And that’s the way the (third-party) cookie crumbles…

Third-party cookies, named for their creation by domains not directly visited by the user, have long been the cornerstone in tracking user behavior across various websites and executing retargeting strategies. But the increasing emphasis on privacy is reshaping the digital advertising landscape – the gradual phasing out of third-party cookies.

IAB Croatia, the Croatian branch of the IAB Global Network organization, has prepared the 41 page document ‘Guidelines for a Cookieless Digital Future’, to provide all relevant information on the topic. What follows is our TL;DR summary for merchants.

The triad of change

In the context of digital advertising, three key changes in recent years have contributed to the elimination of third-party cookies:

1. Legal circumstances related to data collection and use:

The increasing global recognition of the fundamental right to personal data protection has led to more strict legal requirements for user consent and data tracking. Various regional and international laws, most infamously the GDPR, have been instrumental in shaping these legal circumstances, emphasizing user consent and transparency in data usage.

2. Browser Gatekeeping:

Enhanced privacy measures implemented by browsers (including Safari, Firefox, Edge, and Chrome) are changing how third-party cookies function. Notable initiatives like Apple’s Intelligent Tracking Prevention (ITP) and Mozilla’s Enhanced Tracking Prevention (ETP) have significantly reduced the capability of third-party cookies to track users across sites. Google’s Chrome, holding a substantial market share, has also introduced significant changes with its Privacy Sandbox initiative, aiming to develop new standards for web privacy and replace third-party cookies with alternative solutions.

3. Ad Blocking:

The rise of ad-blocking tools, both as browser extensions and integrated features, has contributed to the declining efficacy of third-party cookies. These tools, leveraging blacklists and artificial intelligence, prevent the loading of scripts known for tracking and profiling, further limiting the reach of digital advertising.

The Eye of Sauron weakens

Chrome’s decision to block third-party cookies was a move that marks the most considerable change in digital advertising since the introduction of real-time bidding in 2009. Nowadays, approximately 30% of ads are displayed in browsers like Safari and Firefox, which do not support third-party cookies. With Chrome, accounting for about 65% of browser usage, implementing this change, the era of third-party cookies is effectively coming to an end. Google’s plan is to phase them out completely by the end of 2024!

While the industry has expressed concerns about a cookieless future, it’s crucial to note that this change doesn’t affect all cookies. First-party cookies, stored by the domain the user visits, will still play a significant role.

The shift away from third-party cookies necessitates new data protection technologies to support digital advertising features like frequency capping, using first-party data for targeting new audiences, and optimizing ads based on user preferences.

Effects on Measuring and Verifying Digital Ads

The “Cookiexit” accelerates the need for merchants and advertisers to evolve their methods for ad verification, measurement, and brand safety. It’s certainly feasible to adapt these metrics to a cookieless world, and the wheels are already in motion.

Ad Verification:
Ad verification processes, crucial for detecting fraud, ensuring brand safety, and measuring ad visibility, do not necessarily rely on cookies. It’s important for businesses to consult with their verification service providers to ensure their methods are prepared for a future without third-party cookies.

Measurement:
The traditional reliance on third-party cookies for measuring individual user exposure to online advertising is changing. New measurement approaches include collaborations with publishers and networks for data alignment, probabilistic models, laboratory-controlled exposure studies, advanced analytics, and experimental methods like A/B testing. These methodologies will help gauge the impact of digital advertising investments more effectively in a cookieless world.

Attribution:
Changes in measurement will also influence how advertisers approach attribution, necessitating the adoption of new models or combinations of methods. The elimination of third-party cookies means that advertisers must find alternative ways to collect data for effective campaign targeting and measurement.

Viewability:
The concept of viewability, which determines whether an ad is visible to users, remains crucial. Advanced verification technologies now can measure additional engagement signals beyond mere visibility, contributing to a more nuanced understanding of ad effectiveness.

Ad Fraud:
The guidelines recognize ad fraud as a significant challenge, encompassing any intentional misreporting in digital advertising. Tools and practices for addressing ad fraud, often provided by the same organizations responsible for ad verification, will continue to play a key role.

Brand Safety:
Lastly, brand safety remains a top priority, referring to the placement of ads in suitable environments. Contextual targeting, which evaluates the appropriateness of an ad’s context for a brand, will become increasingly important as a method unaffected by the removal of cookies.

So what are the alternatives?

Merchants now need to rethink their advertising strategies and focus on the creative use of available data, contextual intelligence, and real-time segmentation to maintain engagement and relevance in a cookieless future.

A key replacement is the use of first-party data-based identifiers, pivotal in a digital world transitioning away from traditional cross-site tracking and retargeting methods. Advertisers and merchants are now focusing on identifying their audience directly through CRM data and email, leveraging these as vital components in programmatic and digital strategies. This shift, underlined by the increasing privacy consciousness, allows for more personalized campaigns and a deeper connection with consumers.

Contextual targeting is gaining prominence as a viable alternative. This method, refined by advanced machine learning and semantic analysis, allows advertisers to align ads with relevant content, matching consumer interests without relying on personal data. Contextual targeting has evolved to understand the deeper meanings and themes within content, enabling more precise and effective ad placements.

Conclusion

So, what should you (a savvy merchant) do during this transition period? As Ross Geller would say – pivot! Now is your chance to deeply integrate first-party data, an invaluable asset that’s already within your reach, especially if you have direct customer relationships or subscriptions. This data shouldn’t just be used for attracting potential shoppers, it’s also key to better understanding and connecting with your audience on a more personal level.

Embrace solutions like contextual targeting, CRM integration, and email marketing, which are experiencing a resurgence. These tools offer a meaningful way to connect with customers without compromising their privacy. If you’re not sure where to start – drop us a note, we’ll help 🙂

Also, don’t forget to engage in industry forums and collaborations. These platforms are goldmines for insights and keeping ahead of the curve. Lastly, take the time to review and bolster your ad verification and fraud detection systems. Ensuring brand safety and trust is more crucial than ever in these times.

Look at this era as an opportunity to enhance user experience and forge stronger connections with your audience, ultimately driving your business forward in a privacy-conscious world.