April 6, 2021
It has been over a year since Google announced plans to phase out third-party cookies from its Chrome browser by 2022, creating a wave of anxiety across stakeholders in the addressable advertising universe. Since the ‘90s, we’ve relied on third-party cookies to target and measure audience engagement across the open web, but with Chrome’s nearly 47% share of the US browser market—and following similar moves by Safari (38%) and Firefox (4%) before it—Google’s most recent announcement signals the death knell for third-party cookies.
What’s worse, Google announced in March of this year that it will not build cookie alternatives to track individuals across the web, nor use them in its products. This, alongside Apple’s new requirement for opt-in consent to ad tracking, means that two common identifiers we use for audience targeting and measurement will likely disappear in the near-term.
While the situation sounds dire, the reality is that much of the advertising we run today (eg, mobile, connected TV, and the aforementioned browsers) is already post-cookie. And several alternative targeting methods, both existing and new, are available for testing in the coming months. So, don’t panic—prepare.
Four alternative-targeting solutions you should plan for now:
1. Alternate user-level identifiers. Multiple industry players are working to preserve the targeting, measurement, and optimization capabilities we desire while also protecting consumer privacy and better communicating the value exchange for ad-supported content. Among the leading contenders for this potential solution is the Unified ID 2.0 plan put forth by our partners at TheTradeDesk, who are working with several industry groups and companies to replace third-party cookies with an alternative identifier tied to hashed and salted email addresses. This solution offers cross-channel targeting, extending beyond current cookie limitations, like CTV and mobile. It remains to be seen whether the centralized console for email opt-in will create UX and/or scale issues, but the solution has promise. We hope to enroll some clients in the beta testing in the near-term.
2. Cohorts. Cohort-based targeting is the solution that Google is pushing with its recently announced Federated Learning of Cohorts (FLoC) , which is reportedly at least 95% as effective as cookie-based targeting based on Google’s research to date. This approach aggregates audience segments based on browsing behavior and probabilistic models, allowing marketers to continue activating interest-based buys without targeting individuals. (Note: Google will continue to capture first-party data for targeting on its own platforms, from which the lion’s share of its ad revenues are derived.)
3. First-party data. Publishers and marketers alike should start shoring up their own first-party data (ie, the information gathered directly from site visitors, prospects, and customers) and devising plans for storage, consent, management, and use. Some predict that building an audience will move from the buyers (DSPs) to the sellers (SSPs) in the supply chain, with publishers selling anonymized first-party data to exchanges and direct buys leveraging logged-in states to provide continued targeting opportunities to advertisers. Even Google has plans for publishers to share their proprietary audience IDs with advertisers across programmatic deal types (but, unlike the Unified ID 2.0 solution, this requires each publisher to utilize its own ID system).
4. Contextual targeting. Another mainstay from the ‘90s, contextual targeting isn’t new but is seeing a resurgence in the wake of growing privacy restrictions. Here, ads are targeted to relevant content (with more advanced offerings using machine learning to conduct sentiment analysis and layer in real-time data like time of day, weather, or onsite behavior). While not as alluring as more contemporary audience-buying techniques, it is privacy safe and effective. In a recent study from DoubleVerify, 69% of respondents said they are more likely to look at an ad that is relevant to the content they are viewing.
Although the official third-party cookie phase-out date is unknown and the identity landscape is continually changing, marketers should begin experimenting with alternate solutions now to determine what may work best for 2022 and beyond. Some solutions aim for interoperability, but the reality is that we will likely keep using multiple identifiers in the future. The crumbling cookie represents the next phase in a continually fragmenting marketplace; hopefully, one with a renewed sense of purpose that deepens trust in the media supply chain and creates a true value exchange between brands and consumers.
