The advertising industry has been talking about “the death of the cookie” for years, but little urgency was put behind the topic — until January 2020. That’s when Google announced its decision to sunset third-party cookies by 2022. Since then, the advertising industry has been consumed with what a future without third-party cookies entails. And indeed, Google’s decision has major impacts on how the internet currently works.
But why, exactly, does the death of the third-party cookie matter so much? Let’s dive in.
In advertising, a cookie is a small piece of website data stored on a user's web browser when they’re on the open web. When a user opens a web page, cookies are saved on the browser and start tracking the user’s web interactions.
Cookies have served as an essential feature of advertising technology (Ad Tech) for decades. They were designed to be a reliable way for websites to remember important information intended to enhance the usefulness of the website and internet experience for the user. Today, cookies are widely used to help publishers and advertisers deliver targeted messaging to connect with their audiences.
Cookies on the internet mostly fall into two distinct categories: first-party and third-party.
If you’ve ever logged into a website, you’ve encountered a first-party cookie. First-party cookies are stored by websites to optimize the user experience. They’re often used to collect information like usernames and passwords, language preferences and products in a shopping cart. These cookies are owned and accessible only to the company that’s collecting them.
For the most part, first-party cookies remain a reliable, privacy-compliant way for publishers and advertisers to customize user experiences within their owned environments. It’s when we move beyond these overtly permissioned interactions that third-party cookies become relevant, and where continued policy changes among the tech giants become disruptive.
People encounter third-party cookies on the internet every day. These cookies are placed on websites by third parties with which websites work. They can include advertising partners, as well as social platforms and other services.
These bits of code are responsible for a lot of the staples of modern-day advertising, including:
As third-party cookies disappear, so will a lot of modern-day Ad Tech that has relied on third-party cookies in order to deliver relevant, targeted advertising to users. Let’s explore some of those staples in greater detail.
First-party data targeting allows advertisers to deliver relevant ads to users who have previously visited their website. However, in order to target users outside of their own websites, a common practice known as retargeting, advertisers rely on third-party cookies. Advertisers also rely on third-party cookies to create traditional lookalike targeting models, where a larger targeting cookie pool is created by mirroring a first-party audience with cross-site user profiles.
Frequency capping is used to limit exposure of a single consumer to a specific advertisement. This is something marketers often want to do to avoid overexposing users to the same ad, which results in limited effectiveness and wasted marketing dollars.
Most ad servers, demand side platforms (DSPs) and other Ad Tech providers can frequency cap users when delivering digital ad campaigns. To do so, the ad platform drops a third-party cookie on a user’s browser once an impression is served. From there, the platform can automatically recognize that user on any site based on that unique cookie. This process ensures that an ad is only shown to a single user a specific number of times within a specific timeframe.
Attribution gives advertisers insight into how effective their digital ads are at driving sales or other business outcomes. These insights, typically delivered by Ad Tech providers, are heavily reliant on third-party cookies.
When engaging in attribution tracking, Ad Tech providers will often provide their advertising partner with specific code to place on their website, which allows the Ad Tech provider to track conversions (such as clicks through to purchases) on that website. The provider then serves an advertiser’s ad in various locations across the internet. When a user clicks on the ad, a third-party cookie is placed on their browser by the Ad Tech provider. When that user visits the advertiser site, assuming the third-party cookie is still present on their browser, Ad Tech providers can match specific user ad interactions to purchases made.
AdChoices is an opt-out solution that gives users control over their data when they’re being targeted with ads that are based on their browsing history. It might seem counter-intuitive that opting out of cookie-based data targeting requires the use of third-party cookies — but it does.
Ad Tech providers are required to include AdChoices disclaimers on any ad they run on the open web. When a user clicks on the disclaimer on an ad, it takes the user to a page where they can choose to opt in or out of receiving data-targeted ads from that provider. In order to ensure data-targeted ads are no longer shown to users who choose to opt-out, Ad Tech providers need to place a third-party cookie on the user’s browser in order to recognize those users across the open web.
When you consider the above functions, it becomes clear how reliant the digital advertising industry has become on third-party cookies over the years. In the case of all of the above functions — targeting, frequency capping, attribution and opt-outs via systems like AdChoices — the processes break down when cookies are cleared from browser caches, or when the third-party cookie placed expires on the browser.
