The Most Popular Emerging Alternatives for Third-Party Cookies
If you’ve been staying updated on the latest developments in the ad industry, you might be aware that third-party cookies will soon be phased out entirely. Google, used by over 60% of people worldwide, is one of the last browsers to give cookies the final goodbye. Using first-party data and alternative solutions has become more critical than ever if publishers and advertisers want to protect their revenue.
In this article, we’re going to:
- Explain why third-party cookies are being phased out.
- Go over a few of the current top alternatives.
- Briefly explain how publishers can prepare.
Let’s start by explaining why third-party cookies are being phased out.
Why Are Third-Party Cookies Going Away?
The downfall of third-party cookies isn’t something new. In fact, Firefox and Safari stopped supporting their use long before Google announced that it’s phasing them out. Why are these browsers doing away with third-party cookies while still allowing first-party data collection?
The answer is user privacy.
Third-party cookies are essentially data packets containing user data created by an external domain (a third party) different from the one a person is currently visiting. The data packets are shared between digital platforms for advertising or data collection. It’s those sharing practices that have become a privacy concern.
Over the past few years, user privacy and data collection have become a global priority. Some countries have outlawed the sharing of user data entirely, while many others are hot on their trail.
What Alternatives Are Available for Advertisers and Publishers?
With third-party cookies on the way out, the advertising industry is hard at work trying to find viable alternatives. Similarly, publishers are looking at new ad technologies to protect their revenue streams. Here are a few of our top alternatives that can help publishers future-proof their ad stacks.
Before there were third-party cookies, there were contextual ads. Contextual adverts target websites with relevant keywords and metadata through an automated process. For example, if you were a food blogger, the page would show ads related to food or cooking. There’s no need for third-party cookies.
Have you ever signed in to your Apple or Google account from a new device and received an alert? Device fingerprint technology is what makes that possible. Marketers already use the technology to follow potential customers’ activity online, not much unlike third-party cookies.
Essentially, it de-anonymizes users and gives advertisers access to information like your:
- Time zone settings
- Operating system
Using device fingerprinting, marketers can monitor your online activity in a very similar way as third-party cookies.
Universal ID Solutions
Universal IDs are relatively new, but the technology is already gaining traction in the advertising industry. Three types are currently emerging:
- First-party data-based
- Industry ID solutions
IdentityLink, the first solution, was developed in 2016 and used first-party data. TradeDesk, a DSP, created its own system called Unified ID to improve matching rates and prevent conversion loss. These are just some of the dozens of ID solutions currently available.
There are a few significant advantages to using universal IDs:
- Access to better and more accurate user data
- Higher revenue potential
- Better UX design
- Faster sites and auctions
Publishers and advertisers already have access to a universal ID solution through ID5, which is available in Prebid.js. Prebid technology is already becoming a popular way for publishers to protect their revenue streams.
Google Privacy Sandbox and Aggregated User Data
Since Google Chrome is one of the most popular browsers, it shouldn’t be surprising that the search giant is already working on a solution. The Privacy Sandbox initiative launched in 2019 intending to find alternatives to cookies while mitigating the phase-out’s effect on publishers and advertisers.
Many different industry players are part of the initiative. One of the proposed solutions is the “Federated Learning of Cohorts,” or FLoC, pronounced like a flock of birds, keeping to an unofficial theme that included names like SPARROW and DOVEKEY. It’s also one of the most promising technologies that Google and the initiative have developed.
FLoC uses aggregated user data, much like scientific studies. Instead of being identified as an individual, a person’s info will be included in a group containing thousands of other, similar users. Essentially, users will be put into groups based on their browsing behavior and then receive a “cohort ID” rather than an individual one.
According to Google, the initial test results show a lot of promise for advertisers and publishers. It considers FLoC an “effective, privacy-focused replacement signal for third-party cookies.” It also claims that advertisers can expect to see a 95% conversion rate per dollar spent.
FLoC’s success will depend on how willing players are going to be to adopt the technology. It’s already released for public testing, but now Google needs to prove that the solution works. The technology is already under fire from privacy experts, so its future is still very much up in the air.
Image Source: Marketing Tech News
Is Programmatic Ad Technology Doomed?
Losing third-party cookies won’t doom programmatic ad technology, but it’ll have a significant impact. According to the IAB, publishers may lose up to $10 billion once the cookies are disabled1. Even Google’s research shows that publishers can lose between 50% and 70% of their revenue if they don’t adapt their ad strategies in time.
Industry experts and IAB’s Rearc Project are also hard at work to find a viable alternative emphasizing accountability and transparency. There’s also the PRAM Project, which is focusing on creating a new commercial relationships infrastructure.
Programmatic ad technology definitely isn’t doomed. However, now more than ever, it’s critical for publishers to prepare for future changes by adopting new technologies and solutions early.
Third-party cookies are going the way of the dodo, and there isn’t anything we can do about it. What publishers can do is prepare for the future by adopting new technologies, preparing for the changes, and working with future-ready exchanges and managed ad tech service providers. Don’t be caught off-guard when cookies bid their final goodbye in 2022.