Categories: Programmatic Advertising|By |12.6 min read|

Programmatic Advertising without Cookies

Cutting back on cookies? It seems as if that’s the way the internet is heading. With new regulations like GDPR and CCPA, as well as pressure from privacy advocates, many companies are starting to phase out third-party cookies. This includes Google, who has announced that it will be discontinuing them in 2024
What does this mean for programmatic advertising? Will things be able to go on as usual, or will this be the end of programmatic as we know it? In this article, we’ll discuss the end of third-party cookies, how it will affect your Programmatic Advertising, and what measures you can take to ensure your digital strategy is ready for the change.

What Are Third-Party Cookies?

Third-party cookies are pieces of code that are placed on users’ devices when they visit certain websites. These cookies collect data about the user’s behavior, which can then be used for targeted advertising.

First-Party Cookies vs. Third-Party Cookies

While they both serve the function of collecting and remembering data, third and first party cookies are different in many ways. It’s important to be able to distinguish the two, as much of what you’ll hear about cookies in the news will be referring to third-party cookies. Here’s a quick breakdown.

First-Party Cookies

First-party cookies are placed on websites to gather user data on behalf of that site’s publisher or owner. They are mainly used as a tool to get insight into visitors’ behavior and improve User Experience (UX). Common examples of first-party cookies in action include online shopping carts that remember your items as you browse, or website login pages that keep you logged in for future visits. By providing value exchange incentives, advertisers will need to concentrate on expanding their first party data. For instance, you may think about providing a 10% discount in return for an email address or register.

Third-Party Cookies

Third-party cookies work by incorporating JavaScript from one website into another. This allows them to transmit a user’s habits across numerous websites. Third-party cookies also exist for the purpose of collecting user data, however differ in who they’re placed by and who they send that information to. Third-party cookies are most often set by advertisers or other websites that want to track users’ behavior across multiple sites. In order for them to do so, they place a cookie on the user’s browser when they visit a site that has partnered with the advertiser. Then, as the user visits other sites, that third-party cookie will track the user’s activity and report back to the original advertiser.

This is how many online advertisers are able to target ads specifically to users based on their interests. It’s also how some companies are able to keep track of a user’s online activity even if they switch devices or browsers.

Why Companies Use Third-Party Cookies

Advertisers use third-party cookies to track users’ behavior across multiple websites in order to serve them targeted ads that are relevant to their interests. This allows them to show ads that are more likely to result in a conversion, as they are based on the user’s past behavior. But the use of third-party cookies is not just limited to advertisers – many website owners also use them to track user logs and the behavioral data of their visitors for analytics purposes. This helps them to understand how people are using their site and what changes need to be made in order to improve the user experience.

The Prevalence Of Third-Party Cookie Use Online

Third-party cookies have been a staple of the internet for as long as can be remembered. Since the 1990s, companies, brands and digital marketers alike have relied upon them as a window into users’ online behavior. In fact, about 80% of advertisers depend on third-party cookies to collect data about potential customers’ interests. But despite their widespread use, there is a growing concern over the privacy implications of third-party cookies.

Because they are able to track users across different websites, they can build up a very detailed profile of an individual’s online activity. This information could potentially be used for nefarious purposes, such as targeted advertising or even identity theft.

In recent years, there have been a number of high-profile cases of companies misuse of third-party cookies. In one such case, it was revealed that the British political consulting firm Cambridge Analytica had used them to collect data on millions of Facebook users without their knowledge or consent. This led to a public outcry and ultimately resulted in new regulations being put in place to protect users’ privacy.

The Imminent Obsolescence Of Third-Party Cookies

While third-party cookies have had their place in the advertising campaigns and ad targeting for quite some time, their run as a standard commodity may be close to over. Many ad tech companies have started blocking third party cookies. Popular web browsers have shifted away from third party cookies so that they get better idea of its users .Through the initial iteration of its Intelligent Tracking Prevention (ITP) protocol, Safari begins to block a few third-party cookies. Moreover, Firefox introduces enhanced tracking protection (ETP) and subsequently declares that all third-party cookies would be automatically blocked.

