The end of third party cookies is a chance to make web advertising better

26 2 21 3rd party cookies

From 2022, the most popular web browser – Google Chrome – will block all third party cookies, preventing ad-tech companies from tracking users across the web.

This will mark a major shift from the technology that has underpinned web advertising for many years and the advertising industry is grappling with its implications. But perhaps it’s also a good time to acknowledge that cookie-based targeting, while technically clever, has been far from perfect and we have an opportunity to put better systems in its place.

Chrome’s change brings to a head the issue of cookie blocking but it has been bubbling for some time, so far without fundamentally changing web advertising. Apple’s Safari browser (34% of the UK market) already blocks cookies and has done since March 2020. An estimated 24% of UK internet users block not only tracking cookies, but all web advertising entirely. And we know that cookies cannot track users across different devices, but have to take it largely on trust that ad-tech platforms can manage to follow users from phone, to tablet, to desktop and back again.

Cookie-based tracking has led to well documented negative externalities. Its complexity enables ad-fraud and it also prevents high quality news websites from fully monetising their readership, because user data passes into ad platforms and can be used to target those readers away from the news site itself. The profile of a valuable target customer – a high net worth individual – will include data from the financial news sites that they read, but you can target adverts to that individual user without ever placing one on the financial publications themselves.

Fragmenting users and advertising placements into tiny pieces, enabled by third party cookies, also causes certain types of news coverage to be defunded. Maybe you’d rather your advert didn’t run alongside stories about Covid-19, but only against more cheerful news? In a world of third party cookies, news organisations have lost control of negotiating advertising space as a bundle, so some of their most valuable public interest work is avoided by ad placement rules. Advertisers have gained a great deal of control over placement, but the impacts on society of public interest news becoming financially unviable may be severe.

Finally, the tracking and targeting that third party cookies enable is disliked by web users, and in some cases individual-level targeting may not even work that well for advertisers. A series of large brands have found no effect from reducing the scope of their targeted buys and Google now say that after 2022, targeting based on ‘large demographic cohorts’ will be 95% as effective as individual-level targeting using cookies.

So we shouldn’t mourn the demise of the cookie, but we can use its loss as an opportunity to make web advertising better.

What should be the future of display advertising?

  • Publications should be able to monetise the value of their readership
  • Placements should be transparent – advertisers must know exactly what they’ve bought and where
  • Targeting should embrace the letter and spirit of the GDPR

There is a form of display advertising that achieves these things. High quality contextual placement – buying ads to target the content of a page, rather than the profile of an individual user – has up to now been the poor cousin of cookie-based targeting, but has the potential to be a better future for web advertising. Rather than attempting to hold onto an individually targeted approach as cookies disappear, we should embrace contextual placement as a better model. Indeed, a model that may always have been better, but has taken regulation to drive a much-needed change.

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