In January 2020, Google announced that it is to phase out support for third party cookies in its Chrome web browser by 2022. This article gives an overview of how this will have an impact on the digital advertising ecosystem including BidTheatre DSP.

Cookies and User Identification

Insights about users are tied to a user identifiers. The current advertising ecosystem is reliant on platforms using their own (usually randomly generated) user identifiers, which are stored in user cookies. Cookies persist over time, which enables the reader and writer of the cookie to accumulate insights of a user's past behavior.

Tracking of users across different web domains relies on the reading and writing of so called third party cookies. A third party cookie is a cookie that is being read and written by domains that are not the domain that you are visiting. The ability to share data across different platforms in a meaningful way when user identifiers are local and random relies on third party cookies.

BidTheatre is an example of an actor that relies on third party cookies for various purposes related to advertising. Below we will look at these individually, and discuss the impact of the upcoming changes.

If you want more details on third party cookies, plenty has been written.

Universal ID

Replacing the randomly generated identifiers with a global user identifier could be an elegant substitute for the need of third party cookies. Existing infrastructure oriented around tying insights to user identifiers could be kept, and there would be no need for the tedious work of sharing user id's across platforms.

The Trade Desk has a proposal for Universal ID 2.0, which is an identifier based on user email hash. Producing an email hash will require users to provide their email to the websites they visit, which obviously has a limiting factor on its application. Within its scope however, it will provide deterministic user data sharing within the existing infrastructure built around user ID's.

Google has announced that it will not invest in supporting user identification mechanisms such as the Universal ID 2.0. It is early so say whether this means that Google will actively fight it and if so if that's even technically possible.

In the following sections we will look at the major targeting features facilitated by user id's and third party cookies. We will focus on discussing the impact where a universal ID is not available.

Use Case 1: Frequency Capping

BidTheatre tracks what ads have been shown to what users. This makes it possible to "frequency cap", or pace, ad delivery so that messages are spread over time, which improves impact and gives a more pleasant user experience.

Frequency capping across different domains today relies on the use of user identification, and will hence not continue to work the way we know it. Google's Privacy Sandbox seems to explore options to provide a replacement mechanism, but it still early to say if and how that will work.

Use Case 2: Conversion Attribution

Post click conversion attribution does not rely on third party cookies, and should remain unaffected without third party cookies.

Post view conversion attribution is reliant on third party cookies, and will stop working as the cookies are phased out. Google is working on alternative methods to facilitate this via its Privacy Sandbox initiative. Most likely, advertisers will have means to attribute advertising effect on user conversion also after the third party cookie.

Use Case 3: Audience Data

The ability to accumulate insights about users and use these insights in media buying plays an important role in digital advertising. Usually at least three parties are involved in this process:

  • The source of the user insights

  • The media where the ad is displayed

  • The platforms that facilitate the buying and selling

Various configurations exist here, and we will look at them individually.

Publisher Audience Data

In the case of publisher audience data the source of the insights and the media is the same. Here the publisher and its platform partners can rely on first party cookies for user tracking, and provide its media inventory and collected audiences through PMP deals to buyers.

Advertiser and "Third Party" Audience Data

The ability for dedicated platforms to store audience data server side and send it for activation in partner platforms (SSPs, DSPs) relies on user ID's and will consequently be unavailable.

Other common audience data keyed on e.g. IP addresses or postal codes will be left unaffected, and we will likely see more of this type of third party audience data. Many of BidTheatre's third party audience vendors are building new data sets in this way.

Likewise, retargeting of visitors to an advertiser's site will be unavailable. This is perhaps the biggest short term impact of the third party cookie going away, possibly second to global frequency capping. Google's intention seems to be to replace audience targeting capabilities based on individual insights with the concept of user cohorts, explored below.

User Cohorts

Google, together with several other industry actors, are envisioning a way to provide means for interest based advertising by letting the browser place its user in "cohorts" based on browsing behavior. Access to the cohort data is strictly limited to ensure that it does not "leak" to give third parties insights into the preferences of individual browsers. The cohorts will need to be of at least a threshold size, to guarantee that an individual cannot be identified by his or hers belonging to a specific cohort.

It seems likely that user cohorts will provide a mechanism for both interest based advertising, advertiser retargeting and even third party audience data to live on in the post third party cookie world. This will rely on new mechanisms for buyers and sellers to transact around audience data, and the industry is currently working to specify the details.

Overview

Below is a brief overview of what we're seeing ahead.

Feature / Context

Within Publisher Domain

Cross Domains (not authenticated)

Cross Domains (authenticated, e.g. Universal ID)

Frequency Capping

Yes

No (?)

Yes

Publisher Audience Data

Yes

No

Yes

Advertiser Audience Data (e.g. retargeting)

No

No

Yes (requires user authentication at both advertiser and publisher)

IP-based Audience Data

Yes

Yes

Yes

Post View Conversion Attribution

No (?)

Yes (requires user authentication at both advertiser and publisher)

Post Click Conversion Attribution

Yes

Yes

Unaffected features, will work without third party cookies

  • Frequency capping of ads within individual domains

  • Attribution of ad clicks to conversions

  • Targeting on publisher first party audience data

  • IP-based audience data such as zip-code base audiences and b2b

Affected features and actions for advertisers

  • Expect somewhat decreased unique reach and increased unique user ad frequency due to frequency capping not being possible cross domains

  • Expect less hard attribution data of display ads views to conversions, to the extent possible rely on previous models and collected statistics

  • Orient audience buying to publisher and/or IP-based audiences, talk to DSP or agency about user interest targeting based on user cohorts

  • The mechanics of retargeting will not continue to work, talk to your DSP or agency about the possibility to transition to building user cohorts of advertiser site traffic

General advice

  • Be calm, your advertising still has plenty of ways to be effective. Plan changes together with DSP or agency

  • Be skeptical about vendors claiming to have a one-stop cure to replace everything affected by the demise of the third party cookie

  • Explore possibilities to join a universal ID network if it makes sense and you can authenticate users. Within an authenticated network possibilities for tracking and targeting are great.

BidTheatre Transition Status

Here we will outline the status of the work we project to be related to replacing third party coookies and the IDFA identifier.

Feature

Status

Universal ID 2.0

Pending evaluation

User Cohorts & Privacy Sandbox Support

Support will be implemented once the industry settles on a specification.

Apple SkAdNetwork support

On roadmap for Q2 2021

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