The advertising industry is notorious for constant re-invention, and this coming year promises to be one of its most dynamic yet. The changes primarily stem from the planned deprecation of third-party cookies on Chrome, which would significantly change the approach marketers and media owners require to deliver personalized and relevant advertising to consumers.
As an industry, we’ve been adjusting to the disappearance of third-party cookies for years. Safari and Firefox phased out third-party cookies in 2017 and 2020 respectively, but Chrome still accounts for 63.5% of browser traffic, meaning cookie deprecation without a meaningful alternative would have even greater impact across the advertising ecosystem. Because this is a crucial discussion topic, I wanted to share the latest updates on proposed industry solutions, including Google’s Privacy Sandbox, as well as an overview of our comprehensive, multi-pronged addressability strategy to future-proof our clients’ advertising performance.
As we continue preparations for Google’s planned 2024 rollout of the Privacy Sandbox, we understand that our clients need flexibility above all else. We remain committed to our addressability ethos, which emphasizes scalability and interoperability of solutions for a more open and unified, and therefore efficient, ecosystem for all stakeholders. We firmly believe that our strategy and tools will empower our clients and our partners alike to navigate the evolving addressability landscape for a sustainable and prosperous future.
Assessing ecosystem impact
Addressability changes without meaningful alternatives impact our entire ecosystem, as all players need to understand consumer behavior across online environments—how we browse, shop, and buy—to deliver personalized advertising. For brands and agencies, it would be more difficult to reach audiences and accurately measure campaigns, resulting in the lack of ability to optimize messaging in environments across publishers, retailer sites, and social platforms, where advertising dollars are having the most impact.
With reduced addressability and attribution, brands and agencies may hesitate to bet on publisher inventory that doesn’t align to their target audiences. This reduced appeal could potentially result in lower yields for publishers and decreased brand investments overall. To adapt, publishers of all types are focusing on their first-party data strategies, enhancing targeting options for non-addressable consumers, and exploring new revenue streams such as offsite retail media.
While retailers have extensive access to first-party data, they will want to continue strengthening their first-party data strategies, especially for scaling both their audience and their monetization growth. Monetization with onsite sponsored and display ads within retailers’ owned sites is protected by addressability changes, but this inventory is not infinite, motivating retailers to explore offsite opportunities. This would help them leverage their data to the fullest and to bring preferred consumers back to their sites by activating commerce data from consumers who can be addressed outside their ecommerce sites. Such activations rely on first-party data, including hashed emails, to be successful.
All these challenges can significantly impact the consumer experience. When advertising lacks personalization, consumers may not find value in brands’ products and publishers’ content. In some cases, it can even result in a negative experience that discourages them from returning to these sites, such as seeing the same ad multiple times due to imprecise management of frequency and sequenced messaging along the shopper journey. This is reminiscent of the end of the prior adtech booms, when we saw a plethora of low-quality ads about teeth whitening, weight reduction, and other services people were not in-market to buy. Not only were these distasteful to internet users but they also brought little value to the publishers, causing a no-win situation.
Industry solutions for addressability
Since Google’s 2020 announcement about their intent to phase out third-party cookies, the industry has introduced an overabundance of addressability solutions. We’ve tested many of these solutions and continue to publish our findings to benefit and strengthen the entire industry. A variety of adtech companies have proposed their own proprietary identifiers as ‘this-for-that’ alternatives to cookies. However, many of these solutions would introduce further fragmentation by optimizing addressability within their organization or platform, limiting scale and interoperability with the broader ecosystem.
As mentioned earlier, the most widely discussed industry solution has been Google’s Privacy Sandbox, a working group initiative to test proposed APIs from Google to maintain addressability on Chrome without third-party cookies. Criteo has collaborated with Google in the Privacy Sandbox over many years and iterations, serving as a bellwether of adtech to ensure proposed solutions maintain advertising performance for our clients and partners.
We’ve been rigorously testing Privacy Sandbox solutions alongside third-party cookies, and in 2024, we expect to see first-hand results of what a world without those cookies could look like as Google plans to disable them for 1% of Chrome users in Q1, allowing for a five-month testing period on fully cookieless traffic thereafter. After completion of the testing, Google will evaluate the results from participating companies, including Criteo, and may proceed with further deprecation, pending approval from the UK’s Competition and Markets Authority (CMA).
As a reminder, in response to an investigation by the CMA into Google’s Privacy Sandbox proposals, Google made written commitments to the CMA that it would not deprecate third-party cookies in Chrome if the Privacy Sandbox did not sufficiently mitigate harm to competition in the entire online advertising ecosystem. In addition, Google has also said those commitments will be honored globally. The CMA has been concerned that if advertising performance is harmed on the open web, digital ad spend may actually become more concentrated with Google, causing harm to the ecosystem and to consumers. Therefore, the Privacy Sandbox will need to achieve a sufficient level of performance in targeting and measurement, or Google will likely face regulatory enforcement. Our goal in working with Google is to help them understand what’s needed and whether the Privacy Sandbox is meeting these requirements and is therefore able to deliver economic performance and privacy together before third-party cookies are removed from Chrome.
