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The Effects of a Cookieless Future and the Evolution of Data
After nearly two decades of dependency on cookie-based advertising in the web, the ecosystem is about to undergo a fundamental shift from the legacy third-party cookie tracker to newly developed cohort-based targeting and persistent identifiers (PIDs) from advertising companies centered around Google Chrome’s Privacy Sandbox project, announced in 2020.

Just recently delayed for second time, after being originally slated for 2022, then 2023, this transformation is now expected to happen in the second half of 2024. Despite these ongoing delays, tied to challenges with European regulators concerned about disadvantages to Google competitors, we still believe now is the time to begin working towards adopting a first-party focused data structure, improving our data collection, evaluating our approach to 3rd-party data, as well as reviewing existing privacy policies.

Cookie Replacement Solutions

While not yet finalized, the leading marketplace cookie replacement solutions have already been through several iterations of testing for privacy, efficacy in targeting and measurement, and longevity impacts compared to cookie-based targeting. There are a multitude of proposed solutions in the marketplace with early adoption being slow to pick up in place of cookies. Empower is already testing several of these solutions.

Consumer privacy demands and pending/new legislation also play a role in the adoption of a post-cookie identifier strategy which must meet those benchmarks while preserving internet advertising’s value exchange. By no means has a market leader been identified as a replacement, but leaders are beginning to emerge to replace a cookie with another persistent identifier, such as a user’s email address or a device ID. Currently, open-web bidding inventory on cookieless IDs represents a smaller portion of targeting methods, but that number is expected to grow regardless of the delay by Google.

Cookieless strategies are nothing new, Mozilla and Apple both have blocked 3rd-party cookies on 40 percent of the web for several years running, and advertisers have adapted to those challenges similarly to how advertisers will have to adapt to the 60 percent of the web that Chrome represents. The key difference is Google’s dominance as an ad tech behemoth itself, which puts their future strategies at odds with regulators and competitors alike.

Marketplace Impacts & Advertising Strategy

The immediate to mid-term solutions are as follows:

  • Adopt persistent, consent-based identifiers as part of the ecosystem and test for scale
  • Reprioritize contextual buying strategies
  • Build up first-party data sets and expand scalability for prospects via lookalike modeling

Advertiser strategies will likely focus more on adopting the use of alt-IDs in place of cookies while preserving 3rd-party data. This incorporates alt-IDs in data-enabled marketplaces in programmatic DSPs and leverages advanced contextual placements. Publishers are also working to shore up their contextual effectiveness and alt-ID partnerships with bidding exchanges and seller-defined audiences from SSPs.

Advertisers should explore additional resource deployments for first-party data collection, prioritizing PII-based offline (POS/email) whenever possible. Online first-party data collection in platforms leveraging cookieless tagging technology will enable targeting of 1:1, cohort, and household level. First-party-based, high-value seed audiences enable powerful lookalike modeling efforts for upper funnel tactics not dependent on cookies to serve new customers.

In Short…

While cookie-based targeting is not at immediate risk, prioritize testing alternative identifiers at an ever-increasing scale until cookie-based targeting is phased out in 2H 2024. Collect more first-party data while continuing to leverage 3rd-party data, lookalike models and contextual targeting.