27 January 2021
3rd party cookies are a programmatic advertising cornerstone that enable advertisers to track users between websites and display ads relevant to the user’s browsing behaviour. In January 2022, quite sometime after Firefox and Safari, Chrome will also block 3rd party cookies. Below we analyze the pros and cons of the top 3rd party cookie alternatives.
Why do advertisers pay more to identify users?
Many major brands have moved to a digital-first advertising strategy. This is because digital advertising allows them to control their spending, do frequency capping, target specific audiences, measure the effectiveness of their campaigns, and personalize their messages. All of this is based on the ability to identify customers. For the past 20 years, this identification process has been done through 3rd party cookies.
Why are 3rd party cookies being blocked?
Privacy concerns about how 3rd party cookies collect user data and pass it to 3rd parties has led to action from regulators and web browsers. From 2018, the GDPR regulations have set out rules for explicitly gathering user consent for targeted advertising within the European Union. Similarly, the CCPA regulations in California aim to protect the data of users within the state. The Safari and Firefox browsers have already blocked 3rd party cookies and Chrome will follow in January 2022. As a result, the advertising industry has been testing alternatives to 3rd party cookies.
The impact of 3rd party cookies on ad revenue
When advertisers can’t identify users they usually bid 50% less. As of December 2020, roughly 30% of users already had a browser that blocks 3rd party cookies. Below is a breakdown of the desktop browser market share from StatCounter.com, a site that uses Snigel’s header bidding stack.
The best 3rd party cookie alternatives
Identity solutions - 3rd party cookie alternatives
Identity solutions use personal data such as an email address, phone number, or login ID from the publisher or brand to target users. When a user visits a website their personal data is collected and sent to an ID provider. From there, the user is matched to an existing ID or a new ID is created. This ID is a universal identifier that can be used across the many websites that are connected to the identity solution. Therefore, the tool gets stronger as more brands and publishers feed data into the ID solution as this increases the chances of a positive match.
Identity solutions companies
LiveRamp and The Trade Desk Unified ID 2.0
In October 2020, LiveRamp’s Authenticated Traffic Solution (ATS) and IdentityLink ID products were united with The Trade Desk’s ID solution to create ID 2.0. This is a promising development which gives Unified ID 2.0 more scale and therefore more power to identify users and improve ad yield for publishers. Identifying users through email addresses is a core pillar of Unified ID 2.0 because it gives publishers a greater level of independence when web browsers make decisions about tracking.
Authenticated Traffic Solution (ATS) is a LiveRamp product that helps publishers identify users for targeted advertising that increases CPMs. This solution uses Apple’s Identifier for Advertisers (IDFA), Google’s Advertising ID (AAID), and logged in email to identify users instead relying on third-party identifiers.
ID5 provides an independent shared identity infrastructure. They produce deterministic and probabilistic IDs based on the data passed to them by brands and publishers.
What are deterministic IDs?
A deterministic IDs is an ad targeting method that is close to 100% accurate and based on personal data provided by the user. However, since many users don’t provide this data, only around 20% of the global audience is currently able to be matched this way.
What are probabilistic IDs?
A probabilistic ID is a more scalable inferred ID solution based on the user’s device, the time stamp, the url, and the user’s IP address. An ID algorithm uses this data to produce a probability of a correct match. Targeted ads are rendered if it is highly likely that the user has been correctly identified.
Contextual targeting - 3rd party cookie alternatives
Contextual targeting refers to serving ads based on an analysis of the web page’s contents for key words and phrases that advertisers want to bid for. It does not rely on personal data but may make use of data passed across by the publisher such as the device and time of browsing. Advertisers use machine learning to predict which pages are best to target and when to target them.
Contextual advertising is most effective when the publisher has highly themed content that attracts users with a specific interest. It is less effective for advertisers with broad audiences. In addition, contextual targeting is a good fallback for situations where it has not been possible to obtain the user’s personal data through a CMP or other registration strategies.
Semasio uses Natural Language Processing (NLP) to analyze pages and identify significant terms and phrases. These terms are used to create a Semantic Page Profile which is added to a Semantic User Profile every time the user visits a new page. As the Semantic User profile gets built out, the ad targeting will become more accurate.
Google’s Privacy Sandbox
Google’s Privacy Sandbox is the company’s proposed solution to replace third-party cookies with a set of application programming interfaces (APIs). Advertisers will be able to use the APIs to receive data on:
- The prevention of spam, fraud, and DoS
- Ad targeting
- Federated logins
Google’s Privacy Sandbox is still in development and there is no clarity yet on which features will be included and how the platform will be used. Companies can contribute to the project by submitting suggestions that will be reviewed by the W3C consortium.
1st party data and 3rd party cookies
Many of these 3rd party cookie alternatives are still being tested and developed. As a result, their future effectiveness is hard to predict. Overall, it’s clear that the ability to gather 1st party data will be critical for publishers to receive higher CPMs. Publishers without a strategy for gathering 1st party data should seriously consider how they could add gated articles, forums, newsletters or other value-added content to entice users to register on their site.
What will replace 3rd party cookies?
Identity solutions, contextual targeting and Google’s Privacy Sandbox are promising 3rd party cookie replacements however, a clear winner has yet to emerge. To avoid a sharp decline in revenue, it’s best for publishers to start experimenting with these solutions before 3rd party cookies are blocked by Chrome in January 2022. As an ad tech provider and header bidding company, Snigel has been perfecting its integration with these solutions since 2019. Our partner websites are already able to make use of this technology through AdEngine, our header bidding solution.
If you’d like to find out how we can help your website prepare for a future without 3rd party cookies, contact us here.