How to continue without cookies?

User tracking—particularly cross-site tracking via third-party cookies—has gotten out of hand in recent years. In some cases, a single visit to a news website resulted in over 50 cookies being set, all of which tracked the user across pages. Constant retargeting only added to the problem. And this at a time when data privacy—especially since the Cambridge Analytica scandal—has become increasingly important. Users don’t want to be tracked—period. But they also don’t want to pay for content on websites, so in the past they’ve accepted a certain amount of tracking in exchange for free content—though, in reality, they don’t want that anymore either. That’s the real crux of the whole issue. This led to pressure for new laws (GDPR, etc.) on the one hand, and on the other hand, browser manufacturers have addressed this need.

What role do browsers play?

Smaller browsers in particular, such as Firefox and Safari, see data protection as an opportunity to differentiate themselves and take market share away from Chrome, the market leader. They are focusing on data protection, thereby addressing customers’ interest in not being tracked. In doing so, they often go further than lawmakers and block third-party cookies even when users have given their consent to be tracked by them. Currently, Chrome is still the exception, but that will definitely change by the end of 2021.

What does this mean for Swiss publishers?

As is well known, publishers have so far struggled to make money online—or, more specifically, to earn as much money as they used to from print. The problem is that users don’t want to pay for content, so revenue must come from advertising. And the more targeted this advertising is, the more it can be sold to advertisers and their agencies. In addition, Swiss publishers also need some kind of targeting product to compete with Google and Facebook and their data. And it is precisely this data that was collected in the past via third-party cookies, which are now being phased out. The alternative: so-called ID solutions. These work as follows: When a user logs in with their email address or phone number—for example, to comment on an article or subscribe to a newsletter—an ID is generated. The email address or phone number is used as the basis for the ID and is hashed (encrypted) for identification purposes.

On the one hand, one might wonder whether this is really the future—after all, email addresses and phone numbers are quite sensitive data when used as a basis. And what if lawmakers ban these as well in the medium term, or if browser providers block them? Google shares these concerns and will not support ID solutions within its advertising ecosystem (Google Ads, Google Display Network, YouTube). On the other hand, this is nothing different from what we already know from Google and Facebook and their «walled gardens»—and what we’re forced to accept in order to use their services. When in doubt, publishers are now following suit and building their own «walled gardens.».

One thing is clear, though. In the future, consent will increasingly be obtained through the login process—and not just on publishers’ websites. And the only real alternative that avoids data protection issues and doesn’t rely on email addresses or phone numbers is contextual targeting, which will certainly regain importance among Swiss publishers as well. That said, compared to ten years ago, the contextual targeting product available today will certainly be better.

Why does Google play such an important role?

Google plays a dual role in this context. On the one hand, it is a browser provider with the Chrome browser, which has an estimated market share of 40–45% in Switzerland. As the market leader, however, Chrome must hold its own against competitors who are trying to take market share away from it by offering privacy features. On the other hand, Google is an advertising network (primarily the Google Display Network and YouTube) and has, until now, stored targeting data in third-party cookies and «tracked» users across all websites in the GDN.

Starting in 2022, Google will also phase out third-party cookies in the Chrome browser—and, more importantly, individual tracking—or, to put it another way, block them in the same way other browsers do and implement alternatives. Unlike other market players, however, Google will not support ID-based solutions as an alternative; instead, it is pursuing its own approach with the Privacy Sandbox. For users, this is slightly more privacy-friendly than before, as only cohorts (approximately 5,000 users) are tracked, rather than individuals. For publishers—and thus advertisers—this approach is slightly less effective, with Google estimating it at 95 percent of third-party cookie performance. Retargeting will also continue to exist in some form. The Privacy Sandbox currently applies only to Chrome. It is doubtful whether other browsers will support it as well.

However, it should be noted that third-party targeting has often been quite inaccurate in the past—this problem, which is often glossed over, is not solved by the new approach and may even become even less accurate. Is contextual targeting, then, perhaps really the better alternative, since it doesn’t pose a data privacy issue and is, at worst, less inaccurate?

So what does this mean for advertisers?

First things first: Advertisers can still use their own first-party cookies and the data they collect, but they can no longer use personalized one-to-one advertising (retargeting and third-party targeting). They can also continue to use targeting options within «walled gardens» such as Google and Facebook, just as before. The changes primarily affect the open web outside of Google and Facebook. It’s often said that advertisers should therefore rely more on first-party data and cookies, which are not affected by the changes. But what exactly does that mean? Here are a few examples: A TV manufacturer could build a new app with valuable features, such as controlling the TV via the app—the data collected from this can be used for segmentation and upselling/cross-selling. Or a laundry detergent manufacturer could set up a blog with fabric care tips and thus collect first-party data and email newsletter addresses from blog visitors—the data from this can be used for segmentation and more targeted messaging.

From the advertisers’ perspective, standardization of ID solutions is essential; a proliferation of new ad identifiers and a confusing jungle of ad tech providers must be avoided at all costs. The other extreme—increasing market concentration among one or a few market participants (particularly Google and Facebook)—is, however, also not a viable alternative. A joint effort must focus on making it even clearer to users than before that free content on the internet requires funding and, therefore, advertising. Login alliances such as the Swiss Onelog, in particular, face a significant communication challenge: Consumers must be convinced to use such accounts and to grant all participating websites consent for personalized advertising.

The demands of the SWA To the digital players in a future without third-party cookies:

• A sufficient number of new ID solutions as alternatives to Google and Facebook.
• Solutions that continue to enable cross-platform reach management and cross-platform frequency capping.
• Publishers should better communicate to their users that free content on the Internet requires funding and, therefore, advertising.
• New high-quality advertising products focused on contextual targeting.