Regardless of how many times Google delays its cookie phase out, publishers need to understand what’s at stake for them in the advertising ecosystem post third-party cookies. Media companies also need to be aware of the various data operations strategies then can experiment with to position themselves for success as first-party data moves to the fore.

ArcSpan Technologies analyzed the extent to which the looming deprecation of third-party cookies in digital advertising requires publishers to revamp their audience data operations in order to maintain and grow their sales results. Through quantifying the expected data monetization disruption that digital media companies face over the coming 12-18 months, we found that there are proactive solutions that offer ways publishers can mitigate material revenue losses.

What’s at stake for media companies

• CPMs on Google Chrome will decrease 42%: Based on the value of programmatic advertising over the past eight months based on the presence of third-party cookies (“3PC”) across browsers.
• Google Chrome 3PC deprecation puts 25% of publisher’s total revenue at risk: The impact of a 42% decrease in Google Chrome CPMs translates to a 25% overall revenue loss for median publishers in the study.

ArcSpan’s study to measure the impact of cookie deprecation

To measure the potential impact of impending third-party cookie deprecation, ArcSpan analyzed data across a number of top-tier and mid-tier publishers. By dissecting publisher revenue according to channel, browser and cookie presence, we were able to identify the portion of revenue most vulnerable to cookie deprecation.

The analysis looked at the revenue distribution between Direct Sold and Programmatic channels, of which Programmatic is expected to experience the most pronounced revenue impact. ArcSpan observed an average distribution of 20% of revenue stemming from Direct Sales, while 80% was sourced through the programmatic channel.

Next, we analyzed the percent of programmatic impressions and revenue in which third party cookies were present. While these impressions comprised 68% of total programmatic impressions, they accounted for 80% of programmatic revenue. Finally, we isolated the revenue attributable to Chrome browsers in which third-party cookies were present.

Among the publishers analyzed, a median of 60% percent of total revenue was associated with programmatic impressions delivered via the Chrome browser where third-party cookies were present. This portion of revenue will thus be the most impacted by CPM decreases in the event that third-party cookie deprecation occurs without viable and scalable alternatives.

The analysis further quantified the potential revenue impact by observing CPM differences based on whether third-party cookies were present or absent. According to our research, impressions lacking third-party cookies cleared at 42% lower CPMs. To summarize, ArcSpan identified a potential scenario in which 60% of publisher revenue could decrease by 42%, netting a 25% decrease in overall revenue.

Revenue risk grows to 35% amongst heaviest programmatic and Chrome-driven publishers

While a potential revenue decrease of 25% represents the median in our research, the range of outcomes can vary greatly across the publisher spectrum. ArcSpan highlighted a quartile of publishers who were most at-risk as a result of cookie deprecation. Publishers in this quartile tend to have greater than 95% of revenue sourced via programmatic, and greater than 85% of programmatic revenue coming from Chrome programmatic impressions with third party cookies. For this quartile of publishers, the total revenue at risk increased from 25% to 35%.

Advertising success without third party cookies

Leading media companies are developing strategies to both prepare for a future without third party cookies and mitigate potential revenue losses under those conditions. These strategies typically take the form of a portfolio management approach and upgrading publishers’ revenue operations tools with a focus on first-party data quality, accuracy and scale.

These options can support both direct and programmatic revenue:

• Develop a first party data strategy: Publishers are creating compelling first-party audience segments by processing and organizing contextual, content consumption, engagement, and offline data signals. Publishers are also investing in collecting first party data from their users by offering on-site engagement tools such as surveys and polls, while more premium publishers have been able to acquire registered and even subscription users. They can then develop differentiated data product offerings to both earn data premiums and grow direct sales.
• Participate in audience curation opportunities: In this scenario, publishers with and without a direct sales team can feed audiences into curated deals that meet the buy-side needs to target consistent audience definitions at scale across multiple publishers. By partnering with the right platforms, publishers can leverage A.I. and machine learning to automate site content and data processing to create scalable audiences with accuracy and consistency.
• Establish an identity framework: Testing different identifiers to determine open auction uplift is critical for publishers. There needs to be a consistent approach to onboard alternative identifiers and measure their incremental impact in programmatic transactions under different scenarios (type of browser, SSP, etc).
• Incorporate first-party data signals in the bid stream: While still evolving offerings like Google PPS and Prebid SDA offer an opportunity to push high quality data signals into the bid request and potentially positively influence bidding behavior.
• Explore dynamic flooring: Publishers can leverage machine learning in conjunction with their proprietary data signals to optimize programmatic auction prices.

These options have different degrees of impact and different levels of effort to implement. But as a portfolio, they will help drive incremental revenue in a changing environment.

Although Google has (repeatedly) delayed the timeline for Chrome third-party cookie deprecation, leading publishers are keenly aware that they cannot become complacent. ArcSpan’s research highlights the revenue at stake in the event publishers are forced to accept the level of CPMs that are associated with cookieless impressions today. Regardless of a publisher’s level of readiness, it is important that they identify tools and platforms that can comprehensively address the portfolio of strategies that will enable them to protect and grow their revenue.