What is the Cookieless Future?
The so-called “cookieless future” is a result of Google’s planned deprecation of third-party cookies on its Chrome browser, which it announced in January 2020. With a significant amount of digital advertising activities being dependent on information collected by third-party cookies, Google and the rest of the advertising technology industry, as well as publishers and advertisers/marketers, are developing and seeking out alternatives. Central to the non-Google technology will be alternative ID solutions based on information other than cookie IDs, such as email addresses. Because the effectiveness of an organization’s use of certain cookie replacements, such as alternative ID solutions, will likely hinge upon the quality and amount of its first-party data, many companies are amassing troves of first-party data in a variety of ways.
While Google recently announced it is postponing the end of cookies until sometime late in 2023, prudent organizations need to understand the implications of, and start to pivot towards, a cookieless future now. Cookie alternatives already exist in the market and their prevalence will no doubt increase as new privacy regulations approach and as the market responds to privacy-focused consumers and organizations.
Google’s FLoC
Rather than relying on individual tracking that uses cookies, Google’s alternative – the Federated Learning of Cohorts, or FLoC – relies on an algorithmic process inside the user’s browser to generate cohorts composed of thousands of people based on the sites they have visited in recent days, the content on the pages they viewed, and other factors. In an effort to preserve privacy, Chrome assigns FLoC IDs to a cohort, or group of people, without including any individual-level data. For example, if there is a FLoC for people interested in home design, then everyone in that cohort would be given the same FLoC ID and could be served ads based on their interest in home design. Notably, individuals (or rather, devices/browsers) may be placed into any number of FLoCs. Google’s testing of FLoC is paused for now, following its recent announcement.
Alternative ID Solutions
Broadly speaking, identity or “ID” vendors are vendors that match different sets of data with one another in order to carry out or enable a variety of advertising functions, including attribution, measurement, and creation of segments for serving advertisements. In the current cookie-laden ecosystem, to use a simple example, identity vendors are used to match data collected by one party’s cookie with data collected from another party’s cookie in order to serve an advertisement to a particular device. In other words, identity vendors determine that the information collected is about the same device, aid in forming a profile about that device, and that leads to a specific ad being served.
Alternative IDs – many based on email addresses rather than cookie IDs – already exist and everyone seems to be throwing their hat into the ring to provide an alternative ID solution when cookies go away. With Google announcing that it would not be developing an alternative ID, a number of companies, ranging from long-time AdTech providers to media companies and banking institutions, are making identity plays. These solutions will form a key part of any organization’s digital advertising strategy, well in advance of the death of cookies in 2023. Prudent organizations already have begun, or will soon begin, vetting them from a business and compliance perspective to stay ahead of the curve.
Bolstering First-Party Data
The use of ID solutions and other issues presented by a cookieless environment depend on the amount and quality of a company’s first-party data. Therefore, the cookieless strategy of many companies may include a high quantity of first-party data. Some of these efforts may also include increasing the number of email sign-ups (e.g., through loyalty programs or other incentives) and forming data partnerships with complementary organizations (e.g., retailers and consumer packaged goods companies).
