Navigating the New Advertising Landscape

The long-awaited “cookie-pocalypse” has been delayed. Again. Harry Menear takes a took at the challenges and opportunities for the ad industry.

Google announced on April 25th that it would be holding off on the deprecation of third-party cookies on Chrome due to "ongoing challenges related to reconciling divergent feedback from the industry, regulators and developers." This is the third time that Google has pushed back the final curtain for third-party cookies. 

Google intended to conclude the process before the end of Q4 2024, and had already started restricting third-party cookies by default for 1% of Chrome users in early January. More recently, in March, Google beefed up restrictions for consent requirements in the EEA. For a moment, it looked as though nothing could stop the imminent demise of the cookie. Now, however, the end of the road for third-party cookies is looking rather nebulous once more. 

For some, the decision to delay (yet again) is starting to make the looming end of the third-party cookie era feel like a second shoe that will never drop. 

"While Google’s decision to delay cookie deprecation may make it feel like it might not happen, we expect it is still coming," cautions Justin Reid, a senior media director at Tripadvisor. Brands like Tripadvisor are “already future-proofing their advertising strategies," he notes, adding that many are turning towards first-party data collaboration as the solution. 

For advertisers still struggling to figure out what a cookieless future might look like (and a profitable one, no less), Google’s decision represents a reprieve, but a temporary one. “Those savvy enough to get ahead will be even better served when the depreciation of third-party cookies finally arrives,” says Reid. "However, while the delay is an opportunity to give those behind a chance to catch up, the time to act is now. The future is already here."  

Cookies Have "Got to Go" 

Google originally announced that it would be winding down support for third-party cookies 

In 2019. The move is ostensibly central to the company’s efforts to create a more privacy-centric version of the internet. The sale, purchase, and use of third-party cookies to track users’ online activity in order to better target online advertising has been increasingly criticised, both for its disregard of individual privacy, and its increasingly diminishing returns as an advertising resource. 

"Advertising has overreached with data," says Joe Root, co-founder & CEO of Permutive. Regulatory protections like GDPR have given users increasing control over the use of their data in the past five years. According to Root, this "huge swell in consumer choice around data has led to 70% of consumers opting out of sharing their data, making digital advertising unsustainable."

For advertising firms, diminishing returns from third-party cookies has resulted in a market-wide "collapse in reach" which Root explains has resulted in them losing market share and brand equity. "For media companies, the economics of a cookie-based ecosystem don’t add up; the 50% take rates from ad tech companies make digital publishing and content creation unsustainable," he explains. "The result is chaos and uncertainty regarding the direction for publishers and advertisers." 

Root isn’t the only industry professional who agrees that third-party cookies have been increasingly detrimental to the health of the ad tech sector. While a cookie-less future represents a wealth of uncertainties for the future of advertising, there’s a growing consensus among industry experts that their demise is a necessary one. 

"Regardless of how transparent the industry is about the use of tracking software, the fact over half of UK web users now employ ad blockers says it all really," reflects Mike Fantis, a VP at the DAC Group. Cookies may have been a useful short-cut for marketers to better target consumers in an increasingly fast moving world. However, Fantis posits that “the result has been a certain laziness."

The new advertising landscape won’t be as simple as the current one. It won’t have any easy answers — at least not right away. 

Fantis paints a picture of lost consumer trust, lost advertising revenue, and an industry in danger of stagnating. "The tech should always have been a means to an end, but thanks to cookies it became an end in itself," says Fantis. "The only answer to their removal is that brands and agencies will need to get strategic again."

What’s Next? 

The postponement of the third-party cookie’s demise seems to have been largely motivated by a lack of enthusiasm (and therefore pre-launch testing data) for Google’s replacement solution: Privacy Sandbox. 

This doesn’t change the fact that the solution is likely to fill the majority of the hole in the market left by the deprecation of third-party cookies. Privacy Sandbox has been under development for several years at this point and, widely, seems to be a promising long-term alternative to support targeted advertising in a post-cookie world. 