Digital ad industry has impacted badly due to the blockage of third party cookies. The reason of blocking the third party cookies is its inability to clearly explain the value exchange. Industry analysts are predicting an imminent downturn in their use as a result of several emerging trends in the tech world, the most notable of which we’ll list and explain below.

Google’s Abandonment Of Third-Party Cookies

This is perhaps the most noteworthy and impactful development to affect the outlook of third-party consumer data in digital advertising. Marketing campaigns have changed since the abondonment of third party cookie on Google chrome. Back in January 2020, Google announced that it would cease the use of third-party cookies on its platform, a major move in the tech giant’s efforts to prioritize user privacy. It set the original cut off date for the end of 2022, but that was inevitably pushed back several times to where it now sits at in late 2024.

Although it’s been delayed multiple times now, Google’s impending ban hasn’t failed in getting marketers’ attention. As a major piece of the puzzle that is online advertising, third-party data is fundamental to many of their current strategies and tools. With this ban set to (eventually) kick in on the world’s largest search engine, people are scrambling away from third-party data and increasingly looking towards the development of new solutions.

Privacy Regulations

The California Consumer Privacy Act (CCPA) is one of many regulatory frameworks to come into effect over the past few years as a result of increasing government stringency on the issue of user privacy. The CCPA, signed into effect in 2018, protects citizens of the State of California through the provision of several rights over their personal data. It’s accompanied by similar laws around the world, including the UK General Data Protection Regulation, EU GDPR and PDPA, and while tailored to their respective regions, share a common agenda against the use of third-party data. Policies like the GDPR have made it harder for companies to collect and manipulate user information, thereby limiting the potential applications of third-party cookies.

Cookies May Just Be Going Out Of Style

Aside from industry and legal changes, another major factor influencing third-party cookies’ dismal future is the simple shift we’ve been seeing lately in consumer sentiment. Now more than ever, people are concerned about and paying attention to how their personal data is being used, and that doesn’t look good for cookies. Data from multiple surveys and studies show that only a third of US consumers would accept all the cookies a website imposed on them. What’s more, 41% of consumers delete their cookies regularly, and 30% have purposefully installed apps on their devices to block third party cookies and avoid having their data collected altogether. It’s evident, then, that the current cookie system is not meeting the needs or expectations of users, and it’s only a matter of time before they’re replaced by a better solution.

Cookies And Programmatic Advertising

The progressive downturn we’re seeing in the use and popularity of third-party data and cookies has been especially concerning for programmatic advertisers. After all, cookies have been the backbone of the industry since its inception. With user preferences changing and that inevitable ban from Google coming in the next few years, they’re at a loss of direction in terms of where to go next. Programmatic advertising is the process of automating the buying and selling of ad space on a real-time basis. It’s enabled by programmatic technology, which uses data and algorithms to streamline and optimize the entire process.

Traditionally, the programmatic ecosystem has been built on a foundation of third-party data, with cookies playing a central role in collecting and passing that data along. This consumer data is then used to target ads to specific audiences based on their interests, demographics and past behavior. However, with the phasing out of third-party cookie data, programmatic advertisers are going to have to find a new way to collect data and target their ads.

The Impact Of Third-Party Cookies On Programmatic Advertising

The impending ban on third-party cookies is going to have a big impact on programmatic advertising. As mentioned before, cookies have been integral to the programmatic ecosystem, and without them, ad agencies are going to have a hard time collecting the data they need to target their ads effectively.

What’s more, the loss of cookies is going to make it harder for advertisers to reach their target audiences. Without the ability to track user behavior and target ads accordingly, they’ll be forced to rely on other, less effective methods, such as targeting by IP address.

Can Programmatic Advertising Be Done Without Third-Party Cookies?

