Key Takeaways

• Cookies are small text files stored in web browsers that track user behavior

• First-party cookies are created by the website you're visiting

• Third-party cookies come from external domains and enable cross-site tracking

• The digital advertising industry has relied heavily on third-party cookies

• Browsers are phasing out third-party cookies due to privacy concerns

What Exactly Are Cookies in AdTech?

If you've browsed the internet for more than five minutes, you've probably seen those annoying cookie consent popups. But what are these cookies everyone keeps talking about?

In the simplest terms, cookies are small pieces of data that websites store in your browser. They're not software or programs - just tiny text files with information. Think of them like digital name tags that help websites remember who you are and what you've done.

For publishers and advertisers, cookies are kinda like the foundation of modern digital advertising. They enable everything from basic site functions to sophisticated ad targeting across the entire internet.

The Two Main Types of Cookies

Not all cookies are created equal. There are two main types you should know about:

First-Party Cookies

These cookies are created by the website your visiting right now. They help with basic stuff like:

• Remembering your login info

• Saving language preferences

• Keeping items in your shopping cart

• Tracking how you use that specific website

First-party cookies make websites work better for users. They're generally considered less invasive because they only track your behavior on one specific site. They're also not going anywhere anytime soon.

Third-Party Cookies

These are the controversial ones getting all the attention. Third-party cookies are created by domains other than the one you're currently visiting. Usually they come from ad networks, analytics tools, or social media platforms embedded in the website.

What makes third-party cookies special? They can track you across multiple websites, building a profile of your interests and behaviors across the entire internet. They enable:

• Audience targeting (showing ads based on your interests)

• Retargeting (those shoes follow you everywhere!)

• Frequency capping (limiting how often you see the same ad)

• Attribution (measuring which ads led to conversions)

Why Cookies Matter in AdTech

For years, third-party cookies have been absolutely central to how digital advertising works. According to a study by Epsilon, personalized ads can deliver 5-8 times the ROI on ad spend compared to non-personalized ads. Cookies make that personalization possible.

For publishers, cookie-based advertising has typically meant:

1. Higher ad revenue through better targeting

2. More valuable audience data

3. Improved user experiences with relevant advertising

4. Better performance measurements and optimizations

As Clearcode explains, the entire programmatic advertising ecosystem has been built around the ability to track users across websites.

The Cookie Apocalypse: What's Changing?

The party's ending for third-party cookies. Due to growing privacy concerns and regulations like GDPR and CCPA, browsers are phasing them out:

• Safari and Firefox already block third-party cookies by default

• Google Chrome (with about 65% market share) plans to block them by 2025

• Mobile environments have already limited tracking capabilities

This change fundamentally disrupts the AdTech industry. Nativo provides a good overview of why this matters - virtually every aspect of programmatic advertising relies on these cookies.

Alternatives to Third-Party Cookies

The industry isn't just giving up. Several alternatives are emerging:

First-Party Data Strategies

Publishers are focusing on collecting their own user data directly. This means:

• Getting users to register or log in

• Building direct relationships with audiences

• Creating more engaging content that encourages users to identify themselves

Contextual Advertising

Rather than targeting users based on their behavior across sites, contextual advertising targets based on the content they're currently viewing. If you're reading an article about hiking, you might see ads for hiking boots.

According to Google's privacy guidelines, contextual signals can be highly effective without compromising user privacy.

Federated Learning of Cohorts (FLoC) and Topics API

Google proposed these alternatives as part of its Privacy Sandbox initiative. Instead of individual tracking, these approaches group users with similar interests together. The actual implementation continues to evolve.

What Publishers Should Do Now

If you're a publisher or advertiser, don't panic. Start preparing with these steps:

1. Audit your current cookie usage and understand your dependency

2. Build direct relationships with your audience through engaging content, newsletters, and community features

3. Explore partnerships and first-party data sharing opportunities

4. Test alternative targeting methods like contextual advertising

5. Stay informed about industry developments through resources like IAB's guidelines

The Future Beyond Cookies

The end of third-party cookies doesn't mean the end of digital advertising. The industry always adapts. As industry experts note, we're likely moving toward an advertising ecosystem that balances personalization with privacy in new ways.

For publishers and advertisers willing to evolve, these changes may even create new opportunities to build more transparent, trust-based relationships with users.

This article is part of our "Monetization Minis" series designed to help publishers understand key concepts in digital advertising and monetization.