The latest regulations aimed at protecting user privacy. Therefore, major tech companies will require explicit permission from users to share and use data generated from digital interactions.
Customers are frequently unaware of how their data is utilized, and they are unlikely to grant consent for data sharing. As a result, the digital advertising industry can lose access to third-party data, which has been a crucial driver for programmatic advertising.
Moreover, marketers, ad agencies, and publishing and media platforms where ads are displayed will have limited or no access to first-party data, which currently provides behavioral and demographic insights for creating target audiences and segments.
According to the research, ad spending in the digital advertising market is over $600 billion, and cookies play a significant role in this.
So, let’s focus on a few things adtech owners need to know as we approach the end of third-party cookies.
What are Third-Party Cookies?
Third-party cookies are small text files that are stored on a user’s device (such as a computer or mobile phone) by a website that the user did not directly visit. These cookies are created and used by third-party domains, which are different from the domain of the website that the user is visiting.
Third-party cookies are typically used by advertisers and other third-party websites to collect data about user’s browsing habits, which can be used to serve personalized ads and content. For example, a user might visit a clothing retailer’s website and then later see ads for that same retailer while browsing other websites or social media platforms. These ads are served based on data that is collected through third-party cookies.
Third-party cookies work by tracking users’ behavior across different websites and building a profile of their interests and preferences. This data is then used to serve targeted ads and content that are more likely to be relevant to the user. However, some users and privacy advocates are concerned about the potential for third-party cookies to be used to track users’ behavior without their consent or knowledge.
Why are third-party cookies going away?
Firstly, privacy concerns have become more prominent in recent years, and third-party cookies have been criticized for their ability to track users’ online behavior without their consent. Third-party cookies are often used by advertisers and other third-party websites to collect data about user’s browsing habits, which can be used to serve personalized ads and content. However, this practice has been viewed by many as a violation of user privacy, and there has been increasing pressure from consumers and regulators to limit the use of third-party cookies.
Secondly, web browsers such as Google Chrome, Mozilla Firefox, and Apple’s Safari have started phasing out support for third-party cookies. In early 2020, Google announced that it would phase out third-party cookies in Chrome within two years, citing the need to protect user privacy. Mozilla and Apple have already implemented similar measures in their respective browsers.
Lastly, there has been a shift towards alternative technologies for tracking user behavior and serving targeted ads. For example, Google has developed a new technology called Federated Learning of Cohorts (FLoC), which uses machine learning algorithms to group users with similar interests into “cohorts” without tracking individual users’ behavior. This approach is designed to provide advertisers with valuable information about user behavior while also protecting user privacy.
What alternatives for ad tech companies exist beyond third-party cookies?
As third-party cookies are being phased out, adtech companies will need to adapt to new ways of targeting and tracking users in order to continue serving targeted ads. Here are some strategies that adtech companies can consider:
- First-party data: Adtech companies can shift their focus to collecting and utilizing first-party data, which is data that is collected directly from users through their own websites and apps. This data is more reliable and accurate than third-party data, as
users are more likely to provide accurate information when they trust the source. Adtech companies can also use machine learning algorithms to analyze this data and gain insights into users’ behavior and preferences.
- Contextual targeting: Contextual targeting involves serving ads based on the content of the website or app that a user is currently viewing, rather than relying on third-party cookies to track their behavior across the web. This approach is less invasive and more privacy-friendly, as it does not require tracking users across different websites.
- Unified ID: Some adtech companies are exploring the use of a unified ID, which is a unique identifier that is shared across different websites and platforms. This approach allows advertisers to track users’ behavior across different platforms and devices, while also providing users with more control over their data.
- Collaborate with publishers: Adtech companies can work with publishers to collect and utilize first-party data. This approach can be mutually beneficial, as publishers can use the data to improve their content and user experience, while adtech companies can use the data to serve more targeted ads.
- Develop new technologies: Adtech companies can invest in the development of new technologies, such as machine learning algorithms, that can analyze user behavior and preferences without relying on third-party cookies. These technologies can provide valuable insights into user behavior, while also protecting user privacy.
In conclusion, adtech companies will need to adapt to new ways of targeting and tracking users as third-party cookies are phased out. By focusing on first-party data, contextual targeting, unified IDs, collaborating with publishers, and developing new technologies, adtech companies can continue to serve targeted ads while respecting users’ privacy.
Why is contextual targeting the future for adtech platform owners?
Contextual targeting has emerged as one of the best options for adtech platform owners after third-party cookies are phased out. This approach involves serving ads based on the content of the website or app that a user is currently viewing, rather than relying on third-party cookies to track their behavior across the web. Here are some reasons why contextual targeting is a good option:
- Privacy-friendly: Contextual targeting is less invasive than other forms of ad targeting, as it does not require tracking users across different websites. This approach respects users’ privacy, which has become increasingly important in recent years.
- Increased relevancy: By serving ads based on the content of the website or app that a user is currently viewing, contextual targeting can ensure that ads are more relevant to the user. This can improve the user experience and increase the likelihood of users engaging with the ads.
- Brand safety: Contextual targeting can also help to ensure that ads are displayed in a brand-safe environment. By serving ads on websites or apps that are relevant to
the ad, adtech platform owners can reduce the risk of ads appearing next to inappropriate or controversial content.
- Better engagement: Contextual targeting can result in higher engagement rates, as users are more likely to click on ads that are relevant to the content they are viewing. This can help adtech platform owners to improve their ad performance and increase revenue.
- Future-proofing: As more and more users become aware of the privacy risks associated with third-party cookies, contextual targeting is likely to become more popular. By adopting this approach early, adtech platform owners can future-proof their business and stay ahead of the curve.
To sum up
Without third-party cookies, it’s much harder for businesses to identify individuals. It is also harder to show them relevant ads, measure the performance of ad campaigns, and attribute ad views to conversions. For advertisers, it means their ads don’t perform as well, meaning they waste money on advertising and see a lower ROI. For publishers, it means they see a decline in their ad revenue. It has led to the search for alternatives that can power the crucial programmatic advertising processes.
Contextual targeting is emerging as a strong alternative to third-party cookies for adtech platform owners. By focusing on the content of the website or app that a user is currently viewing, contextual targeting offers a more privacy-friendly and effective approach to serving targeted ads. With its potential to improve targeting, brand safety, user experience, and flexibility, contextual targeting is likely to become an increasingly important strategy for adtech platform owners in the post-cookie era.