Third-party cookies are set to come to an eventual end, but that doesn’t mean the programmatic ecosystem has to come to an end with them. While the loss of cookies is going to have a big impact on programmatic advertising, it’s not the death knell some people are predicting. There are a number of ways programmatic advertising can be done without third-party cookies, and likewise many ways marketers can prepare for their discontinuation. Through the following, we’ve listed the top five and explained how each can be used to keep your programmatic campaigns running smoothly.

As we’ve mentioned, 1st party data is going to become increasingly important in the post-cookie world. This is data that’s collected directly from your website, rather than through third-party cookie data. The biggest barrier that marketers are facing in collecting first-party data is the extra work they’ll be required to put in to do so. This information isn’t simply handed to you the way it is with third-party data. You have to proactively collect it yourself, usually through forms or surveys.

How can this be made easier?

  1. Incentivization

One way to make first-party data collection easier is to incentivize users for completing forms or surveys. This can be done by offering discounts, coupons or freebies in exchange for their information.

  1. Look Into Alternative ID Solutions

Several cookie alternatives have been proposed since Google first announced it would be phasing them out in 2020. These solutions have been designed to help marketers continue to collect the data they need for effective ad targeting in their programmatic campaigns. The most popular alternative is Privacy Sandbox, which is a set of open standards that Google is proposing. This solution would allow for some data to be collected and used for advertising purposes, without violating users’ privacy. Another popular solution is The Trade Desk’s Unified ID 2.0. This is an identifier that uses hashed email addresses for ad targeting. It’s already being used by a number of publishers, and it’s seen as a more privacy-conscious alternative to cookies.

  1. Invest In Relationships With Publishers

The next best thing from first-party data is second-party data, which is data that’s collected by one organization from another. This data is usually high-quality and valuable, as it’s coming from a trusted source.

One way to get your hands on second-party data is to develop relationships with publishers. This data can then be used for programmatic advertising, as well as for other marketing purposes.

As cookies begin to discontinue over the coming months, marketers will be best served by sharing data through these kinds of relationships.

  1. Try Contextual Advertising

This is where Gourmet Ads has been focusing for the past few years since the demise of cookies was announced. Contextual Targeting is a form of digital marketing that targets ads to users based on the content they’re consuming. This can be done through keywords, topics or even the tone of the content.

For example, if someone is reading an article about smoked brisket, they might be targeted with contextual advertising for bbq sauce, meats or even a barbeque. This is different from cookies, which would target them based on their past behavior or intent.

Contextual advertising is seen as a more privacy-conscious alternative to cookies, as it doesn’t rely on personal data. It’s also seen as more effective, as it targets ads to users who are already interested in the product or service.

  1. Start Testing Non-Cookie Based Solutions Immediately

Just because Google has pushed their third-cookie ban back multiple times doesn’t mean that you should procrastinate on what is clearly an inevitable change to come in the digital advertising sector.  The time to start testing and implementing non-cookie solutions is now.

It’s important to remember that not all of these solutions will be perfect, and that there will likely be a period of trial and error as we all adjust to the new landscape. But the sooner you start, the better prepared you’ll be when cookies finally do disappear.

The decline of third-party cookies is inevitable, and it’s going to have a big impact on programmatic advertising. Advertisers are going to have to find a new way to collect data and target their ads effectively. Media buying and selling ad space on publishers’ websites will be changed after these amendments. But, like anything, this change presents an opportunity for innovation and new ideas. So, while the loss of third-party cookies may be a blow to programmatic advertising, it’s not the end of the world. There’s still a lot of potential for the digital advertising industry to grow and evolve, even without cookies.

Since advertising process has changed after the ban of first and third party cookie by major browsers. We may expect advertisers to dedicate greater resources to alternative formats as they shift away from strategies that rely on third-party data. Advertisers found new ways of data strategy, ad revenue and contextual advertising. Many digital advertisers believe that programmatic ads have improved after the demise of third party.

Modern techniques in programmatic advertising help advertisers to sell ad space more in a better way. Their capability of ad spending and contextual targeting has been refined. No doubt, traditional marketing has plummeted. New data driven marketing techniques have evolved which offers advertisers an opportunity to do behavioral targeting and audience targeting.