The Financial Impact of Third-Party Cookie Depreciation

In an earlier post, we write about the transition away from third-party cookies and into new secure ways of generating data for marketing purposes. However, it’s important for us to highlight the true financial impact of these changes, and why it’s critical for companies to start their transition early. Martech companies who delay their own phasing out of third-party cookies will pay the price and potentially be left behind for good.

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In 2020, both Firefox and Safari stopped supporting third-party cookies altogether. With a combined 20-25% usage share, this meant that cookie-based data generators were only running at 75% capacity. For big brands spending millions on online advertising, this is a major financial loss that only a few were able to recover from.

Now, Chrome is planning a phase-out of third-party cookies by 2025, which eliminates another 60% of the usage market. Companies still reliant on third-party cookies after this transition will be wasting 80% or more of their marketing dollars with such limited capability of third-party cookie technology.

Recent reports estimate that this transition could result in a nearly $10 billion revenue loss in martech and advertising industries as ad personalization options begin to decrease. Without an alternative by 2022, this could result in a 50% or more drop in revenue for some of the biggest martech companies in the U.S. and worldwide.

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Why will revenues decrease?

$10 billion seems like an unimaginable number for revenue loss within a few years. However, there are multiple factors that make this transition away from third-party cookie usage an industry-changing event:

  • Brands will begin investing most of their online marketing budget into sites with their own first-party cookie systems, such as Facebook, Amazon, YouTube, and other media companies that can create their own advertising options.
  • Cost-per-click and cost-per-action campaigns will become more popular as ad targeting becomes more difficult. These models are much less profitable for marketers but are more compliant with privacy-first marketing principles.
  • The potential for traffic fraud and decreasing efficacy of marketing analytics will make advertisers less trustful in their analytics programs until new systems are constructed without the use of third-party cookies.
  • Advertising on Android mobile devices will increase as these programs have not been limited to third-party cookies yet.

What Can We Do About It?

The only solution to change is adaptation. If martech companies don't want to be caught in the crossfire as third-party cookies become obsolete, they need to invest in sustainable and secure programs that allow for tracking without compromising user data. Confection is part of the solution to provide a data generator that is good for people and marketers alike.

Our solution eliminates the need for cookies by providing an ecosystem for tracking that doesn't compromise user data privacy. Our solution is compliant with international privacy-first laws, which means it is forward-thinking with the inevitable privacy-first world.

If you'd like to learn more about how Confection can help you prepare for a privacy-first future, schedule a demo by clicking the button below.

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Confection collects, stores, and distributes data in a way that's unaffected by client-side disruptions involving cookies, cross-domain scripts, and device IDs. It's also compliant with global privacy laws so it’s good for people too.

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