Leading up to the 1% deprecation in January, we will continue testing Privacy Sandbox solutions. Due to our extensive reach, spanning 19,000 advertiser clients, including 220 retailers, and thousands of premium brand-safe open internet publishers, our test results will carry statistically significant weight in shaping Google’s proposals, even though only a small percentage of Chrome’s traffic is available for testing.
When I speak with marketers, it’s clear there is a misconception about the Privacy Sandbox being focused only on broad cohorts, or “interest groups” as they are called by the initiative, so it is important to say that we are also testing for individual targeting and measurement. With this in mind, our goal in leveraging the Privacy Sandbox is to deliver the levels of performance that our clients expect for acquisition, retention and retargeting campaigns while helping Google deliver the user privacy that is promised by the Privacy Sandbox. We are focusing on testing three marquee APIs which are now operational in Chrome, including Protected Audience (formerly called FLEDGE), Topics, and Attribution Reporting to enable retargeting, interest-based advertising, and measurement without third-party cookies.
We will continue to work with Google and prepare for the H1 2024 market tests to ensure that whatever they do, their approach continues to maintain the balance between ecosystem health and consumer privacy. And no matter how great the Privacy Sandbox ultimately functions for Chrome users, additional solutions are required to maximize success and address the industry’s holistic addressability needs across all environments.
Ultimately, we are committed to ensuring our clients and partners have flexibility and easy access to the right mix of addressability solutions for sustainable growth over time.
Criteo’s multi-pronged addressability strategy
To ensure future-proofed, addressable advertising for our clients and partners, we’ve developed a multi-pronged strategy to activate personalized and measurable campaigns across open internet publishers, as well as retailers’ sites and social platforms. Aside from our participation in Google’s Privacy Sandbox, another pillar of our strategy is first-party data, such as hashed emails. With the right addressability partner, hashed identifiers are a universal tool to bridge data sets from marketers and media owners across demand and supply without requiring many complex integrations or partnerships, facilitating successful personalization and measurement.
Several of our clients are already seeing significantly improved performance with hashed emails, including a publisher client who generated a 52% increase in revenue when utilizing hashed emails on cookieless Firefox and Safari. A large US publisher partner saw a sequential increase in hashed email bidding, generating an immediate lift of close to 140% in CPMs for Safari browser traffic. This lift contributed to a year-over-year increase of 70% in media spend after enabling hashed emails as a targeting signal for its authenticated, logged-in users. These successes show that marketers and media owners can have confidence in performance continuity when third-party cookies are deprecated.
We are also focused on activating across the rest of the consumer journey outside of the open internet, helping our clients reach consumers in more closed and authenticated environments like retailers’ sites and social platforms. Our extensive partnerships with 220 retailers for retail media help marketers activate and measure campaigns in closed environments in a streamlined way. And our use of contextual signals is extending addressability to content that consumers having affinity for certain products trust to make their brand choices and buying decisions.
Underpinning each of these pillars is our industry leading developments in AI, which evaluate every data point whether a hashed ID is present or not. For instance, our built-in intelligence enables large language models (LLMs) to help predict user interests and anticipate their responses to advertising. By coupling these public models with private data in privacy protecting ways, marketers can achieve better predictive accuracy without compromising consumer privacy—and reduce reliance on disappearing cookie linkages. As a result, brands can craft more personalized messaging than ever before, and explore the potential for more interactive advertising experiences.
Through the unified toolset within our Commerce Media Platform, we can dynamically allocate our clients’ budgets across retail sites, the open internet, and social media to optimize for their campaign goals. The interplay between our solutions enables advertising investments across all environments to optimize for success and support a diverse and thriving ecosystem.
Along with ensuring the delivery of a superior customer experience, our clients and partners can rest assured that each of these solutions prioritizes privacy. From making sure that all first-party data is hashed to eliminate risk of exposing personally identifying information (PII) to operating within the Privacy Sandbox. Criteo has privacy at its core with consented data collection and activating data in our First-Party Media Network across the open internet, the Privacy Sandbox, and closed environments.
2024 will be the year of transition
As we enter 2024, we step into the heart of the very event we’ve been anticipating for over three years. It represents the transition from uncertainty to a clearer understanding, providing the entire ecosystem with a complete picture.
I firmly believe the coming year will foster innovation and collaboration like we’ve never seen before in advertising. The Privacy Sandbox serves as a testament to this spirit, with competitors coming together to forge a stronger and more sustainable future for advertising. We are encouraged by the progress we’ve witnessed and await the next phase of the journey so that we can better help our ecosystem future-proof for the new era of addressable advertising.