Ad Monetization in a Cookieless World

I have been asked several questions around ThirdParty Cookies and wrote few blogs on AppLixir Blog and some guest blogs. This is a continuation of a guest post we made few months back on WinBuzzer – Optimizing Ad Monetization for a Cookieless World.

Third-party cookies have raised significant privacy concerns due to their ability to track users without their knowledge or consent. As a result, most modern web browsers now block third-party cookies by default or provide options to block them. Major browser vendors like Apple, Mozilla, and Google have announced plans to phase out support for third-party cookies entirely in favor of more privacy-preserving alternatives for targeted advertising.

So, what does this mean to publishers and how can publishers prepare for the revenue impact?

The Revenue Impact

The deprecation of third-party cookies is expected to have a significant negative impact on the ad revenue of publishers. Here are the key points regarding the revenue impact on publishers:

1. Loss of Targeted Advertising Capabilities

Without third-party cookies, publishers will lose the ability to effectively target and retarget audiences across the internet for advertising campaigns. This will make it harder for them to monetize their traffic through targeted ads.

Research from McKinsey & Company suggests that publishers risk losing $10 billion in revenue due to reduced personalization and audience targeting capabilities after cookie deprecation.

2. Decline in Programmatic Ad Revenue

According to Lotame’s research, 33% of publishers expect their programmatic revenue stream to shrink considerably following the loss of third-party cookies.

A Google survey found that publishers lose around 52% of their programmatic revenue due to the absence of third-party cookies.

3. Measurement and Attribution Challenges

Publishers will face difficulties in measuring the effectiveness of their ads, especially cross-device conversions and view-through rates, without third-party cookies for tracking.

The inability to track and optimize ad performance could directly impact their return on ad spend (ROAS) and overall revenue.

4. Revenue Risk Projections

A Deloitte study projected that the average revenue risk for companies due to third-party cookie deprecation ranges from $91 million to $203 million per year, with some companies risking upward of $300 million in revenue.

While the exact revenue impact is still uncertain, most publishers acknowledge the significant financial risks posed by the loss of third-party cookies and are actively exploring alternative solutions to mitigate these risks and sustain their ad revenue streams. This brings me to my next section which is ‘how to mitigate the revenue loss’

Strategies on Ad Monetization:

Publishers should prepare for the end of third-party cookies by adopting a multifaceted approach that encompasses the following strategies:

1 – First-Party Data Focus

Shift towards collecting and leveraging first-party data.

In a cookieless future, first-party data becomes invaluable. Encourage users to share personal information by offering valuable content, personalized experiences, or rewards. First-party data is direct information collected from your audience, giving insights into their preferences, behaviors, and demographics.

To effectively collect first-party data:

• Create engaging content that motivates users to sign up or subscribe.
• Offer incentives like exclusive access, discounts, or rewards.
• Use interactive elements such as surveys, quizzes, and polls to gather data.

This data allows for targeted advertising and personalized experiences without relying on third-party cookies.

2 – Privacy-First Solutions

Invest in privacy-first advertising technologies.

Adopt technologies that comply with data protection regulations like GDPR and CCPA. These solutions respect user consent and provide transparency about data usage. Privacy-first solutions build trust with users, which is essential for long-term engagement.

Key actions include:

• Implement consent management platforms (CMPs) to obtain and manage user consent.
• Use privacy-centric ad networks that prioritize user data protection.
• Regularly update privacy policies and ensure they are easily accessible and understandable.

3 – Contextual Advertising

Leverage contextual advertising to serve relevant ads.

Contextual advertising targets ads based on the content of a web page rather than personal data. This method aligns with privacy regulations and does not rely on third-party cookies, making it a viable alternative in a cookieless world.

Steps to implement contextual advertising:

• Analyze your website content to identify key themes and topics.
• Use contextual ad networks that match ads to relevant content on your pages.
• Continuously optimize ad placements by monitoring performance and adjusting strategies.

4 – Universal IDs and Cohorts

Explore universal IDs and cohort-based targeting.

Universal IDs and cohort-based targeting, such as Google’s FLoC (Federated Learning of Cohorts), provide alternatives to third-party cookies. These technologies aim to balance personalization with privacy.

Considerations for using these methods:

• Stay informed about industry developments and emerging standards for universal IDs.
• Experiment with cohort-based targeting to understand its impact on your audience and ad performance.
• Collaborate with ad tech partners to integrate these solutions into your monetization strategy.

5 – Collaborative Data Solutions

Join or form publisher coalitions for data sharing.

Collaborative data solutions involve sharing first-party data with other publishers in a privacy-compliant manner. This collective approach enhances audience insights and strengthens advertising propositions across a network of sites.

To participate effectively:

• Identify potential partners with similar audience profiles and complementary content.
• Establish clear data-sharing agreements that comply with privacy regulations.
• Leverage shared insights to create more effective ad campaigns and improve targeting.

6 – Direct Partnerships with Advertisers

Forge direct relationships with advertisers.

By building direct partnerships with advertisers, you can leverage your first-party data to offer comprehensive advertising packages. These packages can include data insights, targeted ad placements, and exclusive deals.

Actions to take:

• Develop a clear value proposition highlighting the benefits of direct partnerships.
• Create tailored advertising packages that cater to the specific needs of advertisers.
• Maintain strong relationships through regular communication and performance reporting.

7 – Adopt Privacy Sandbox Initiatives

Participate in Privacy Sandbox initiatives.

The Privacy Sandbox by Google aims to create open standards for web functionalities that respect privacy, including advertising. Engaging with these initiatives can help you stay ahead of industry changes and adopt new technologies that support privacy-centric advertising.

Steps to get involved:

• Follow updates and participate in testing new Privacy Sandbox proposals.
• Provide feedback to help shape the development of these standards.
• Integrate Privacy Sandbox solutions into your ad monetization strategy as they become available.

8 – Educate and Communicate

Educate your audience about privacy measures.

Transparent communication with your audience about privacy practices and the value exchange of their data fosters trust. Educate users on the importance of supporting content providers through advertising and how their data is used responsibly.

Effective communication strategies:

• Create informative content explaining your privacy policies and data practices.
• Use clear and concise language to ensure users understand the benefits of sharing their data.
• Regularly update users on any changes to your privacy practices or data usage policies.

By focusing on these strategies, publishers can navigate the challenges posed by the end of third-party cookies, safeguard user privacy, and continue to deliver value to advertisers. Feel free to reach out to us at AppLixir (info@applixir.com) on how to navigate these changes while still generating revenue through Rewarded Video Ads!