It’s just over six months until Google effectively ends third-party cookies and the fight to find a replacement is heating up. But the UK’s Press Gazette is warning that if a cookie replacement isn’t found, publishers stand to lose ‘hundreds of millions’ of pounds in display ad revenues.
Takeaways
- Third-party cookies, used by advertisers to serve relevant ads to web users, are already blocked by Safari and Firefox web browsers and will be phased out in Google’s Chrome by 2022. But while there’s an almost universal acceptance that cookies are bad for privacy, there is still no broad agreement on an effective replacement and that could cost publishers.
- In its Online Platforms and Digital Advertising report, the UK’s Competition and Markets Authority cites a 2019 study from Google that compares the revenue publishers received from personalised advertising against revenue from non-personalised ads. The CMA’s analysis suggests UK publishers would earn around ‘70% less revenue when they were unable to sell personalised advertising but competed with others who could’.
- The CMA’s comparison isn’t entirely useful – personalised targeting via third-party cookies will be removed for all publishers. But with the UK ad market worth £23.5 billion in 2020, it does highlight the potential for huge revenue losses if publishers can’t settle on a substitute identifier to allow marketers to target advertising on their sites.
Replacing cookies
Google is pushing its own FLoCs alternative to third-party cookies, but there is far from universal acceptance of either Google’s promises not to embed its own advantage in the new system or even of its ability to protect user’s privacy. This has led to a flurry of alternative initiatives.
- The Trade Desk’s open source UID 2.0 is an initiative that aims to replace third-party cookie IDs with an alternative identifier tied to hashed and encrypted email addresses. Early supporters include The Washington Post and one of the world’s largest ad buyers, Publicis Groupe.
- Unified ID 2.0 took a step closer to being independent of its original creators with The Trade Desk handing over the full open source code base for Unified ID 2.0 to industry body PRAM (Partnership for Responsible Addressable Media), run by the IAB Tech Lab.
- “Handing the code over to an industry body is a milestone on the journey from concept to viable solution”, said Alex Cone, VP of privacy and data protection at the IAB Tech Lab.
Beyond identity
At the publisher level, companies are considering taking control of their own data destiny. Some are also considering contextual tagging as much as individual identifiers to target advertising.
- At a recent Life After Cookies event, Jana Meron, senior VP of programmatic and data strategy at Insider said if a contextual ad network materializes, the data will likely be as good as a third-party cookie.
- Focusing just on emails, for example, IDs will be “really, really, really” expensive. “With context, reaching all the people who want to read about remote work, can gain scale much more easily and might provide access to tens of millions of impressions.”
- Jason Schmidt, VP of data strategy and partnership at Conde Nast, agrees and said every publisher with the means should build their own proprietary contextual engine.
Despite the dire revenue predictions, there is optimism that a solution, or solutions, will be found. Richard Reeves, managing director at the Association of Online Publishers, said it’s not in Google’s interest to ‘shoot themselves in the foot’ and not have any of the income previously reliant on third-party cookies.
“The reality is that by the time Google turn off the third-party cookie… we will understand different ways of being able to connect to that data and that information in a compliant way.” His ideal would be based on information supplied with the consent of that user.
