Google’s Third Party Cookies Changes in the Publisher Industry

The advertising industry has discovered innovative methods to persuade users to purchase products since embracing the digital world. Tracking, in general, has become a more comprehensive term, encompassing various methods ranging from the basics of digital fingerprinting to the recent integration of AI ad placements. The most recent shift in tracking involves the phase-out of Google’s third-party cookies, causing concern among ad-dependent companies, as they fear the potential impact on their primary source of revenue. 

Google's Third Party Cookies

What are Third-Party Cookies? 

Advertisers utilise Third-Party Cookies to optimize ad campaigns, providing the best chance for conversion. These cookies learn consumers’ behavioural patterns, including the websites visited and potential purchase preferences. 

Example 

Let’s take Eric as an example. He browses for a new pair of trainers on a running website but decides not to make the purchase immediately. While Eric is exploring a news site, he encounters an ad featuring the same pair of trainers he had previously browsed. A cookie is placed on the news website, containing data indicating Eric’s prior visit to a different website where he browsed such trainers. Consequently, ads that are relevant or feature the same pair of trainers will be displayed to Eric, increasing the likelihood of conversion. 

Why are They Valuable to Publishers? 

While publishers have diversified their revenue streams, many still consider ad revenue a primary source. The key indicator affected by the phase-out of third-party cookies is CPM, decreasing it by an unknown amount. The more data known about a user, the higher the CPM tends to be, enabling publishers to generate more ad revenue. 

In summary, the significance of third-party cookies for publishers lies in their ability to dictate the value of a website’s advertising. In a chain reaction, third-party cookies impact CPM, ultimately influencing a publisher’s ad revenue. 

What will the Phase-Out Do to Publishers? 

Publishers were already grappling with challenges in this low-spend ad market, as highlighted by numerous top media figures indicating the toughness of 2023. Google’s plans may have potentially hindered the anticipated recovery for ad revenue. 

Google’s alternative approach involves making advertising relevant through the new Google “Topics.” This system gathers data and organizes it into interests from a specific week. However, topics for an individual last only three weeks, after which the data is deleted. 

Applying this to our example, if Eric browses for trainers as before, when he visits a news site, they would understand Eric’s interest in trainers but in a more general sense. It is highly unlikely that Eric would be presented with ads for the same pair of trainers but is likely to see general ads for trainers or apparel, reducing the chance of conversion. 

The consequence of this is a lower CPM, impacting not only publishers but also advertisers. Ad revenue is expected to decline as companies charge less for an impression due to reduced relevancy and lower conversion rates. This decline will significantly affect retailers’ sales, as they might initially perceive getting more value with a lower CPM, but in reality, this is likely to translate to lower conversions. 

Google’s Changes

In Google’s endeavour to revamp its advertising system, it may be prioritizing quantity over quality. While commendable for attempting to enhance privacy through “Topics” and reducing the circulation of personal data. Another likely cause for change is Google’s new stance on ad blockers in 2023. Ad blockers were deemed against Google’s policies, causing many apps in the industry to face challenges.  

Furthermore, Google’s video-sharing platform, YouTube, imposes limitations on the number of videos accessible when an ad blocker is installed, asserting a violation of their terms of service. This shift reflects another layer in Google’s dynamic approach to advertising, emphasizing potential trade-offs between quantity and quality. 

Solutions

Numerous alternative ad tech platforms employ diverse targeting techniques, potentially moving towards offering a higher CPM than Google. It is advisable not only to explore singular options but also to establish an array of ad tech partners, aiding in the evaluation of future ad tech developments. 

Implementing ad revenue recovery strategies can enhance CPM and impressions. Ad blockers impede most data analytics, resulting in a lack of relevant ads being served due to insufficient data. Many ad revenue recovery solutions boast increased impressions by rendering ad blockers ineffective, inadvertently boosting ad revenue through the additional data they gather. 

For further information on an effective ad revenue recovery strategy, please contact info@b2.ai.