Home Data-Driven Thinking Sins Of The Cookie: How Third-Party Cookies Set The Industry Back

Sins Of The Cookie: How Third-Party Cookies Set The Industry Back

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Manny Balbin, Head of Product, Media & Publishing, Switchboard Software

Google Chrome’s third-party cookie deprecation plan is in effect, and the industry continues to await the fallout from the death of the cookie. 

However, it’s worth recognizing that the third-party cookie actually stymied the development of digital advertising. 

Sure, that little http text file was key to the evolution and dominance of programmatic advertising – for better and worse. And there’s plenty on the “worse” side of the ledger.

As we reflect on how third-party cookies held the industry back, the point isn’t to spit on the cookie’s partially dug grave – but to instead examine where the cookie’s varied replacements can help us right past missteps.

Here’s what the cookie got wrong and what its inheritors need to get right.

1. Convinced advertisers context didn’t matter 

The third-party cookie and programmatic advertising were a democratizing force for both advertisers and publishers. Smaller publishers could rely less on black-box ad networks for indirect revenue and grab spend from major brands. 

Advertisers and agencies were delighted to have more targeting control compared to direct buys on premium publishers and ad networks. But, arguably, the buy side abused this power, cherry-picking cookies on low-CPM inventory.  

Enter the race to the bottom – CPMs nose-dived, content arbitrage ascended, and the “Made For Advertising” revolution was born. To further reduce eCPMs (and mislead advertisers to the actual cost of campaign performance), buying platforms chased cookies on low-CPM sites, dumping spend at the end of the month on bad impressions that weren’t viewable, only seen by bots or were cramped by dozens of other ads. Depressed CPMs meant publishers had to chase traffic any way they could, encouraging clickbait content. 

2. Empowered shady data vendors and overreliance on questionable data

Where did the seemingly endless supply of third-party targeting cookies come from? Shady vendors scraping publisher sites (often brought there by advertising tags at the behest of the advertiser) and building collections of questionable quality with no regard for consumer privacy. 

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Third-party data vendors were enablers, allowing buyers to stick with linear-style demographic buying instead of evolving their targeting strategies to better meet the digital environment. Advertisers were happy to keep paying for mystery-grade data as they thought they were saving on actual ad buys. Then they were shocked – shocked! – to find their digital campaigns weren’t performing.

3. Misleading measurement

The cookie was developed to remember items in an online shopping cart. It’s no surprise it was employed for advertising attribution and campaign measurement. 

The marketer’s dream is perfect campaign measurement – tracking how every touch point led to the eventual sale and then using that data to optimize spending. Too many trusted the third-party cookie to offer accurate attribution, but the tool was stretched beyond its limits.  

This led to conversion inflation and double counting. Bad practices like last-click attribution overinfluenced spending decisions, and marketers received a warped understanding of target consumers and their behaviors.

So what now?

Like weaning a toddler off a pacifier, it’s healthy for the industry to let go of third-party cookies.  

Here’s what to consider as we move beyond our cookie habit:

  • Identity solutions: There are too many options out there. And besides, authenticated traffic will only make up a fraction of the digital ecosystem at any time. We must also embrace probabilistic solutions to bolster addressability and attribution. Both advertisers and publishers are struggling to see performance lift via identity. But, as cookie deprecation sinks in, the true performers should emerge.
  • Publisher first-party data segmenting: This was the original purpose of publisher DMPs. Advances in edge computing have enabled top-notch segmenting and performance advertisers can sing about. Consumer intent data is of particular interest. That’s right – context matters again!
  • Advertiser data enrichment: Major brands have built up cloud infrastructure and data-crunching abilities to better understand their customers and target audiences. Taking this to the market requires identity solutions, lookalike modeling and co-mingling with publisher data. Don’t get too caught up in the clean room buzz. They are only a piece of the puzzle, and the scale challenges that plagued second-party data in the past remain.
  • Retail media: Yes, retailers can actually tell when advertising leads to units moving off shelves. Both brands and publishers can team up with these nascent players to help develop their advertising and monetization. As retail measurement standards take shape, many advertisers will have a greater idea of advertising performance than ever before.
  • AI-powered targeting algorithms: Independent AI-driven buying platforms have existed for years now. Obviously they’re fueled by data, but experience “in the field” makes them stronger. Publishers need to partner with these independent providers where possible – after all, the models are being trained, and pubs have great training material.

All aboard 

In the vast sea of digital advertising, the disappearance of third-party cookies might feel like uncharted waters, but it’s also a chance to navigate toward a more sustainable and effective future.

Embracing diverse data strategies and innovative technologies can help us swim freely, unburdened by the limitations of the past. We have solutions that help us establish data sources of truth and assess the performance across these seemingly disparate channels.

As the waves roll in, let’s not cling to the fading echoes of the third-party cookie. Let’s welcome the opportunity to shape a new era of advertising that prioritizes quality, context and consumer privacy.

Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.

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