Why third-party cookies should (still) be dead to publishers.

Google is no longer phasing out third-party cookies. However…

Google had initially announced plans to phase out cookies in 2020 and even began testing this phaseout in January 2024 by disabling third-party cookies for a subset of users. However, they have since changed their stance again and decided to continue supporting third-party cookies.

Why does this matter to publishers?

Internet cookies have existed for thirty years and are essential for functions like remembering your shopping cart or keeping you logged in. While first-party cookies serve practical purposes, third-party cookies are used by tech giants like Facebook and Google to track users across different sites, creating detailed profiles for targeted ads.

In theory, this may sound promising for publishers since they can use the cookies for better ad targeting and increase their revenue. In practice, however, it has led to market dominance by a few major players. In other words, it resulted in reduced ad revenues for many publishers and compromised user privacy.

As privacy concerns grew, browsers like Firefox and Safari responded by blocking third-party cookies by default, a practice that has been standard for over five years. Google, on the other hand, has refused to block third-party cookies outright. They’ve opted to develop proprietary alternatives instead, giving them control over user data.

What should publishers do to safeguard ad revenue and protect user data? The simple answer is that they must explore alternatives to third-party cookies. This article outlines the impact on revenue and explores available alternatives.

Google’s solution: The Privacy Sandbox and retaining third-party cookies

Google wants to give users the choice of how to manage their third-party cookies. With the Privacy Sandbox, Google proposes a new set of tools to replace third-party cookies, but skepticism remains about whether this will truly benefit the broader ecosystem.

In fact, experts are skeptical about Google’s Privacy Sandbox, fearing it will consolidate Google’s control over data management and reduce transparency. Concerns remain about whether it will truly enhance user privacy.

Once Google establishes the Privacy Sandbox, what will stop it from eating away at publishers’ advertising revenues even more by controlling both the ad inventory and user data? There is only one winner in this scenario, and the false sense of security users would get by rejecting third-party cookies in Chrome would not improve things for anyone but Google.

But this is a simple development of an existing situation, with tech giants making promises (remember social media platforms and traffic to publishers?) and then slowly gaining more control (and revenue) over publishers.

Google research suggests that removing third-party cookies could cut ad revenues by over 50% for some publishers, further limiting reach in a market that is already moving away from cookie-based tracking.

However, Joe Root, CEO of the publisher tech firm Permutive, speaking to TheDrum, is of a different opinion: “Cookies no longer exist for 70% of the internet; Google is simply handing the timelines for the remaining 30% over to consumers, and when given a choice, consumers overwhelmingly opt-out.” In short, the widespread blocking of third-party cookies by browsers like Safari and Firefox means that most internet users are already beyond the reach of this tracking method. Even with Google’s partial retention of third-party cookies, users are increasingly opting out, further diminishing the relevance and utility of third-party cookies in digital advertising.

How publishers can move beyond third-party cookies

Publishers must prepare for a future without third-party cookies, despite Google’s decision to delay their phase-out. Proactively developing privacy-focused strategies is crucial, and publishers are taking action.

New solutions are being developed in response to third-party cookies’ decline. We spoke with Ryan McBride, Chief Strategy Officer at Illuma, who explained that one effective approach is using durable ID systems, which rely on user consent and secure data like hashed emails. These systems offer more accurate tracking than traditional cookies, though they may not cover as many users quite yet. To complement these systems, AI is being used to target ads based on the content users interact with, helping to maintain the effectiveness of ad campaigns.

According to the ID5 State of Digital Identity Report 2023, 72% of organizations have already implemented systems that allow them to identify and track users across different platforms and devices without relying on third-party cookies, with an additional 20% planning to do so.

Regardless of Google’s latest (or future) decision, publishers should not rely solely on third-party cookies as a cornerstone of their advertising strategies. The effectiveness of these cookies is waning, and Google’s control over the data landscape raises concerns about fair competition and user privacy. Publishers need to focus on sustainable, privacy-compliant strategies to safeguard their revenues and enhance user trust.

1. Leverage First-Party Data and Cookieless Technologies

First-party data, collected directly from users through their interactions with a publisher’s website, has become an invaluable asset. This data provides insights into user preferences, behaviors, and engagement patterns, enabling the creation of personalized experiences and targeted advertising. A significant advantage of first-party data is that publishers own this information, allowing them to control their advertising strategies without relying on third-party intermediaries.

