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The end of the third-party cookie may have been delayed, but publishers and brands must continue to experiment with compliant, sustainable approaches to ad targeting and measurement. With privacy now the focal point of the digital ecosystem, harnessing alternative advertising solutions is important for 75% of industry players.
Despite this, 40% of businesses don’t consider themselves fully prepared for the change.
As buyers and sellers prepare, it is important to have a real-time understanding of the impact that cookie and ID deprecation will have. The Identity Indicator, a report from Smart, delivers the latest insights into emerging trends. From current browser usage, to user consent, the report offers a valuable overview of today’s landscape as the ecosystem progresses toward its privacy-centric future.
Cookie-enabled browsers still dominate
While Safari and Firefox have implemented policies that limit third-party cookies by default, browsers such as Internet Explorer, Microsoft Edge, Opera, and Google Chrome still accept them – for now. As a result, the latter group of browsers provide the lion’s share of ad inventory across desktop and mobile. In the UK, this amounts to 87% of desktop auctions and 80% of mobile auctions coming from browsers that support third-party cookies.
Countries where the GDPR is in effect see higher usage of browsers, on both desktop and mobile, that restrict third-party cookies. In particular, Germany’s extensive history of data protection – stemming from its world-first Data Protection Act in 1970 – has now enabled it to be a leader in cookieless browser usage. During Q2 2021, a third (31%) of its ecosystem’s desktop ad inventory came from browsers that limit third-party cookies. Regarding the usage of cookieless mobile browsers, only the US (28%) and UK (20%) surpasses Germany (18%), most likely due to the significant proportion of iPhone users.
Interestingly, however, most desktop and mobile traffic still comes from browsers accepting cookies. This quantifies how big an impact Google Chrome, which owns almost half (49.4%) of the browser market share across all devices, will have when it pulls the plug on third-party cookies. Due to these competitive concerns, the UK’s Competition and Markets Authority (CMA) will have an oversight on Google’s removal of third-party cookies to safeguard a fair digital advertising market.
The UK market has a high proportion of alternative IDs
With Google Chrome’s confirmation that it won’t use alternative identifiers in its products, the programmatic market will likely experience a considerable dip in cross-domain user tracking and ad targeting capabilities. Broader targeting methods will therefore take on a bigger role in the ecosystem, but what’s the current state of ID usage in auctions?
For the UK, half (50%) of auctions do not have a cookie, mobile or other user ID sent in the bid request. Additionally, 36% of UK auctions include an alternative ID, following the lead of the US and Germany, where 64% and 37% of auctions use alternative identifiers respectively.
Achieving precision and reach is a priority for the industry, but the growing restrictions around user data will continue to impact the effectiveness of alternative ID sharing. Solutions grounded in first-party data are also receiving attention from ad buyers, as well as content-driven targeting and direct deals with publishers. The key challenge with first-party IDs, however, is gaining user consent. Many first-party solutions depend on personally identifiable information, such as log-in data, but users’ reluctance to share this information for advertising purposes will minimize the scale of first-party IDs.
The majority of auctions require user consent
In the UK, 5% of auctions are sent without positive consent from the end-user. Publishers especially are looking to maximize the value exchange for consenting users, as they are uniquely placed to educate audiences on how advertising supports free, quality content. This approach has its limits, however. Across Europe, consent rates vary between 50% and 80%, leaving a significant proportion of users opted out.
But is advertising undermined in the absence of user consent? In France, a quarter (25%) of auctions are conducted without positive user consent for using personal data, which is higher than other countries that fall under the GDPR. This percentage has risen since the CNIL’s announcement in March 2021, which stated the use of cookies will continue to be a priority control theme for the year ahead.
There are clearly avenues for serving ads to audiences without needing to leverage user data. For example, advanced contextual targeting can utilize in-depth semantic analysis to ensure ads align with online content. Not only does this method maintain advertising efficiency, but it also optimizes ad relevance while preserving user privacy.
Given the rising pressure to uphold data privacy rights, industry players need to proactively adapt their ad infrastructure. At present, there is still a reliance on cookie-enabled browsers and user IDs to conduct auctions – but to thrive in the post-cookie ecosystem, buyers and sellers need to get ahead of the curve. By onboarding and optimizing alternative advertising solutions, they will be in a strong position to sustain revenue no matter how privacy regulations evolve in the future.
Pierce Cook-Anderson, Country Manager, Northern Europe, Smart
About: Smart is a leading independent ad tech platform built to serve the interests of both buyers and publishers. Smart works directly with hundreds of buyers and more than 1,000 publishers worldwide including Groupe Marie Claire, TracFone, Le Figaro, Leboncoin, Altice Media Publicité, and IMGUR to deliver display, video, native, and rich-media ads to over 50,000 sites and apps. The company operates 12 offices worldwide and leads the charge in building a transparent ecosystem based on quality.
