The “third party cookies” coming to end
More than 300 times a day, the personal data of each citizen is put up for sale on the Internet. At least, this is the assessment of the study by Autonomy, published in October 2021 on behalf of the Greens in the European Parliament. Even if this is only an average value, it shows the scale of the business that is also possible on a daily basis with the help of “third-party cookies”. But it all has to end.
This is what not only data advocates, but also politicians and many consumers would like to see. Because while first-party cookies are relatively unknown, third-party cookies collect so much data that it is possible to create a comprehensive profile. Before an advertiser buys an advertising space on the Internet, he automatically requests data about the year of birth, gender, location, interests. The obvious advantage of this procedure is that advertising reaches its target consumer better, waste is much lower than with print or television advertising.
According to a 2016 study by Adlucent, the majority of Internet users (71 percent) also value personalized ads more than random ones, which are often perceived as inappropriate. But at the same time, according to a study by the Norwegian Consumer Council, half of users do not want advertising to be based on personal data. One in three uses an ad blocker, and the same number already refrain from using some sites in order not to collect data. Data advocates and politicians also fear that citizens can be manipulated.
What are third-party cookies?
Cookies are mainly used to store data while surfing the Internet without direct user activity. This way, the site finds out who visited it earlier, and can, for example, display products in the shopping cart. When using cookies of the first party, they are installed only by the website operator and recognizes the visitor when he returns to the site.
A third-party cookie, on the other hand, comes from another provider, often an advertising server. It collects Internet user data and stores, for example, what content on the site the user is interested in. This becomes interesting when the same advertising server reproduces its cookies on many other sites and can thus create a personalized “traffic profile” on different sites, and this for a long period of time even without the user explicitly registering the sites.
The advertising server uses this data to provide the connected advertisers with as accurate an idea as possible about the visitor who has just come to the site. Then, in real time and automatically, the corresponding profile is put up for auction before the ad is displayed. That is why different advertising motives play for different people.
AdBlocker and cookie request
For years, both regulators and technology companies that want to do business on data protection have been trying to set limits to the data collection mania. Thus, depending on the dependence of the business model on the advertising market, competition has arisen between large technology corporations in the field of data protection.
Until now, Apple’s business has been much less based on advertising than Google’s business. AdBlocker, incognito mode, and user consent forms are the most obvious tools. But the advertising industry is reacting: Those who use an ad blocker can no longer use certain sites, it is often difficult to choose not to use them. That is why most of the users click on the “consent” button in annoyance, so that countless cookie notification banners disappear quickly.
Despite all the obstacles, the Internet advertising market continues to grow. The “Internet search” advertising medium alone is likely to soon reach an advertising volume similar to television advertising, and social media, online video and e-commerce are still to come.
Alternatives to personal cookies
Many companies will suffer from a ban on the use of third-party cookies, starting with advertisers themselves, who can use cookies not only to target their audience more accurately, but also to learn more about their own customers or stakeholders. In addition, there are advertising agencies, advertising brokers, advertising server operators and all content providers who earn money by independently reproducing advertising, for example, online media. However, first of all, it will affect Google. In the value chain of an automated auction for the reproduction of advertising, the technology company has a market share of 50 to 90 percent, according to a report by the UK Competition and Market Authority.
“Google’s goal is no longer to collect personalized data, but to be able to offer customized advertising,” the company said.
That is why Google has been working intensively on alternatives to third-party cookies for several years. The goal: to no longer collect personalized data, but individual advertising should remain. The solution should offer a distributed FLoC (Federated Learning of Cohorts) solution – however, the market entry has been repeatedly postponed. It will be ready no earlier than the end of 2022.
But, not everything is so simple. You can declare anything, but it is impossible to refuse cookies completely, because they are too important. Google wants to be able to use third-party cookies until at least mid-2023. When using FLoC in the future, people will be assigned to cohorts, i.e. they will no longer be registered individually. The common denominator of a cohort may be, for example, an interest in cars or a visit to a certain website.
However, this approach has also met with resounding resistance from data advocates, and some important players on the internet, such as WordPress, have announced a boycott. Google, they criticize, continues to collect personal data, even if it is now aggregated in a different way. The main problem – personalized advertising as such and possible manipulation of personality – has changed little.
Other providers rely on explicit consent for personalized advertising. The Trade Desk, an American provider of advertising technologies, for example, developed the Unified ID 2.0 initiative together with the Washington Post newspaper and the Publicis advertising group. At the first contact with the Washington Post website, for example, the user must register and consent to personalized advertising. Instead of cookies, anonymized email addresses on various websites connected to Unified ID 2.0 are used to collect personal information.
Other initiatives are also based on identification, for example, in Germany – NetID, which is backed by RTL, ProSieben Sat.1 and United Internet. But there are already critics of the identity card procedures. Google, like no one else, has announced that it will no longer allow personal identification in the Google Chrome web browser, when there will also be no more third-party cookies.
It is also unclear how many users will actively register. This, of course, will depend on how high the benefit for them will be from transferring their data for content.
Back to the beginning: context is what matters
But there is also a departure from personal or aggregated profiles: a return to contextual advertising, which is usually called ambient advertising. Coaches are advertised on the sports newspaper website, travel on the hotel rating portal. But not only the content, but also the likely emotions and the underlying mood (negative or positive context) must be captured.
According to Big Market Research, the environmental advertising market is expected to grow almost fourfold from 106 billion US dollars, until 2025. However, it is also possible to conduct an auction of advertising space in real time. However, bidders will not know who is viewing the page, but only what it is about.
It is believed that in some market segments, such as travel, the contextual approach already works better than user-based targeting. According to a recent survey conducted by IAB Europe, the international trade association of the online advertising industry, 74 percent of respondents already consider contextual advertising one of the most important strategies after the end of the use of third-party cookies. Two-thirds of advertisers want to increase their advertising budget in this area, according to the Customer Data Platform Institute. In addition, consumers obviously like that ads are displayed in accordance with the content being viewed.
Blockchain also comes to the rescue
There are other approaches that blockchain technology offers. According to Coinmarketrate.com , the Brave web browser, for example, removes all external advertising, and instead reproduces its own, and shares the proceeds with the user. The Blockgraph blockchain project also solves this problem.
Approaches such as “Global Privacy Control” (GPC) or “Advanced Data Protection Control” (ADPC) – a return to “Do Not Track”, which is actually already implemented, probably have better growth prospects: the user indicates once what data he is ready to disclose. This eliminates the need to define it separately for each page.
In Microsoft’s “Parakeet” model, on the other hand, there is a “trusted” server between the user and the advertising platform, which can clearly distribute users, but anonymizes them and distributes them into cohorts, as in the case of Google’s FLoC.
Conclusion
It is unclear which approach will eventually prevail. But it will be more difficult for advertisers to cancel third-party cookies for now. Medium-based advertising is likely to have narrow boundaries in some areas of goods and services; for example, for men’s clothing advertising, it may be more difficult to find a medium of content of sufficient scale without returning to the previous inaccuracies of the print era.
On the other hand, all those advertisers who themselves have a strong presence on the Internet, and therefore can use first-party cookies or even be attractive enough for the user to register, should have advantages. And it doesn’t matter what technology will be behind it. The main thing is a reasonable approach, and the preservation of personal data of users.
Despite the fact that the end of the use of third-party cookies is probably just coming, companies should already think about a strategy to compensate for this loss.