In 2024, third-party tracking cookies will be withdrawn from Chrome, the browser most web users surf in. This event marks the end of a years-long deprecation of tracking cookies from all major internet browsers and mobile devices. Tracking users on the web and mobile apps to understand their preferences and target them with relevant content is no longer an option. For many digital publishers, this change disrupts their business models, which have been based on achieving a high yield for inventory supported by third-party data, complemented by their first-party data, for programmatic digital advertising. In this article, we look at the implications of the loss of tracking cookies for publishers, the alternatives available to them, and the opportunities on offer in a privacy-first model of publishing.
Why do publishers fear the loss of tracking cookies?
As IAB Europe notes in its Guide to the Post Third-Party Cookie Era, “The blocking of third-party cookies in Chrome will bring the single biggest change to the digital advertising ecosystem since the introduction of real-time bidding in 2009”.
This is no overstatement. The end of third-party cookies restricts publishers’ ability to develop audiences. Audience development is how publishers grow their readership’s volume and value. Because digital publishers rely on ad inventory as their primary revenue source, this inventory can be sold at a premium if publishers develop the right kind of audiences, specificity is important.
For years, publishers have relied on tracking cookies to build these specified audiences. Without cookies, digital publishers’ revenue models are at risk as, without an alternative, they would be unable to deliver ad-funded content to consumers.
The UK’s Competition and Markets Authority predicts that ending third-party cookies on Google’s properties could lead to publishers losing hundreds of millions in revenue if no viable alternative is found. For many publishers, the loss of third-party cookies is an existential threat.
Why are third-party tracking cookies being withdrawn?
Global privacy regulations, including the General Data Protection Regulation; the California Consumer Privacy Act; the Virginia Consumer Data Protection Act; and Brazil’s Lei Geral de Proteção de Dados, have been a key driver for change. As a result of these laws any organisations that handle or process the personally identifiable information (PII) of consumers need to do so with consent and ensure that users’ privacy is maintained.
A second change driver are consumers themselves. Increasingly, people favour brands that respect their privacy. Browser owners need to ensure that they’re not tracking web users using their products, or risk losing them to competitors with a better reputation for privacy compliance.
For similar reasons, smartphone providers have increased privacy controls on Mobile Device IDs, which help verify users as they move between apps and online. Apple, for instance, has made its Identifier for Advertisers opt-in when formerly it was opt-out. This move has slashed opt-in rates so much that iPhone users have effectively fallen off publishers’ radars.
And it’s not just third-party tracking cookies that are coming under pressure. Browser companies are increasingly stamping down on using “fingerprinting” to identify users. Publishers use fingerprinting to profile web or app users based on markers such as a device’s browser version, language setting, and IP address. Browser companies including Apple, Google, and Mozilla are targeting fingerprinting as a privacy-invasive practice that they plan to eradicate. Another window onto the web has closed.
The challenges of maintaining scale when building audiences for programmatic advertising
How can publishers plug the gaps caused by the loss of tracking cookies and device fingerprinting? Paywalls are an alternative, where publishers directly charge users to access their content. However, paywalls are only really an option for a tiny minority of publishers. One study found that 63% of publishers face challenges when adopting a subscription model.
Some relief will come via enclosed ecosystems (also known as “walled gardens”). Massive digital platforms like Google, Meta, Amazon, and others will collect consented data from authenticated users (i.e., people who have logged on to use their services), and some of this data will be made available to publishers to help them build audiences. Google’s Privacy Sandbox is a good example of how this approach would work in practice.
However, even with this data at their disposal, publishers will not be able to build audiences on the same scale as today. This is because they will lack information on “ghost users”: unauthenticated people surfing on the open web. Publishers therefore need to find a privacy-conscious means of recognising the overwhelming bulk of web visitors who land on their pages without previously confirming their identities via sign-ins. Verifying ghost users is paramount if publishers want to achieve the scale required for programmatic revenues.
Universally Unique IDs (UUIDs) are another alternative to third-party cookies. However, UUIDs are also limited in scale. With UUIDs, consumers must still consent to be authenticated, which only around 20% are willing to do. And then there’s the problem of consent. If a person opts out of one publisher, the universal nature of the ID means that all publishers will automatically lose access to the data.
The limitations of new publisher monetisation strategies
In addition to paywalls, some publishers are looking to even more novel monetisation strategies to help them adapt to the loss of tracking cookies. Some publishers (such as The Guardian with its online bookstore) are looking to direct sales to mitigate potential ad funding losses. These publishers are in effect transforming into e-commerce businesses, which is already a highly competitive space.
Other publishers are embracing product development as a new engine of growth. These companies look to create and launch digital products linked to their publishing business. One example is Quartz, a research publisher, which has built an app that connects readers to relevant news stories.
Finally, there’s native advertising. This is where publishers sell space for sponsored content that is formatted to be almost indistinguishable from editorial content. The market for native advertising is forecast to grow at a compound annual rate of 375% up to 2032.
However, despite the increasingly innovative approaches to monetisation being taken by publishers, one thing remains the same: for their strategies to work, publishers need to understand their audiences. Without this granular understanding of audiences, inclusive of their preferences and behaviours, publishers will struggle to realise the full revenue potential of their new business models, whether that’s selling products, designed new digital experiences, or attracting sponsors of native advertising.
