Why publishers are ready to end the high cost of third-party cookies and data leakage

While publishers have been preparing for the deprecation of third-party cookies for years, many continue to rely on them, even as they test alternatives, experiment with their own first-party data offerings and see continued data leakage — which could be costing them revenue. 

Data leakage can occur when users traverse the web, leaving a trail of demographic information, purchase history, location data, content consumption history and more signals across the websites they visit. Third-party cookies make data leakage possible by enabling parties who don’t have a direct relationship with the user to build audience segments or misappropriate targeting data that the website owner may not have agreed to or known about. This not only negatively impacts user privacy but also harms publishers by allowing ad tech to reuse this data elsewhere without compensating the publisher at all.

The problem is widespread. In a new Digiday and Google Privacy Sandbox survey of 65 publishers, 94% of respondents reported that data leakage (unauthorized disclosure of first-party data on a third-party site) is a significant concern, with 38% saying it is “very significant” and more than half (56%) calling it a “somewhat significant” concern. 

“Publishers are keenly aware of the trade-offs that come with today’s digital advertising ecosystem,” said Joey Trotz, director of ecosystem engagement at Google Privacy Sandbox. “By investing in privacy-preserving advertising solutions, we’re taking steps to make the web fundamentally more private for everyone, and in parallel, giving publishers a new level of control over their data.”

For publishers, the widespread, unauthorized disclosure of first-party data on third-party sites creates costly financial, reputational and operational challenges.

Data leakage poses a risk to publisher revenue and reputation

Although publishers and advertisers benefit from the personalization and targeted advertising that cross-site identifiers have enabled for years, continued reliance on third-party cookies impacts not only user privacy and trust but also publishers’ bottom lines.

Among publishers, data leakage and ad revenue are intrinsically linked. More than three-quarters (76%) of respondents in the Digiday-Google survey listed “loss of ad revenue” resulting from data leakage as a top risk to their business. This is followed by damage to user trust (53%), damage to reputation (44%) and regulatory actions (42%). 

When asked to estimate the revenue opportunity of eliminating data leakage, including by eliminating the third-party cookie, 56% of publishers estimate they would see at least a 21% increase in revenue, with 9% estimating an increase of 41–60%. 

Third-party cookies have been a significant contributor to data leakage, and their deprecation will allow publishers to protect user privacy while encouraging them to adopt new and innovative strategies. 

In light of these benefits, the industry might expect to see publishers working quickly to make changes. Only some are, however. In the Digiday-Google survey, only 9% of publishers have a complete plan for the end of third-party cookies. Most publishers (73%) have a partial plan, while 11% have yet to start implementing a plan at all, and time is running out for the third-party cookie.  

In the meantime, publishers are taking steps to keep their audience data from being misused or misappropriated by others for targeting users on other websites — 98% of publishers said protecting their audience data was at least “somewhat important,” with 44% considering it “very important.”

At present, publishers primarily rely on technical and commercial agreements to protect against audience data leakage and misuse. Seventy-seven percent of publishers trust their contracts to prevent third parties from purposely or accidentally misusing audience data and 87% think technical protections against audience data leakage and misuse — for instance, removal of cross-site identifiers — benefit their businesses. 

Looking ahead, 78% of publishers believe removing third-party cookies will make their audience data “more valuable.”

With the removal of third-party cookies, publishers gain additional technical protections against data leakage while finding new paths to audience revenue with first-party data. 

“We believe that the removal of third-party cookies will benefit publishers looking to monetize their audience data. As publishers gain additional technical protections against data leakage, we hope they will be able to more effectively monetize their first-party data,” Trotz said. “We expect that this could create new opportunities for publishers to bring enhanced value to advertiser relationships.”

Sponsored by Google Privacy Sandbox

https://digiday.com/?p=524670

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