We will focus on Google Chrome to discuss 3rd party cookies’ value in online advertising. Because (i) Cookie and privacy policies vary among browsers, and Chrome is the most popular web-browser (91.56% global share, according 6sense’s report) (ii) Google announced their plan in replacing 3rd party cookies in 2025 (iii) The Ad-exchange industry, whose value largely depends on Cookies, accounts for 10% of Google’s revenue.
The Ad-Exchange Industry Structure
Publishers like the NY Times attract readers and sell ad space to third-party ad exchanges, which collect user information through cookies and sell it to advertisers. This ecosystem facilitates targeted advertising and effective ad placements.
Benefits of Third-Party Cookies
- Targeting: Allows behavioral targeting and effective ad management.
- Measurement: Helps in measuring ad effectiveness and cross-site attribution, so as to facilitate bidding.
- Automation and Scale: Supports ad campaign optimization and large-scale deployment.
Advertisers benefit from cookies by reaching targeted consumers more effectively, measuring ad interactions, and leveraging identity-based information to refine ad strategies.
The Privacy Dilemma
Advertisers have a long wish list, where they aspire to increase the value of their ads, but possibly through sacrifice privacy:
- reach large quantities, targeted consumers
- masure basic information necessary for ads: clicks, conversions
- preferably, some more identity-based info: user behavior, identity across sites
- run experiments and automation
The Dilemma: Informativeness erodes privacy but makes ads more valuable. Cookies provides informativeness and can achieve all these tasks.