Audience development strategies in a cookieless world
Regardless of whether publishers are looking to maintain their existing ad-centric revenue models, or targeting new sources of revenue, audience development will remain critically important to their future success. So, how can publishers continue successfully building large audience segments at scale once tracking cookies and device fingerprinting are history?
Fortunately, publishers need not look far to find an answer to this question. Their own first-party data is a treasure trove of information on the interests of their audiences. Most publishers will already have a robust first-party data strategy in place but may be worried about its scale when third-party cookies are finally deprecated.
Whether a publisher has previously chosen to use their first-party data to create audience segments or not, their site analytics will provide a wealth of useful audience insights and attributes. These data signals are the foundation for publishers to build out their audience segments, mapping their first-party data with real-time cross-channel audience signals from the open web. However, without tracking cookies a new identifier is needed to pick up these signals, and it’s here that telco-verified publisher IDs come into their own.
One important element of this solution will be an ID to join the dots of user activity to create a 360-degree view of both ghost and authenticated audiences without transacting any Personally Identifiable Information (PII). Novatiq’s patented Zenith ID is one such identifier. Generated by publishers, the Zenith ID is then verified by telco partners who have the cross-device view needed to verify web users.
Telco-verified IDs, such as Novatiq’s Zenith ID, ensure the same user’s consistent recognition for consented first-party profiling and accurate analytics, enabling publishers to access the full holistic view of audiences and match them with the right inventory. These publisher IDs use telco network intelligence to verify pseudonymised user profiles without exchanging PII in the programmatic ecosystem. Publishers can thereby verify all users across sites and devices and create unified profiles, even if users have not signed in, allowing them to verify those all-important ghost users.
Beyond “ghostbusting” the telco-verified publisher ID also offers publishers a path to monetise future offerings. As the verification takes place on the telco partner’s network, it is available wherever a digital interaction occurs. That means the ID will be able to verify users on other digital services such as connected TV offerings and audio/visual streaming and download sites.
Dynamic transaction IDs support these publisher IDs to ensure that publisher IDs and audience segments can be activated safely by advertisers. Transaction IDs, such as Novatiq’s Hyper ID, also leverage telco intelligence, and are generated in real time in the publisher ad request and distributed through the automated advertising ecosystem, enabling risk-free first-party audience activation at scale. In this case, as soon as a telco verifies the transaction ID, smart technology associates the requested audience segments to it and sends specific responses to each buy-side platform. These IDs are privacy-centric by design: once used in the ad transaction, the ID vanishes leaving no traces behind.
Data clean rooms vs. telco verification
Telco-verified solutions offer a clear and compelling alternative to publishers looking beyond the era of tracking cookies. However, recently there’s been a little confusion in the industry between telco-verification services on the one hand and data clean rooms (or data cleanrooms) on the other. While on the surface having some things in common, the two are actually very different solutions.
Data clean rooms are virtual spaces where publishers and brands can share customer data in a secure, offline environment. Analysis of this data using hashed emails, phone numbers, device IDs, IP addresses, and other such signals reveals likely matches between the datasets and the insights required for activation in ad campaigns. Use cases include creating audience segments for engagement, identifying lookalike audiences, and campaign measurement. In some cases, data clean rooms enable publishers to build custom audiences that can be sent directly to an ad platform for activation. Examples of data clean rooms include Google Ads Data Hub, the Amazon Marketing Cloud, Snowflake, and Infosum.
As discussed, telco verification is where publishers’ and brand’s consented IDs are shared with a telco to verify user IDs and bring them together to provide a consistent view of the user for analytics and profiling.
Although both telco-verification IDs and data clean rooms leverage secure, privacy-first approaches to audience activation, there are a range of significant differences. First, data cleanrooms require direct access to and visibility of publisher and advertiser data. Telco verification services on the other hand, transact only obfuscated IDs, and even then, behind highly secure telco firewalls.
A second important difference is that cleanrooms operate offline. Telco-verification services on the other hand, take place in real-time with in-flight audience verification. So, where data cleanrooms use processing to find patterns, telco-verification IDs give publishers and brands absolute signals on whether one ID matches another ID.
Another key difference is reach. Data cleanrooms often aggregate data from multiple publishers. However, as many publishers will shy away from sharing their first-party data with competitors it’s hard to see how much scale this approach can really give. With telco-verified IDs, publishers can keep their first-party data to themselves. In cases where they wish to extend their reach, telco-verified IDs enable this without sharing first-party information (only the verification ID is shared).
There are other differences including data types and activation models, but ultimately the most important is that the two solutions serve different purposes. The data from cleanrooms is just another data source that publishers can use to build audiences. Telco verification services join all these different sources together and enable them to be activated in the bid stream.
A bright future for publishers
The end of third-party cookies is a challenge for publishers, but also an opportunity. Innovative approaches to audience development allow them to maintain personalised ad models at scale and in a way that better meets consumer demand for privacy. By focusing on their first-party data and leveraging telco-verified IDs, publishers can confidently move into the new advertising era.