Cookieless Ads: 40% lower value but early signs of progress

Petri Kokkonen, a digital ad revenue growth consultant, shared an update on the state of cookieless advertising within Google Chrome. The update focused on data from the first half of 2024, highlighting both progress and remaining challenges in the industry's transition away from third-party cookies.

A key finding is the lower value of cookieless inventory compared to audiences with third-party cookies. According to Kokkonen's analysis of Prebid data, cookieless inventory currently sells at around 40% less. While the actual price per impression for cookieless ads remains reasonable, a lack of demand is driving down the overall value.

Despite the lower value, Kokkonen identifies positive developments since the beginning of 2024. Prebid, an open-source platform for header bidding, is reportedly performing better, capturing a larger share of cookieless inventory compared to Google Ad Manager (AdX). This suggests that alternative solutions for selling ad space are maturing.

The data also reveals significant variation in performance across different publishers. While some may be able to maintain revenue without third-party cookies based on limited test data, the full impact on the industry remains uncertain. Experts anticipate that advertisers will continue to prioritize audiences with third-party cookies as long as possible.

The delay in phasing out third-party cookies, originally planned for 2024 and now pushed back to an unspecified date in 2025, is viewed positively by Kokkonen. This additional time allows for further development of alternative targeting methods like contextual targeting and cohort signals provided by Chrome. However, a replacement for large-scale retargeting, a core function of third-party cookies, remains elusive.

Kokkonen emphasizes the importance of publishers diversifying their sales channels beyond OpenRTB, the standard protocol for real-time bidding on ad inventory. While OpenRTB will remain strategically relevant, he recommends a combined approach that includes "old school" sales methods. This allows for greater control, security, and optimization of ad inventory. Additionally, publishers are encouraged to maintain strong in-house sales teams for agile testing, learning, and optimization efforts.

The cookieless future for online advertising is still taking shape. While challenges like lower value for cookieless inventory persist, positive developments in alternative solutions and the extended timeline offer reasons for cautious optimism. The key for publishers appears to be adapting their strategies to navigate this transition period. By diversifying sales channels, leveraging in-house expertise, and actively monitoring the value of their cookieless audience, publishers can position themselves for success in the evolving advertising landscape.

Increased Adoption of Cookieless Solutions

A report from Teads, a global media platform, indicates that nearly half of all ad impressions they handle are already cookieless. This suggests that publishers and advertisers are actively exploring alternative solutions. This increased adoption bodes well for a smoother transition to a fully cookieless environment.

Identity Testing by Marketers

Recognizing the importance of preparing for the future, Yahoo recently launched identity testing capabilities. This allows advertisers to experiment with cookieless targeting methods within their platform. By gathering data and insights now, advertisers can develop effective strategies for reaching their target audiences without relying on third-party cookies.

Guidance for the Industry

Industry bodies like the Interactive Advertising Bureau (IAB) Tech Lab are also playing a crucial role. They recently published a comprehensive guide outlining various identity solutions for a cookieless future. This guide explores contextual targeting, privacy-preserving data clean rooms, and other emerging technologies that can help maintain effective advertising without compromising user privacy.

Alternative Targeting Methods

Beyond contextual targeting and cohort signals, initiatives like the TrustPid are gaining traction. Developed by Deutsche Telekom and Vodafone, the TrustPid is a privacy-focused alternative that leverages a user's mobile network operator for identity verification. This approach aims to provide a more targeted and measurable solution compared to traditional cookies, while still prioritizing user privacy.

Potential Revenue Impact

However, challenges remain. Research by Google itself suggests that ads delivered without cookies could represent a significant decrease in revenue for publishers – up to 52% according to their findings. This highlights the need for continued development of effective cookieless solutions that can deliver value for both advertisers and publishers.

The path towards a cookieless future requires navigating a complex landscape. While the potential revenue reduction is concerning for publishers, it must be balanced against the increasing user privacy concerns. Finding the right balance between effective advertising and user privacy will be crucial for the long-term health of the online advertising ecosystem.

The success of this transition hinges on collaboration across the industry. Publishers, advertisers, technology providers, and regulatory bodies all need to work together to develop and implement effective cookieless solutions. Open communication and a shared commitment to a sustainable future for online advertising will be essential.

While challenges persist, the positive developments highlighted in this article offer reasons for cautious optimism. The cookieless future of online advertising is still under construction, but with continued innovation, collaboration, and a focus on user privacy, the industry can navigate this transition and establish a successful model for the years to come.