The Ongoing Cookie Controversy: Google's Latest Delay
Google has recently announced that the complete phase-out of third-party cookies in Chrome will not be finalized by the end of 2024 as previously planned.
As we all know, the decision to postpone the cookie phase-out is not solely Google's, who is working closely with the U.K.-based Competition and Markets Authority (CMA) to ensure that its proposed alternatives for cookies' tracking and measurement functions, known collectively as the Privacy Sandbox, comply with competition laws.
Quarterly Updates and Industry Reactions
Google and the CMA provide quarterly updates on the progress of the Privacy Sandbox initiative to detail the revised timeline; however, this additional delay seemed somehow expected by the industry, given that the CMA already publicly shared 39 “concerns” back in January.
Several publishers and ad tech players have expressed criticism about noticeable technical challenges and market Impact. The operation of the Privacy Sandbox's sequential auction mechanism has been particularly contentious, with claims that it creates a restricted market bypassing traditional roles of ad servers and supply-side platforms and potentially bolstering Google’s dominance. Further, the IAB Tech Lab has raised issues about advertising effectiveness, media measurement, brand safety, governance, and transparency in a recent report.
The IAB Tech Lab’s Privacy Sandbox Task Force has reported that one of the Privacy Sandbox main APIs, the Protected Audience API (PAAPI), generating bids for individual interest groups, may lead to increased chances of advertisers outbidding themselves. Early tests have shown that PAAPI is associated with higher latency, meaning ads load slower, and a decrease in revenue yield. Additionally, PAAPI depends on intermediaries known as Trusted Execution Environments, with only Google and Amazon currently recognized as such providers.
The Path Forward
With these myriad concerns, Google acknowledged the need for further collaboration with regulators and industry stakeholders to refine the Privacy Sandbox. This collaborative approach aims to achieve a consensus that ensures both innovation in privacy measures and the maintenance of a competitive digital advertising landscape.
As Google navigates these complex regulatory and technical challenges, the digital advertising industry remains in a state of flux. The extended timeline for cookie deprecation not only reflects the difficulties of innovating in the space but also the importance of regulatory approval and industry feedback in shaping the future of online advertising. As we await further developments, the industry continues to debate and prepare for a post-cookie world.
A Common Feedback: More Time to Prepare
As shared by the IAB 2024 Outlook, the upcoming cookie deprecation is widely impacting Brands and Agencies concerns and challenges about media investments in 2024:
- 44% of respondents are concerned about the possibility of executing cross-channel media measurement;
- 37% of respondents are worried about having enough first-party data for targeting, activation and other activities;
- 25% of respondents flag the lack of understanding about cookie-loss and platform changes as a major challenge.
Google’s delay provides more time for publishers and advertisers to test post-cookie and privacy-centric solutions, which is seen as a positive development by some experts. However, others believe that this delay will hinder innovation and progress in the industry.
What is becoming clearer is that ad tech vendors are the stakeholders most directly and significantly impacted by the elimination of third-party cookies. But what are the main solutions currently explored in the market, in addition to Google Privacy Sandbox? At MINT, we have identified 10 of the most leveraged alternatives to third-party cookies.
1. First-party data and Zero-party data
First-party data refers to the information collected directly by an organization from its audience or customers. This data comes from the interactions and experiences users have with a company's own channels: websites, apps, transactions, customer service interactions, surveys, and other direct engagements, usually stored and managed in customer relationship management (CRM) platforms. It's considered highly valuable because it's collected from the source itself—the users or customers—thus providing direct insights into their behaviors, preferences, and interests.
Zero-party data consists of information that individuals consciously and deliberately provide to a company or organization. In contrast to first-party data, which is gathered through indirect actions, zero-party data is directly supplied by customers themselves. Users typically volunteer this type of data, sharing their preferences, intentions, or personal details willingly. This renders zero-party data extremely valuable for businesses.
Zero and first-party data aid in audience targeting, even as cookie usage declines, by emphasizing the development and strengthening of customer relationships. As this trust builds, customers will feel more confident in a company’s ability to safeguard their data privacy and become more open to sharing additional information about themselves and their needs.
2. Contextual Advertising
Contextual advertising places ads based on the content being viewed rather than the viewer's personal identity, eliminating the need for personal data or third-party cookies to select ad creatives. This approach is fully compliant and requires minimal use of first-party data or Customer Data Platforms (CDPs), except for leveraging CDP insights to make smarter contextual ad choices.
With the anticipated decline of third-party cookies, contextual advertising is expected to gain traction, although its success varies depending on the accuracy of the contextual analysis of web pages.: the real effectiveness of contextual ad targeting hinges on the analysis technique, whether it examines only text and metadata or also includes image and video assessment to establish ad relevance.
3. Data Clean Rooms
Data clean Rooms are secure environments where multiple parties can share first-party data and insights without compromising user privacy or revealing proprietary information. These environments are designed to allow controlled access to datasets, where sensitive or personally identifiable information is anonymized or abstracted to ensure privacy.
With the ongoing phase-out of third-party cookies, data clean rooms are becoming increasingly relevant in the digital advertising and analytics world, with many brands investigating how to participate in existing clean rooms or set up their own. As an example, major retail media networks, such as Amazon and Walmart, are strategically developing Data Clean Rooms to provide a proprietary advertising platform where brands and affiliates can effectively operate within their online spaces.
4. Second-party data Partnerships
Second-party data is essentially another company’s first-party data that has been either sold or shared directly between two entities. This arrangement involves both parties consenting to exchange data, typically facilitated through trusted partnerships, collaborations, or specific agreements between companies.
The success of second-party data exchanges hinges on a high level of trust between the parties involved. It's crucial that both organizations are confident in the accuracy, relevance, and proper consent acquisition of the data being shared.
