As Cookies Crumble…

January 11, 2024
3 min read

What are the challenges and opportunities for advertisers?

In the ever-evolving landscape of digital advertising, a seismic shift is on the horizon as Google considers bidding farewell to third-party cookies. These small pieces of data have been instrumental in helping advertisers track user behavior across websites. However, with privacy concerns taking center stage, Google's potential move raises questions about how advertisers will adapt to this new era. So what are the challenges and opportunities that lie ahead for advertisers in the post-third-party cookie world?

The Role of Third-Party Cookies:
For years, third-party cookies have been the backbone of digital advertising, providing advertisers with insights into user preferences, behaviors, and targeting options. Advertisers have relied on this data to deliver personalized and targeted ads to users, ultimately enhancing the effectiveness of their campaigns. However, concerns about user privacy and the increasing push for more stringent data protection regulations have prompted tech giants like Google to reconsider their use.

Challenges Advertisers Face:

1. Loss of Tracking Precision:
Without third-party cookies, advertisers will face challenges in tracking user journeys across different websites. This could result in a loss of precision in targeting and personalization, affecting the relevance of ads delivered to users.

2. Impact on Ad Measurement:
Advertisers use third-party cookies to measure the effectiveness of their campaigns and understand user engagement. The absence of these cookies may make it more challenging to attribute conversions accurately and gauge the success of advertising efforts.

3. Dependency on Walled Gardens:
As third-party cookies become obsolete, advertisers may find themselves increasingly reliant on walled gardens – closed ecosystems like Google, Facebook, and others. This could limit competition and innovation while consolidating power in the hands of a few tech giants.

Opportunities for Adaptation:

1. Investing in First-Party Data:
Advertisers can focus on building and leveraging first-party data by encouraging users to willingly share their information. This can be achieved through transparent data collection practices, incentivized opt-ins, and offering personalized experiences in exchange for user data.

2. Embracing Privacy-Focused Technologies:
Exploring alternative technologies that prioritize user privacy, such as Federated Learning of Cohorts (FLoC), can be a viable option. These privacy-focused approaches aim to provide advertisers with insights while respecting user privacy and data protection.

3. Third party data beyond cookies.
Advertisers should be developing other sources for customer data beyond cookies, such as credit card data and industry focused data from providers such as Blue Kai from Oracle. This will allow for continued targeting like that of 3rd Party cookies, but with better built in privacy.

4. Contextual advertising.
Although it’s less targeted than the use of 3rd party cookies, contextual advertising offers broad targeting which is still extremely useful for advertisers. Technology that scrapes a page for relevant content and then serves an appropriate ad that is contextually aligned leads to higher rates of interaction with the advertisment. 

5. Collaboration and Industry Standards:
Advertisers, along with tech companies, can work together to establish industry standards for responsible data use. Collaborative efforts can help create a framework that balances personalized advertising with user privacy, ensuring a fair and transparent digital ecosystem.

The impending shift away from third-party cookies presents both challenges and opportunities for advertisers. While adapting to this new reality may require innovative approaches and strategic shifts, it also opens the door to a more privacy-centric and user-friendly advertising landscape. As the industry navigates these changes, the key will be finding a balance between delivering personalized content and respecting user privacy, ultimately fostering a healthier and more sustainable digital advertising ecosystem.

© 2024 Soubriet Byrne & Associates, Inc.