Cookie Deprecation: Are We Really Facing the Final Farewell?
6 mins read

Cookie Deprecation: Are We Really Facing the Final Farewell?

Current market consensus is that cookies will likely go away… eventually. Despite four years of discussion about the “imminent death” of these third-party identifiers, news of their demise has been greatly exaggerated and will occur gradually, probably extending well into 2025. However, there may be a chance that their end might not consist of complete annihilation but include some accommodation to appeal to regulators.

In January, Google’s Chrome turned off cookies on 1% of traffic coming through the browser, and the results are now proving significant. (Chrome represents more than 60% of all browser market share.) Some publishers reported a 30% loss in monetization from users whose cookies were blocked. However, this is not as sizeable as Apple’s Safari current statistics with publisher losses greater than sixty percent.

A COMMENTARY by Manuel Reyes, CEO of Cortex Media.

This cookie shutdown process will now pause as regulators closely monitor Google. The U.K.’s Competition and Markets Authority (CMA) is overseeing the impact of Google’s alternative Privacy Sandbox. The CMA wants to ensure that Google adheres to new privacy measures but does not unfairly impede or influence the Internet economy. A chief concern is that as platforms restrict data, they could become the only ones with direct consumer relationships. Advertisers would then have to rely on them to reach consumers and trust their advertising metrics, especially if there is no independent access to ad data.

Following the CMA findings, cookie deprecation is expected to resume in some form. If the shutdown does not reach 100% by September, it will likely pause again for the holiday season—bringing us to 2025. There is a chance that the CMA could rule that cookies, in some form, will have to be maintained to keep the market competitive.

So, what does this mean?

Certainly, the future will change for Internet advertising as the end of the cookie means that brands must find new ways to connect with customers online. This fundamentally restructures how and where advertisers buy media, how publishers sell ads in real-time auctions, and how anyone can measure any key metrics.

Specifically, we expect CPMs to increase and for frequency implementation to be a challenge. It will be more expensive to find the correct audience. Smaller media operations will be at a disadvantage if they do not have the right identifiers or qualifiers. And without cookies, frequency caps will be more difficult to implement. Unifying diverse identifiers will be key.

Retail media is booming and will benefit from a cookie-less world. From retailers like Walmart and Target to companies like Instacart, advertisers will see increased value in verifiable and addressable audiences. Transactional first-party data will provide a competitive advantage, especially in a full-funnel environment.

A range of solutions will replace cookies—from first-party data to new ID systems to contextual advertising that uses web page signals rather than a user’s personal information. These varied data solutions will expand rapidly for some time and then ultimately contract after inevitable consolidation and market exits. 

Some unexpected players will be part of building solutions due to the wealth of their data. Companies like Experian and Transunion will be dominant players, while in the U.K., some advertisers are already experimenting with partners like YouGov as they look to find audience cohorts based on demographics, psychographics, and media behavior.

Expect more authenticated IDs and consent management, especially permissions compliant with regulations like GDPR and CCPA. Plus, we’ll see more device or browser fingerprinting and protected audiences. Internet users will confront more paywalls and sign-in agreements as publisher data is helping to fuel the new ad ID ecosystem as cookie replacements. There will be real economic benefits for publishers with the scale and resources to impose their solutions.

Finally, there cannot be a conversation about cookie deprecation without mentioning Google’s Privacy Sandbox. Earlier this month, IAB Tech Lab posted that the Privacy Sandbox will lead to a “radical shift in programmatic auctions” in that it will affect “how advertisers manage frequency capping, which is how often they serve an ad to the same user; how they create audience segments for targeting; and video advertising.”

The Privacy Sandbox will require new approaches. Among the concerns:

  • The selection of DSP for cookie-less browsers will be critical, so separate DSP platforms must be built. 
  • Solutions must be created so diverse identifiers can be stitched together or matched.
  • Large platforms will win as more development, data, and resources are needed. This, of course, benefits Google.
  • Sandbox only offers effective retargeting and contextual advertising solutions currently. It is not a one-stop solution. There are no ad placement guarantees or budget and billing management. Plus, there will be reporting integration issues, as cited by IAB Tech Lab.

What should advertisers expect?

  • Higher CPMs.
  • Higher operational costs due to additional staffing and increases in tech costs.
  • Higher investment in retail media
  • Higher salaries for digital and analytics staff in a more competitive labor market.
  • Difficulties implementing frequency caps.
  • More authenticated IDs and protected audiences.
  • An expanded stable of tech and data solutions to test that will later contract as less competitive players disappear.
  • More market concentration benefiting large players.

The bottom line?

Cookie deprecation means higher media and operational costs for advertisers, including increased staffing and analytics resources. Plus, advertisers will be in continual testing mode for the foreseeable future as they explore an entire suite of new tools to replace the targeting, addressability, and personalization, as well as reach and frequency capping that the cookie provided. From the Privacy Sandbox to first-party data to new ad ID systems to contextual advertising to new data players, everyone will need to be in continual testing mode.

Manuel Reyes is the founder of Cortex Media. Prior to founding his company in 2001, Manuel Reyes served as Chief Executive of Starcom Latin America. He also led MediaVest’s Latin America and US Hispanic divisions. Over the last 25 years, Manuel has held management positions at several agencies, advertisers, and media companies.

Cortex Media has been providing media auditing and consulting services to top-tier advertisers in North America, Latin America, Europe and Asia since 2001