The ID5 report highlights the success many companies have had with cookieless strategies, particularly in environments where third-party cookies are already limited, such as Safari and Firefox.

Key Actions:

• Develop Robust Data Collection Frameworks: Implement systems to collect and analyze first-party data ethically and transparently. This can include subscription forms, newsletter sign-ups, and surveys that provide valuable user insights.
• Utilize Cookieless Technologies: Explore technologies such as contextual advertising, which targets ads based on the content of a webpage rather than user behavior. This method aligns with privacy concerns while still offering relevant ad placements.

2. Diversify Revenue Streams

Relying solely on ad revenues can be risky, especially in an uncertain regulatory environment and with an ever-shrinking slice of the pie going to publishers. Diversifying income sources can provide a buffer against market volatility.

Key Actions:

• Subscription Models: Introduce or expand subscription-based services, offering premium content or ad-free experiences. This not only provides a steady revenue stream but also fosters a deeper connection with your audience, and goes hand-in-hand with gathering first-party data to improve your ad targeting.
• E-commerce and Affiliate Marketing: Monetize content through affiliate partnerships and e-commerce integrations, like Hearst is doing.
• Sponsored Content and Native Advertising: Collaborate with brands to create sponsored articles or native ads that blend seamlessly with editorial content, providing value to both readers and advertisers.

3. Implement Better Advertising Practices

As regulations become more stringent and user privacy plays an important role, adopting better advertising practices is essential for maintaining trust and complying with regulations.

Key Actions:

• Contextual and Integrated Advertising: Emphasize contextual ads that align with the page’s content rather than tracking users across sites. As Ryan McBride, Chief Strategy Officer at Illuma, suggests, advanced contextual solutions allow publishers to control how advertisers classify and value their content better. This approach not only respects user privacy but also enhances the relevance and effectiveness of ads by leveraging AI to analyze content consumption patterns and target ads accordingly.
• Transparency and User Control: Clearly communicate data usage policies and provide users with straightforward options to control their data. This transparency builds trust with users and ensures compliance with privacy laws, fostering a more secure and user-friendly advertising environment.

4. Utilize alternative intent targeting solutions

Dotdash Meredith’s D/Cipher tool represents a significant advancement in intent targeting. By focusing on key moments when consumers are making decisions, this tool can help advertisers reach audiences, arguably better than third-party cookies.

Key Actions:

• Integrate D/Cipher into Ad Strategies: Use D/Cipher to identify and target users based on their demonstrated interests and intents, such as researching products or engaging with specific types of content.
• Measure and Optimize Campaigns: Leverage D/Cipher’s capabilities to track the effectiveness of ad campaigns, allowing for data-driven optimizations that improve ROI.

5. Adopt Universal IDs

With the decline of third-party cookies, Universal IDs have emerged as a viable alternative for tracking and targeting, offering stable and privacy-compliant solutions.

Key Actions:

• Explore Universal ID Solutions: Consider adopting Universal ID frameworks like Unified ID 2.0, which use hashed email addresses or other non-PII identifiers. These IDs provide a stable and reliable way to track users, leveraging consumer-consented data to ensure compliance with privacy standards.
• Leverage High-Fidelity Inputs and AI: Universal IDs can use high-fidelity inputs like hashed emails, which are more reliable and privacy-compliant than traditional methods. These inputs, especially when combined with AI, can create dynamic models based on content consumption patterns, effectively targeting new audiences and improving campaign outcomes.
• Collaborate with Industry Partners: Work with ad tech companies and other publishers to implement Universal IDs, fostering a more seamless and privacy-compliant advertising ecosystem. This collaboration enables better control over content classification and monetization strategies, ensuring accurate valuation by advertisers.

Incorporating these strategies with Universal IDs helps publishers navigate the post-cookie landscape, enhancing user privacy while maintaining effective ad targeting.

Key takeaways

Publishers face a critical moment as the industry shifts away from third-party cookies. Google’s Privacy Sandbox offers one avenue to solve this, but it leaves many questions unanswered about the future of user data control and revenue generation. This transition presents both challenges and opportunities for publishers to rethink their strategies.

Focusing on first-party data, exploring cookieless alternatives, and diversifying income streams will be essential. These steps can help publishers maintain audience relationships and secure revenue streams in a world where cookies will be no more.

At Twipe, we support publishers through these changes, offering insights and tools to adapt effectively. Let’s continue to advance toward a future where robust, privacy-friendly digital strategies support quality journalism.