Why Blocking Third-Party Cookies Could Boost Paid Search Ads

With Google set to discontinue its support of third-party cookies, the entire online advertising ecosystem is bracing for a period of significant reform.

While most are prepared to develop ways to continue to serve relevant and targeted ads without third-party cookies, the change could see fundamental shifts in where online advertisers spend their money.

According to Charles Sturt University professor in information technology Yeslam Al-Saggaf, Search advertising could see a renaissance of sorts in the post-third-party cookies world.

“Because Google is planning to discontinue supporting third-party cookies, those websites that rely on advertisements will struggle to make an income,” he said.

“So in that sense, they might turn to Google to advertise their services on their behalf.”

Al-Saggaf pointed to recent studies by Google that found revenue for publishers drops by 52 per cent on average when advertising is made less relevant by removing cookies.

“However, it is not clear if this is what Google wants to achieve from discontinuing support for third-party cookies, in an attempt to force web publishers to use the more profitable (for Google) Search ads,” he said.

Google’s recent financial results revealed Search sales rose 15 per cent in 2019, which was slightly below the 22 per cent growth posted the previous year.

Al-Saggaf said he predicts any downward trend in Search to be reversed on the back of blocking third-party cookies.

Similar to Al-Saggaf’s hypothesis on third-party-cookies and Search ads, Criteo CTO Diarmuid Gill has suggested walled gardens such as Google and Facebook stand to benefit in a cookieless ecosystem.

“Another unintended consequence might be that after this transition, more advertisers may turn to walled gardens simply because they think it’s easier to address audiences,” he said in a blog.

“If this happens, prices will rise on those platforms due to the increased demand and will drop elsewhere (as overall budgets are unlikely to increase).”

what the future looks like

For Google, the ‘Privacy Sandbox’ is an integral part of the future online advertising ecosystem.

Announced in August last year, the solution promises to be a way to protect user privacy while still giving advertisers the ability to effectively target.

While this solution is still being developed, Al-Saggaf predicted machine learning and AI to play a significant role in the future of online advertising.

“Machine learning is a gamechanger in this space, it’s becoming very accurate. Third-party cookies or cookies in general may no longer be needed,” he said.

“[Machine learning] enables the extraction of patterns about people’s behaviours and characteristics and their previous purchases from historical data.

“With machine learning targeted advertising, you will now receive ads for products and services that even you don’t know at the time that you desperately need.”

Al-Saggaf also cited the continued rise of mobile as part of the case against cookies.

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