How Publishers can diminish revenue loss due to deprecation of cookies in 2022
And what can you do to make sure your revenue flow stays steady post deprecation
The digital advertising sector has faced a respectable chunk of challenges since 2021, ranging from data privacy to operational changes brought on by COVID. The foreboding deprecation of third-party cookies by Google seemed to be another challenge that loomed over everyone's business, with uncertainty and doubts painted all over the wall.
However, Google's announcement last year that the cookie deprecation will be pushed to the end of 2023 gives publishers some breathing space and provides them with the ability to prepare (phew!).
I spent a day with our ad ops and monetization experts here at Vidazoo to understand what publishers and advertisers should look forward to and the steps they can take to minimize the effects of cookie eradication.
McKinsey & Company regarded cookie deprecation as one of the most profound and abrupt shifts in the history of the internet. Their research suggests that publishers risk losing $10 billion in revenue due to reduced targeting capabilities. Another study by Lotame shows 33% of publishers expect their programmatic revenue stream to shrink considerably following the deprecation. This will directly affect the digital publishing economy, as 40% of publishers believe this loss in revenue will result in the need to minimize their workforce.
On Ground Reality
Since both sides of the advertising ecosystem rely on third-party cookies for better performance, there is a unified effort by ad tech companies like LiveRamp, The Trade Desk, ID5, and Perion Network, along with IAB, Prebid, and Advertising ID Consortium, to create user targeting solutions.
User identification will remain a crucial element of the digital ecosystem for years to come and could prove to be the missing link in maintaining a smooth-running revenue stream.
I want to highlight that it will be up to publishers and advertisers to experiment and ensure they choose practical tools at the end of the day.
We know that programmatic spending is constantly rising, and a vast majority of US advertisers currently rely on first-party data in their ad targeting. However, the publishers that rely heavily on third-party data are at risk and will eventually need to decide whether to create a paywall or request audience first-party data in exchange for quality content.
But what about advertisers
In the short run, the expectation is that advertisers will rely on social networks and other walled gardens to effectively target their audience, given their broad reach and deep knowledge of consumers. However, in the long run, advertisers will rely on their first-party data and strive to run direct campaigns to enjoy better targeting capabilities and achieve their KPIs.
What does it mean for 2022
The deprecation of third-party cookies will be an exciting change for the digital advertising sector. It will affect both ends of the ecosystem and create room for innovative solutions that may lay the foundation for the future of programmatic advertising.
"Although the timeline has been pushed, players in the sector shouldn't just lay low and wait for it to happen. Instead, we encourage publishers and advertisers to consult with their partners and identify solutions that can fulfill identification needs, improve inter-connectivity, and protect user privacy.", says Maxim Fainshtein, Vidazoo's VP Product.
With a range of exciting products being developed to navigate a cookie-less web, I can't wait to see how the "new internet" affects the digital advertising sector and dive into these unique solutions myself!