their plans to remove third-party cookies for Google Chrome. While it comes at a shock, it’s not that surprising as Chrome is the most common browser used today across the globe. Out of all the internet users, 63% of them are using Chrome. The second highest, Safari, takes up 14.4%.
At the time of the change, advertisers and publishers were expressing concern over Google’s decision, wondering if cookie tracking was going to be replaced or not. That didn’t happen until March 2021 when the plan was confirmed and that it wasn’t going to be replaced with any tracking technology that was similar to it.
To be clear, Google is still tracking users through data that it’s collecting through Maps, Search, or YouTube. These changes are only going to apply to ad tools and unique identifiers for websites.
It’s big for advertisers as FLoCs aren’t using the same features that cookies use such as frequency capping, targeting based on browsing behaviour or conversion attribution. It’s forcing other companies to adapt in a big way.
Looking To The Future
The announcement has made it clear that cookies are no longer going to be leveraged by sites and that advertisers will need to use better user-identifier solutions than third party cookies.
The only difference is these are not being developed by Google any longer. After all, if there was no substantiation for 3rd party cookies, upwards of 90% of display impressions wouldn’t have an ID attached to them. It’s clear that relying on Google’s Privacy Sandbox isn’t going to be enough.
In order for effective targeting, it’s key to be adopting a portfolio of different approaches that include targeting ads intelligently without any clear identifiers. This is needed because without any clear identifiers, there can be no targeted ads. And without those, it impacts everyone from the users to advertisers and publishers of content.
Without tracking, advertisers won’t be keen to invest in digital advertising. This results in brands not getting as much reach and generating revenue for their products. Not to mention it will be harder on small and upcoming brands as well who need marketing in order to increase awareness.
Advertisers would have less clients and would have to find alternative methods of generating revenue as well. This means adopting a subscription-based payment model.
That scenario though doesn’t have to happen as many digital advertising networks are working on making a solution that’s even better than third party cookies. These solutions are quite promising too.
Enter A New Digital Advertising Avenue
It’s clear that with third party cookies being gone, advertisers will need different solutions to retarget campaigns and measure attribution.
This is where an open-source Unified ID 2.0, Neustar’s Fabrick ID, and LiveRamp’s ATS comes in. Between the three, they have collaborated and shared their “cookieless” identity solutions. Through this effort, they’re keeping the internet open while maintaining consumer privacy and internet publishers and advertisers in mind.
One solution that has sprung from this is using first party data to find information needed. Ad tech companies like Xandr and The Trade Desk are developing ways to track users while maintaining a higher standard of privacy.
This solution is intended to facilitate high-value transactions for buyers and sellers after third party cookies are no more. This also enables advertisers to be flexible and work with first-party data, including authenticated user data, contextual solutions, and audience-based buying.
Alternatively, the removal of third-party cookies can also change the overall digital landscape. Today, more brands seek contextual advertising and good management of first-party cookies is an alternative.
Unified ID 2.0
Another solution that is gaining traction is Unified ID 2.0 which is getting support of larger ad exchanges like Xandr and The Trade Desk.
Unified ID 2.0 is a collective industry effort that’s meant to create identifiers for users on the internet while still keeping a user’s privacy in mind. Think of it as an improved version of cookies as an identifier.
A user can log into a website with an email address and from there, an identifier is created on an anonymized version of that email address. That identifier will routinely regenerate itself so that it’s secure.
Unified ID 2.0 is comparable to cookies because internet users can set preferences to how data is shared – allowing consumers to have more control over what’s being advertised to them.
Whenever a user logs in through a supply partner that is operating in Unified ID 2.0, they get the added benefit of being automatically logged in to any site that’s part of that supply network too.
How This Affects Advertisers
Of course, there is still more time right now to know what the ecosystem will be like without cookies. One thing that is certain is that advertisers, publishers, and users will be affected by this in various ways.
Open-source digital frameworks like Unified ID 2.0 are nice though as this was born from a broad collaboration amongst publishers, tech providers, and buyers. There is a clear will to adapt and develop a new solution that works for everyone while ensuring tracking and user privacy.
All in all, these changes make it clear that an open internet will benefit from stepping away from third-party cookies.