"Google will always be committed to giving companies and developers the tools they need to build thriving digital businesses; it’s the unknown that’s causing more concern at the moment as we all wait to hear how the initiative shapes up," says Sam Rawson, Head of Client Services at Repeat Digital. “The worry that it’s going to be all doom and gloom from thereon is largely catastrophisation. We’ll soon see once the Privacy Sandbox is ready what Google deems an acceptable line between giving away too much user information and cutting off advertising tracking altogether. And marketers will have to adapt to this. There will no doubt be adjustments that will need to be made to existing strategies, but we should see it as a new era in the advertising industry, for the greater good — not an extinction event." 

However, getting Privacy Sandbox to a point where Google feels comfortable pulling the plug on third-party cookies has been a somewhat rocky road. While the company has been "doing all it can to make the industry more prepared," Mateusz Rumiński, VP of Product at PrimeAudience observes that "due to low ecosystem engagement, it was hard to spot all the gaps and shortcomings of the proposed Privacy Sandbox solutions." 

Google is clearly hoping the delay will give enough companies a chance to try out Privacy Sandbox, giving them the data they need in order to iron out the kinks before it leads to “the end of third-party cookies for good," explains Rawson, the Privacy Sandbox is supposedly "Google’s way of showing that it’s committed to respecting user privacy" without costing advertisers (or itself) any money. Rawson assures me that Google “understands the importance of a healthy advertising ecosystem — after all, it relies on ad revenue too."

Without an alternative to third-party cookies that allows brands to measure and understand whether their advertising dollars are doing anything, Rawson notes that Google would be risking “a huge drop off in spend.”

There are concerns that Privacy Sandbox will further consolidate Google’s dominance in the adtech space. "The Privacy Sandbox puts all the advertisers’ eggs into Google Chrome’s basket," comments Katrina Smart, Commerce Media Director, Europe, at The Mars Agency. 

According to Simi Gill, Digital Business Director at the Kite Factory, advertisers need to keep in mind that, while Privacy Sandbox will, in all likelihood, be practical and scalable, "these segments will still require user opt-in and there is a risk those rates could be poorer than we currently expect." She adds that "none of us are naïve to" the fact that "Google will be developing the Sandbox in a way that benefits them given all of their revenue is generated through advertising, so they will want to protect their bottom-line market share."

An Exciting Opportunity

While some experts urge caution, or express cautious optimism, others are advocating for a cookie-less advertising sector that depends less on Google, not more. 

Stuart Colman, Senior Director of European Identity at The Trade Desk, argues that it’s time the conversation about the future of identity moves "beyond Google and the third-party cookie." 

"There’s an exciting opportunity to create new approaches to authentication and to rebuild the online world in a way where everyone benefits," he says. "Cookies were simply never built for today’s digital advertising needs. Instead of a one-size fits all identity model, marketers must embrace a portfolio approach of interoperable solutions."

Whether that looks like a landscape defined by first party data’ and ‘media mix modelling,’ or something different, Fantis warns that success means "putting in the graft". Advertisers and brands will need to source the first-party data needed to make informed advertising decisions, something he predicts will necessitate a return to "old-school tactics like qual and quant surveys." Then advertisers will need to get comfortable doing "close analysis of that data for the purposes of segmentation. Perhaps the biggest shake up will be in having to work harder to encourage people to give up their data in the first place, and that will require a proper value exchange."

Colman argues that the shift  presents an opportunity "to level the playing field and balance the scales away from the walled gardens. The industry must strive towards a world of specialist solutions that are transparent and omnichannel. Solutions such as European Unified ID (EUID) empower brands to connect with audiences across the fastest-growing channels like Connected TV and audio, offering a more holistic view of consumer behaviour. With the application of first-party data, new IDs allow advertisers to ensure relevance and improve the consumer experience — while giving them greater control."