Cookieless Future of Programmatic and Display Advertising
The world of web witnessed a revolutionary change in 1994 with the introduction of ‘persistent client state object’ – a solution that was launched to cope with the ineptitude of tracking new and frequent website visitors. Placing a small file on each website visitor’s device, it tracked the machine’s activities on that site. Later on, these small files came to be known as ‘cookies’.
Cookies turned the web world into a smart environment where user login details, personal preferences like chosen language, and re-visited websites were remembered. Websites using cookies were able to offer a seamless experience by allowing their users to start off their new session from where they had left in the earlier session. Based on their browsing history, users received suggestions according to their interests. In ad tech, cookies enabled website publishers to track users’ activities on the web. Gradually, user personalization, session management, and tracking became the prime uses of cookies.
For more than a decade, the digital advertisement world has been able to target the audience better with all the data they have collected using cookies. But, many recent data breach incidents raised alarms, causing a concern amongst customers about their shared data. With the web users worried about their details being shared without their consent, several changes were set into motion in order to prioritize customer privacy.
Privacy laws such as General Data Protection Regulation (GDPR) and California Consumer Protection Act (CCPA) were brought into effect to regulate the collection of users’ personal data. While Google and Facebook also made some voluntary changes to their data collection policy, the most recent change came in the form of removing third-party cookies from the internet browsers. This change is believed to have a greater impact on the programmatic industry and display advertising.
To know how the cookieless future of the programmatic industry would be, let us first understand the different kinds of cookies and the role they play.
- First Party Cookies – These cookies are set by web server on the website and are supported by all internet browsers. The first party cookies collect data that can be used for several purposes like calculating sessions, pageviews, and the number of website visitors. The data retrieved from these cookies can be seen by the domain host. These cookies, generally, aren’t enabled to track a user’s activity on other websites, except for the original website on which the cookies were placed. Users have the power to either block or delete first party cookies.
- Second Party Cookies – These are cookies that get transferred by one company, which created the first party cookies, to another company under a data partnership. The cookies are usually transferred for ad targeting.
- Third Party Cookies – These cookies are set by external domains that a user does not directly visit. When third-party elements such as plugins, ads, or chatbox are added to the website, they create third-party cookies which saves user information for ad targeting. Data such as type of device, user location, user behavior on the website is collected by these cookies.
Removal of Third Party Cookies
As third party cookies were set by domains other than those visited by the users, it left little to no space for transparency amongst users. Also, it meant that data was being collected by these cookies without the users’ consent. Responding to these concerns, the third-party cookies were first blocked by Apple’s Safari browser in 2017 by introducing Intelligent Tracking Prevention, ITP2.2. Mozilla Firefox followed suit in the year of 2019 with the introduction of Enhanced Tracking Protection (ETP). Google Chrome announced blocking third-party cookies completely within a period of two years.
Being a browser that has a share of 62% of digital users, Google Chrome’s decision to scrape third party cookies is largely going to impact programmatic advertising. A few of the elements that would be affected include behavioral targeting, ad retargeting, audience targeting, frequency capping, and view-through attribution.
Effect on Programmatic Advertising
After being dependent for more than two decades on third party cookies to collect data for ad retargeting, behavioral targeting, conversion tracking, and more, the programmatic advertising companies will certainly witness a large impact. Below are the components that would be affected due to the blocking of third party cookies.
- Publishers – Ad Exchange and Supply-side Platforms (SSP) used third party cookies to identify users on the website, and will not be able to do it in the same manner now.
- AdTech Platforms – Without cookie sync, AdTech Platforms will find themselves at a loss of mapping relevant users to display ads on the browsers. They will have to handle conversion tracking, ad targeting, and frequency capping with a different method.
- Data Management Platform (DMP) – Without third party cookies, Data Management Platform won’t be able to generate any audiences to later use for audience activation and and targeting.
- Advertisers – With the removal of third party cookies, advertisers will not be able to reach relevant users. They will have to build first party audience data and form a partnership with a relevant publisher.
Cookieless Advertising Future
The programmatic and display advertising industry will have to establish an environment wherein alternative strategies are used to target relevant users. Other than relying on cookie-based audience, advertisers should opt for different tactics, a few of which are mentioned below.
- Building First-Party Data – In a couple of years, third party cookies will get completely wiped off from web browsers. But, companies can still acquire first party data from CRM platforms, advertiser’s website, in-app cookies, and foot traffic.
- Using Contextual Advertising – With this technique, advertiser can place an ad on web pages based on the content of those pages. For example, an advertiser can place an advertisement about gym equipment on a web article that speaks about fitness. The chances of conversion are also high here, as a person interested in reading about fitness might also be inclined towards buying relevant equipment.
- Developing a White List – Advertisers can target relevant domains, channels, and apps which might result in many related ads being populated on the website. This, accompanied with regular optimization of the site can help in raising the conversion rate.
- Exploring Other Digital Channels and Mediums – Connected TV (CTV), OTT, mobile apps, and Digital Out-Of-Home (DOOH) are a few of the many digital channel and mediums that advertisers will have to consider.
With the era of third-party cookies coming to an end, its impact will be experienced far and wide in the programmatic and display advertising world. But, viewing this as an opportunity, AdTech companies have already started working on projects to help advertisers market their products and services online. We can be hopeful, that the cookieless future with new solutions will help establish transparency between users, marketers, and advertisers.