There have been many articles and papers written about the death of the 3rd party cookie on Chrome (which accounts for 65.3% browser market share) and what it means for the digital advertising ecosystem as we enter the cookieless web future. Just this week The Trade Desk announced their third-party cookie alternative dubbed UID 2.0 is hitting the market in beta.
As a quick background, historically the 3rd party cookie has been used not only for advertising retargeting purposes but for things such as mobile attribution, frequency capping, ad sequencing, and malware blocking and detection.
Below are some potential working solutions that are being developed in the marketplace to replace the cookie.
Contextual targeting is back! The idea of delivering ads according to what people view or watch is not new, in fact in many ways it is what the digital advertising industry was founded on 10+ years ago. The benefits are aligning ads with the content that a user is viewing to make the ads more relevant. Also, with technologies like positive/negative sentiment detection, keyword scraping and scoring, and AI technology that scans videos and classifies them in content categories, contextual targeting capabilities are getting more and more sophisticated.
In terms of negatives, it is hard to measure attribution using purely contextual targeting. Without cookies or some type of personal identifier it will be hard to measure and credit for multi-touch attribution on a contextual ad.
FLoC is Google's privacy sandbox proposal that groups people according to their browsing behavior into interest-based Cohorts. It leverages an on-device algorithm and machine learning to group together like-minded users. Google claims that it is as effective as a 3rd party cookie replacement solution, and they recently released a study that says this method reaches 95% of the conversions per dollar spent when compared to cookie-based advertising. Also in the initial study, Google claimed that FLoC’s generated a nearly 350% improvement in ad recall and an almost 70% improvement in precision over a random assignment of users to cohorts.
In terms of negatives, Google has not provided the underlying data for review to back up their effectiveness claims. Also, for the most part when comparing data sets, they did not do a true apples to apples comparison. What Google should have used to drive their comparison on the 350% and 70% rates, is an active audience segment from a reputable data partner.
Unified ID 2.0
UID 2.0 is a third-party cookie alternative created by The Trade Desk. It is a single sign on solution for users to login to different publisher websites. Per The Trade Desk, “When a consumer logs into a website with their email address, an identifier is created based on a hashed and salted, or anonymized version of that email. The identifier regularly regenerates itself, ensuring security. At the point of login, the consumer gets to see why the industry wants to create this identifier and understand the value exchange of relevant advertising, in simple terms (unlike today’s cookies). They also get to set their preferences on how their data is shared.” If a user logs in through a publisher that is linked with UID 2.0 their unique identifier is shared across those publishers.
There will be an independent organization that hosts the technical code along with another entity that has the power to audit and shut off bad actors. Currently Prebid.org will support the technical infrastructure with the IAB being the potential auditor.
A number of other companies in the digital advertising industry have also joined the project, including LiveRamp, FuboTV and SpotX.
UID 2.0 launches in beta this week where advertisers will get their first glimpse at how it will work.
In terms of negatives, the efficacy of the solution is a big question. The rumors are that a publisher will be able to collect and retarget only about 20%-30% of previously cookied users on their sites. Also, Google recently announced that they will not be supporting hashed email solutions like the UID 2.0. However, there is a workaround to this by leveraging PPIDs (Publisher Provided Identifiers). Google is building an encrypted signal that publishers could pass in their bid request. Potentially the identifier could be passed through the encrypted signal (unless Google finds some way to block that too!)
Publisher 1st Party Data
For larger scale publishers Google is resurrecting the PPID with added features. With this option publishers will be able to offer their 1st party data programmatically to buyers.
The way the PPID will work is the publisher will create a unique ID per logged in user. They will put that ID into Google Ads Manager and choose which buyers will be have access to it. Google will then hash that ID and pass it to the buyer along with other potential signals (e.g. contextual signals). This way a buyer will be able to identify that for example PPID123 could be a good fit based on the site/content they may have viewed.
In terms of negatives, the solution is still being actively developed so there might be other changes before it is released. Also, for smaller publishers this will be a heavier lift on their side in terms of the technical piece and collecting 1st party logged in data from their users.
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