As an example, this model is frequently employed by airlines and travel companies, which often offer additional services such as taxis and car rentals during the flight booking process through established partnerships. This approach not only enhances customer experience but also drives additional revenue streams to both companies.
5. Permission-based Panels
In the post-cookie world, Kantar suggests that permission-based panels offer a viable solution for marketers to understand consumer behavior and measure media effectiveness. This approach stands out because it relies on explicit consent from individuals to gather data, ensuring compliance with privacy laws. Permission-based panels provide accurate and representative insights by analyzing the behaviors and preferences of a carefully selected group of individuals who agree to share their data.
Unlike traditional cookie-based methods, which track user activities across the internet to target ads, permission-based panels focus on data from individuals who have consented to be part of the research. This method allows for detailed understanding without the privacy concerns associated with third-party cookies.
6. Additional Focus on Walled Gardens
Most companies in the media industry are already adept at leveraging “walled gardens” and social media environments, a practice that will likely intensify with the phasing out of third-party cookies. Utilizing social platforms for ad targeting not only facilitates the collection of high-quality second-party data—including demographics, interests, and activities—but also positions companies to strategically harness this information for more precise advertising.
As many companies are exploring alternatives to third-party cookies, they are also focusing on fully utilizing the capabilities of social media environments in a post-cookie era, including existing followers' profiles, similar audiences (look-alike audiences), competitors’ user base and more.
7. Universal IDs
Universal IDs are unique identifiers that allow advertisers to track users across various websites and devices without relying on third-party cookies.
Unlike first-party data, which can encompass a range of customer information like IP and email addresses, a universal ID typically originates from just an email address. Different vendors are developing alternative identifiers to replace third-party cookies in a purportedly more privacy-conscious manner. Examples include Unified ID 2.0 by the Trade Desk, Universal ID by ID5, Ramp ID by Liveramp, essentially aiming to create their own versions of Google's Privacy Sandbox APIs.
The primary benefit of Universal ID solutions is the broad support from publishers and advertisers, enhancing its potential as an effective tracking tool across websites. Nevertheless, their widespread adoption and efficacy in comparison to traditional third-party cookies remain uncertain.
8. Publisher Provided Identifiers (PPID)
PPIDs, or Publisher Provided Identifiers, are unique identifiers provided by Google that publishers issue to help companies track and target audiences across different platforms. By using PPIDs, publishers can work closely with advertisers to manage the advertising ecosystem effectively with these unique global identifiers.
For publishers to thrive, investing in a Customer Data Platform (CDP) to handle subscriber and user data is beneficial. Additionally, from an advertising standpoint, collaborating with partners to create a unique advertising environment is advantageous. The combined efforts of advertisers and publishers in using a CDP to skillfully manage first-party data, coordinate PPIDs, enrich customer profiles with PPIDs, and track activities associated with these identifiers contribute to gaining critical insights or possibly incorporating Data Clean Rooms into their strategies.
9. User Identity Graphs
User ID Graphs serve as extensive databases linking user identities across multiple devices and channels.
These graphs are often seen as a promising alternative to third-party cookies, though they reflect similar characteristics to third-party data, which raises concerns about compliance with European and other consumer data regulations. Despite these concerns, Customer Data Platforms (CDPs) significantly enhance a company's capability to enrich its first-party data with these additional identifiers. This allows for improved personalization and targeting across various channels, including social media and advertising platforms.
10. Device Fingerprinting
Digital fingerprints, or device fingerprinting, involve collecting information from a user's device to uniquely identify it based on its specific configurations and characteristics. This process can include gathering data such as the device's operating system, browser type, screen resolution, installed fonts, and more. This information is crucial for presenting appropriate ads through the right channels. However, its primary value lies in optimizing ad placements to maximize visibility, rather than customizing ads to individual profiles.
Despite these benefits, device fingerprinting also comes with considerable privacy concerns. It can be considered more invasive than cookies because it is less transparent to users and more difficult for them to control or opt out of. As such, its use has been a subject of debate among privacy advocates and regulators, particularly under strict privacy regulations like the GDPR.
MINT’s Additional Solution: Time to Focus on Campaigns' Data
In the short term, the industry will be still focused on A/B testing the previously mentioned solutions (and more) to assess the impact of the new proxies and performance replacements when the third –party cookies are eventually gone. This short-term visibility is connected to the current absence of a unique long-term approach.
On the one hand, the postponed final countdown of third-party cookies poses significant challenges for all marketers; on the other hand, the continuous reliance on external entities and decisions is a huge risk: brands and agencies need to take a more proactive approach, focusing on their massive volume of events and campaigns' data rather than just audience targeting to find effective solutions for a new advertising space.
As shared by our COO Carlo De Matteo in a recent article on ExchangeWire, we should all shift our focus from tracking users to embracing owned events and campaigns' data.
This concept of data ownership goes beyond merely first-party data, encompassing the extensive array of information derived from multi-channel, multi-asset campaigns, such as impressions, clicks, conversions, and creative content. By viewing audience data merely as statistics—for instance, understanding how increased advertising spending on a particular channel impacts incremental sales — advertisers can maintain effective campaigns even in the era after cookies.
This new approach requires the use of a unified platform for effective advertising data cleansing and management: a business that lacks a unique source of truth, or doesn't utilize an effective centralized software, risks missing out relevant pieces of information. It is crucial for businesses to internally connect all the existing data to avoid losing valuable insights and potential growth opportunities that could be derived from a first-party asset.
This comprehensive data set is the best input to train AI-based predictions engines in the cookie-less era, providing recommendations for budget and campaign optimizations as final outputs.
Interested in shifting your vision on the cookie-less era? Check our Youtube Video.
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