Marfeel Team 2020-09-30

3 predictions for how much blocking 3rd party cookies will cost publishers

As you probably know, Google Chrome is gradually phasing out support for third-party cookies. Within '2 years' the browser will no longer support third-party cookies at all. But, these cookies are an integral part of the ad ecosystem. 

Cookies allow ad networks to capitalize on user data. The block threatens to destroy the value of targeted ads that publishers currently offer advertisers. But with Safari and Firefox already blocking them, increasing pressure from the network of regulation, and the vast silos of first-party data that Google controls, affecting publishers is not going to stop the block now. 

In order to work out just how much the block of third-party cookies is going to cost publishers, Google and other researchers have run studies to try and accurately predict the outcome. 

What is important to remember is that these projections are for publishers that were 'opted out' of third party tracking. They didn't have any of the alternative solutions for third party cookies. This is the likely outcome for publishers that make no preparation or changes to their ad stack but for publishers that adopt alternative solutions. 

Study # 1: The Google Data

Google: Effect of disabling third-party cookies on publisher revenue

Published August 27, 2019 Authors: Deepak Ravichandran, Principal Engineer, Google Display Ads Nitish Korula, Senior Staff Research Scientist, Google Ad Manager

In August 2019, Google ran a randomized controlled experiment on publishers who use Google Ad Manager to serve ads on their non-Google sites across the web. 

Access to cookies was then disabled for a small proportion of randomly selected users (the treatment group). The users in this group that had cookie access removed only saw non-personalized programmatic ads, such as contextual ads. Over a 96-day period from May to August 2019, the publisher's revenue from this group was compared to a control group that saw personalized ads as they would be normally served. 

For the top 500 global publishers, the average revenue in the treatment group decreased by 52%, the median revenue decline was 64% for publishers.

Looking directly at news publishers, there was an average revenue loss of 62% with a median loss of 60%. Overall, a handful of publishers have a small revenue loss (10%), the majority of publishers have losses of 50% or more, with some losing over 75% of their revenue. 

Headline stat: Average losses of 52%

Study #2: Counting the cost of opting out 

Consumer privacy choice in online advertising: Who opts out and at what cost to the industry? Garrett A. Johnson, Scott K. Shriver & Shaoyin Du ∗ June 19, 2019

One of the issues regarding the blocking of third-party cookies is that users can already opt-out of them. By looking at ad impressions served to these people, this study aims to identify the real-world cost of removing third-party cookies from the entire ad ecosystem by looking at the data from users that opt-out of cookie tracking. 

Somewhat surprisingly, given the reported dislike for online tracking, this report finds that only 0.23% of exchange impressions come from Americans who opt out of online behavioral ads. when data from a single ad exchange was observed for a single week it showed that the revenue from these ‘opt-out’ users was much lower all along the supply chain. 

  • -37.4% for DSPs 
  • -31.0% for the exchange 
  • -44.4% for SSPs 
  • -40.3% for publishers

Headline stat: Publishers saw a reduction in revenue of -40.3%

Study #3: Tracking one publisher in detail 

Online Tracking and Publishers’ Revenues: An Empirical Analysis Veronica Marotta , Vibhanshu Abhishek , and Alessandro Acquisti

This study uses a dataset of millions of advertising transactions completed across multiple websites owned by a single media company. The study found that when a user’s cookie is available, publisher’s revenue increases by only about 4%. 

This amounts to an increase of around $0.00008 per ad. The estimated potential outcome mean for transactions without cookies is $0.93, while the potential outcome means for transactions with cookies is $1.02, a statistically significant difference. With the costs associated with using third-party data, any gains were likely negated by these costs. 

Headline stat: Publisher saw a reduction in revenue of 4%.

Overall, the publisher revenue projections are negative across the board. But, it’s important to remember that these publishers have no alternate systems in place. Whilst the headlines show that the depreciation of third-party cookies would not have a positive impact for publishers, there are some mitigating factors. What’s important to remember is that this is simply a blanket block of third party cookies without an alternative system for monetizing user data. 

Currently, the ecosystem is working on alternative solutions such as identity solutions stored in a first-party cookie, known user data identifiers, such as email addresses and contextual data. Although it will take time to develop these solutions at scale and serve them programmatically, these systems will develop to fill the gap left by third-party cookies. 

But, leading assumptions are that overall programmatic spending will drop as advertisers look to other mediums during the uncertainty. However, publishers that adopt a viable solution in advance should be able to maintain their revenue despite these predictions. In fact, as some publishers that don’t adopt new solutions suffer, there is an opportunity for publishers to capitalize on the block of third party cookies by implementing a more sustainable solution.

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