In a World Without Third-Party Cookies What happens to advertising on the open internet?

I. Executive Summary

The advertising landscape on the open internet is changing rapidly. Google may have called extra time on the demise of the third-party cookie, but brands, agencies, publishers, and technology companies should remain focused on finding a long-term alternative. This will avoid swapping a mad-dash in the second half of 2021 for a mad-dash in the first half of 2023. This Quantcast Perspective will address several major trends and identify solutions for the future.

There are already fewer cookies than you might think

The internet is becoming increasingly devoid of third-party cookies, as Safari, Firefox, and others have already deprecated them. While Google has postponed the deprecation of third-party cookies until 2023, there is value in finding a third-party cookieless approach now to enable effective advertising in aforementioned environments.

Data privacy legislation will get more complex before it gets simpler

After General Data Protection Regulation (GDPR), top US state legislators are advocating for data privacy legislation. According to PwC, 44% of CEOs rank data privacy as one of the top three policies that will impact their businesses. There is a lot of ambiguity in how these regulations will manifest themselves.

The ecosystem is ripe for consolidation

Today, there is a mind-boggling variety of companies involved in delivering online advertising: Demand Side Platforms (DSPs), Data Management Platforms (DMPs), Supply Side Platforms (SSPs), and so on. Third-party cookies have been the thread that stitched this complex system together. Without them, the fabric begins to unravel. We will see consolidation–not just fewer companies in each category, but also fewer categories.

Measurement and attribution are key

Relevance is intertwined with measurement (are my ads working?) and attribution (which of my ads are working?). Third-party cookies have been central to how audience planning, campaign activation, measurement, and attribution work. Alternative ways to measure success will be essential to preventing our online world from getting cluttered with even more irrelevant messages and, worse, more publishers dying off through lack of funding.

There is no single right answer

The most successful online advertising campaigns in environments devoid of third-party cookies will run on a mix of emerging alternatives, including first-party data, consent, contextual approaches, cohorts, identifiers, and more. The challenge for brands, agencies, and publishers is to find a partner with the AI and machine learning technology capable of ingesting, understanding, and acting on this complexity in real time.

Our approach is grounded in industry standards, interoperability, and innovation. By leveraging our unique AI and machine learning technology to harness multiple audience signals, we’re pursuing our mission of championing a free and open internet. Read on to find out more about our perspective on the way forward.

II. Introduction: A Changing Landscape

The open internet is a force for good

The open internet is the most powerful mechanism for free expression our world has ever seen. Anyone with access can share their point of view, their content, and their creativity. Today, billions of people around the world have widespread, free access to information, entertainment, news, education, and so much more–all due to a free and open internet.

Advertising funds the open internet

Of course, great content is far from free to produce and distribute. Advertising underpins the viability and vibrancy of this free and open internet, and advertising technology facilitates advertisers to help fund the vital work internet publishers do in producing content that engages, entertains, and satisfies the curiosity of audiences worldwide.

The open internet is at a crossroads

The advertising landscape on the open internet is changing rapidly and has reached a critical juncture. The demise of the third-party cookie is inevitable; consumer privacy regulations are in full force globally, with GDPR and California Consumer Privacy Act (CCPA) prominent among them; tech companies with a vested interest in their own walled gardens–such as Google Search, YouTube and Apple App Store–are gaining relative advantage and are instituting changes that make buying advertising on the open internet harder.

III. Elements of This Evolution

Third-party cookies are dying

The relevancy of cookies has been shrinking for years: initially due to ad-blockers, then due to content being consumed outside of browsers, and more recently due to changes in how browsers operate (Safari and Firefox have been blocking third-party cookies by default for some time). Google announced that it will delay the deprecation of third-party cookies from its Chrome browser until 2023. This will solidify the death of third-party cookies as Chrome browsers represent the vast majority of non-Safari browsers. Delaying efforts or pausing to find alternative solutions will just be like swapping the mad rush of 2021 for a mad rush in 2023. It is important to keep investing in these efforts and find a sustainable solution for the future.

Regulatory pressure around consumer privacy is increasing

Another element of this changing landscape is the growing pressure on governments around the world to create and enforce privacy regulations. As a result, consumer privacy regulations have been instituted, including GDPR in Europe and CCPA in California, with other countries and states (e.g., PDPA in Singapore and CDPA in Virginia) set to enact their own regulations soon. Most industry observers and participants are expecting (and many, including Quantcast, are advocating for) federal privacy legislation in the US. At the moment, there is some ambiguity associated with these various regulations, but one thing is loud and clear: demonstrable consumer privacy and consent practices will be a central consideration in the industry going forward.

IV. Consequences of These Changes

The ad tech landscape will see consolidation

In the decade or so that programmatic advertising has existed, many companies, including Quantcast, have innovated and iterated to facilitate the effective connection between marketers and publishers. This has created entire categories of products: DSP, DMP, SSP, and so on. The third-party cookies and associated “match tables,” which map from one “cookie space” to another, have enabled these systems to interoperate.

For example, a third-party data provider can curate audiences as a list of third-party cookies, pass these identifiers to a DMP for further analysis, then to a DSP to buy impressions, which in turn requires cookie matches with exchanges and publishers.

Third-party cookies and “match tables” are the glue that have held the ad tech ecosystem together. Without third-party cookies, this complex landscape of product categories will have a hard time interoperating. As a result, we will likely see consolidation–not only within a category, but also across categories.

Audience planning, campaign activation, measurement, and attribution will be challenging

As third-party cookies have been used for associating otherwise disparate events across sites (e.g., multiple ad impressions delivered within a campaign), they have provided useful, albeit limited, insight into past consumer behavior and habits. As a result, third-party cookies and “match tables” are the primary mechanisms by which relevance is determined and achieved. This manifests in tactics such as using third-party data to plan and reach desired audiences and remarketing to shopping cart abandoners.

Since marketers have always strived to answer the questions, “Is my marketing working?” and “What is the ROI on my marketing?,” measurement and attribution have been important challenges to solve. While reducing the complex cause and effect of influencing audiences at scale to a single metric may still be a distant dream, it is doubtless that digital marketing is more measurable than traditional marketing. One of the primary methods of measuring performance and attributing value to an impression has been third-party cookies. This has allowed marketers to answer questions such as: “How many people saw an ad before they bought my product?”

Since third-party cookies have been central to how audience planning, campaign activation, measurement, and attribution work in programmatic advertising today, their deprecation will certainly impact how these capabilities work in the future.

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