In this episode of the Website Investing podcast, Avi talks to Eric Hochberger, co-founder of Mediavine, about the development of third-party cookies and how this completely changed display advertising.
They also discuss the efforts of several browsers - like Google Chrome - to remove these cookies to better protect individual privacy.
What does this mean for advertisers who have relied on them for years?
📝 Show Summary & Insights
Before the advent of third-party cookies, advertisers had to buy an ad slot on a webpage, in real time. To do this, they needed to know who they were bidding on.
With third-party cookies, this process was eliminated.
A third-party cookie is essentially a way to store things in a browser. It allows you to stay logged in to a website, even though you’re on another one. It also allows websites to track which websites you’ve been to.
Display advertising has been tremendously shaped by third-party cookies, as advertisers are able to hyper-target their audience, giving them better results than ever before.
In recent years, advertisers have been willing to spend more money on display advertising due to the great results these cookies provided.
Today, we see consumers and companies working to better protect individual privacy by removing third-party cookies.
Several browsers, like Safari and Firefox, have already removed them. Google Chrome, has yet to do so.
The Privacy Sandbox & First-Party Data
According to a Google study, this move could drop ad rates by 60%. This now puts pressure on the advertising industry to change their behavior and look for alternatives.
Eric believes that there are two prongs to solve this: the privacy sandbox and first-party data.
The privacy sandbox is an initiative to create an industry-wide standard for all browsers, for a privacy-centric way to track anonymous segments of users. Individuals would then control which data they allow to be tracked.
On the other hand, first-party data involves data owned by the publisher, who obtains users’ data from logged-in traffic or from subscribers. Email addresses, phone numbers or similar data are safely rehashed into anonymous data. This data is then handed off to advertisers to use for audience targeting. This gives more exact targeting and better results too.
We can’t predict what will happen a year from now. So much could change in the meantime.
Ad rates may drop less than expected, and other alternatives may come up to address this shift.
Eric and Mediavine are working on Grow.me which offers a set of tools to help publishers get more users to log into their websites. This allows publishers to collect more first-party data in the long run.
Grow.me is currently available in beta for Mediavine publishers. Those publishers just need to opt in and enable it. It will be available outside of Mediavine in the future.
When someone is purchasing a site and applying to Mediavine, a background check and vetting take place to verify that the applicant isn’t shady, and to ensure that Mediavine will have a good relationship with them.
What did you think?
Did you enjoy this episode or do you have a question?
Please leave a comment to let us know.