But there’s a bigger problem too: There are some environments that don’t support third-party cookies at all. Currently, all browsers accept first-party cookies by default. However, that’s not the case with third-party cookies.
Apple began restricting third-party cookies on Safari in 2014, with Firefox following suit in 2019. Today, both browsers prevent third-party cookies from rendering and represent 40 percent of all U.S. web traffic combined. When Google does away with third-party cookies in 2022, marketing tactics like behavioral targeting, frequency capping, attribution and advertising opt-outs will virtually disappear from the open web — unless solutions are developed that don’t rely on third-party cookies.
Given the role that increasingly irrelevant third-party cookies have historically played in targeting for advertisers, it becomes clear that our industry must seek out and develop alternatives that will enable a healthy digital advertising ecosystem to thrive in the future. The good news is that such alternatives will enable advertisers to not just maintain their current capabilities in audience targeting, but actually improve them, given that so many potential users are already being lost to traditional cookie-based targeting.
There are several cookieless targeting solutions that can help fill the gap in advertisers’ strategies going forward.
Contextual targeting allows advertisers to granularly target audiences by serving ads that are relevant to the content on a website. This can be done at the category level (i.e., the Travel section of The New York Times) and keyword level (i.e., “beach destination” and “child friendly”). In the absence of third-party data targeting, context becomes an important proxy for audience. After all, people who are interested in cars are highly likely to read articles about cars. Contextual targeting solutions can develop inventory packages for tailored contexts, allowing advertisers to improve performance and reach the right audience.
Cookieless audience targeting provides media buyers with the ability to reach target audiences without the use of cookie-based audience segments traditionally used for audience-targeted media buys. Instead, they leverage machine learning to group users based on characteristics that are not tied to a cookie — attributes such as context, demographics, device, etc. Using signals from these attributes, cookieless audience targeting solutions can model audiences as an alternative to lookalike targeting. These solutions also enable advertisers to reach large audiences on Safari, Firefox and other environments not addressable via third-party cookie-based audience targeting.
The publishing industry’s dependence on third-party cookies to meet advertisers’ cross-channel goals has been decades in the making, and it’s not a dependence that can be shed simply. However, the demise of the cookie was foretold long before now, and viable alternatives are well underway.
The best solution to an industry-wide problem is an industry-wide solution — one built on an open and collaborative ecosystem in which publishers work together to build a more sustainable future for the open web. One of the strongest manifestations of this approach is LiveRamp’s Authenticated Traffic Solution (ATS).
ATS looks to remove publisher dependence on any single tech provider by providing a safe and transparent solution rooted in reader authentication with publishers. The goal is to provide control to readers while delivering enhanced addressability of audiences for publishers. ATS allows publishers to match consented user data with a LiveRamp IdentityLink in real time, thereby enabling people-based advertising on authenticated, cookieless inventory across the open web. Users are given control over how their data is used via a single opt-out that applies to platforms and publishers that leverage IdentityLink. Collaborative solutions like this one, that put user privacy at their core, represent a sustainable vision for a future where the interests of publishers, marketers and consumers are aligned, rather than at odds.
In addition to industry-wide solutions such as the one being developed by LiveRamp, publishers also have the opportunity to lean into email addresses as means of understanding and aligning the interests of their readers and advertisers. On the web, the most-used personally identifiable information (PII) is the email address. Publishers and retailers use email addresses for user authentication, email marketing, loyalty programs and more. Similarly, advertisers also possess a wealth of first-party data in their CRMs tied to email addresses. By leveraging solutions designed to connect publishers’ knowledge of their readers to first-party audiences that are identified by email, these audiences become addressable within the open web, in both cookied and cookieless environments.
It’s time for advertisers and publishers alike to invest in solutions that are cookie-independent, more reliant on first-party data and in turn more privacy-compliant and aligned with the future of Ad Tech without cookies. The solutions mentioned in this post — including contextual targeting, cookieless audience targeting and email-based identity — represent privacy-compliant alternatives that do not leverage cookies or other signals that can be blocked by browsers. In turn, they help put our industry on a sustainable path to a future that isn’t dependent on the whims of a small handful of tech giants.
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