After numerous delays, Google is getting serious about deprecating third-party cookies in its Chrome browser. Beginning in January 2024, the company will test its alternative privacy sandbox solution on 1% of all Chrome browsers, affecting about 30 million users worldwide. The plan is to extend that share to all browsers by the end of 2024. While the rollout will likely be slower given how complicated the process is (mid-2025 is probably a more realistic timeframe), the fact remains: the twilight of the third-party cookie has begun.
Anyone will be affected who has a significant business based on Chrome-browser-based advertising. According to an Adobe survey from March 2023, 75% of marketers “still rely heavily on third-party cookies”.
Deprecation will mainly impact publishers and AdTech vendors, but also advertisers. Without cookies, it will be harder to target and track users who are not authenticated, i.e., those who are not identified by some other means such as a log-in. When targeting gets worse, so does advertising effectiveness. Publishers will be stuck with less powerful and attractive advertising inventory, and a diminished capability to attribute campaign outcomes. AdTech vendors will also be affected because many of their products rely on cookies. This may lead to revenue losses or at least slower growth.
It is true that the death of Chrome cookies only affects a relatively small portion of the overall market – about 7% of total U.S. digital advertising. For the argument’s sake, this assumes only desktop-based display advertising will be impaired, which accounted for 14% of the total in 2022, of which Google’s Chrome held a 50% market share.
But for those players that do have a business in the Chrome-advertising segment, the consequences could be dire, especially for AdTech vendors. According to the Adobe survey above, 16% of marketers say deprecation will “devastate’ their businesses, while 23 percent anticipate significant harm, and 37 percent predict a moderate negative impact”.
Retargeting specialists like Criteo and AdRoll could be hit especially hard. Some companies may be forced to merge, some may be bought out or put out of business altogether. This will be an additional driver of consolidation in 2024. But even short of catastrophic outcomes, all players in this segment might be hurt. When Apple deprecated third-party cookies in its Safari browser in 2017, related ad sales declined 20 – 30% by some estimates. And that was for a browser that only has a little more than half of Chrome’s U.S. market share.
There are many steps publishers and AdTech vendors can take to mitigate the threat. But first, they must decide to do so – many haven’t yet. Judging by surveys, only about a third of ad companies are confident they are properly prepared.
There are a number of reasons why ad companies don’t prepare: A perceived lack of urgency, products that need cookies and can’t be easily replaced, and lacking funds. In other words, these companies live so hand-in-mouth that they can’t muster the means to prepare for the future.
There are three major workarounds that can help mitigate the damage from the death of the cookie: Cohort targeting, universal IDs (also called single-sign-on networks or SSOs) and contextual targeting. All three will help neutralize the resulting signal loss to some extent – but not fully. Even with workarounds in place, revenues will be hit.
What Publishers and AdTech Vendors Can Do About It
- Branch out from desktop-based display advertising into Retail media, CTV and mobile advertising.
- Focus on making available and using first-party data for better targeting. Employ Customer data platforms (CDPs) and data clean rooms (DCRs). Retail media inherently have high-quality data and can be combined with first-party data.
- Implement workarounds: cohort targeting, universal IDs and contextual targeting.
- If you think cookie-deprecation will have catastrophic results for your company, perhaps it is time to look for a buyer now.
What Advertisers Can Do About It
- Move away from Chrome-based display advertising and into channels with better targeting: retail media, sites with authenticated traffic (logins) and any that offer the above workarounds.
This post was first published as a part of W Media Research’s The Top 10 Trends In Advertising In 2024.
W Media Research 