With the announcement of the end of “third-party cookies” in Chrome next year, the business models of digital advertising are undergoing significant upheavals. In this context, CNIL commissioned an economic study to understand the possible consequences of this change and presents its main conclusions.
The Role of Digital Advertising in the Future
Digital advertising is set to be a major financier of French media, with a recent Arcom study predicting it will account for 65% of the advertising market by 2030. However, the market is facing major disruptions such as the deployment of Apple’s App Tracking Transparency (ATT) in iOS, the planned end of third-party cookies in Chrome by early 2025, and the rise of “consent or pay” business models.
The CNIL Study: Key Questions
The study, conducted by Christelle Aubert-Hassouni and Patrick Waelbroeck from Télécom Paris, sought to address key questions about the future of advertising business models and their implications for data privacy. The study involved 25 interviews with advertisers, media agencies, regulators, and digital advertising specialists.
The main focus was to understand the market, evaluate the privacy impact of new business models, and explore potential rebalances in the advertising value chain. The study asked: Will the changes improve online privacy for users? Will they benefit publishers?
The Role of Third-Party Cookies
The study’s first finding is the limited effectiveness of targeted advertising based on third-party cookies. Despite this, advertisers prefer this model. The absence of third-party cookies could lead to a decrease in auction value and consequently a loss of value for publishers.
Regulatory and Market Dynamics
The introduction of the GDPR did not reduce advertising tracking significantly. The major disruptions have come from private sector actions, like Apple’s ATT and Google’s plan to end third-party cookies. The removal of third-party cookies in Chrome will lead to significant competitive and organizational changes, with economic insecurity stemming more from the actions of large players than from regulatory uncertainty.
Seven Advertising Solutions
The researchers identified seven types of advertising solutions in anticipation of the end of third-party cookies:
- Privacy Sandbox: Allows user targeting by cohort and interest based on browsing data.
- Substitute Identifiers: Deterministic or probabilistic identifiers.
- Contextual Targeting: Uses keywords and natural language processing techniques.
- Cohort Targeting: Creates audience segments.
- Retail Media: Advertising spaces offered by distributors.
- First-Party Data Environments: Uses proprietary user data.
- Paywall Trackers: Paid business models generating additional revenue.
Each model is analyzed based on technical integration, user acceptability, advertiser needs, privacy merits, and economic sustainability.
Emerging Trends and Competitive Dynamics
The study highlights two main trends:
- Evolution favors players with significant proprietary data, such as distributors and closed environments.
- Open Internet players will need multiple complementary solutions, leading to technical complexity and interoperability challenges.
The evolution also poses significant competitive challenges. Large platforms define privacy as banning tracking outside their ecosystems, benefit from strong vertical integration, and face interoperability issues with multiple devices.
New Actors and Business Models
New entrants like Internet service providers are emerging, and value will be captured by a wider range of solutions. The researchers do not foresee the end of the open Internet, but increased data-sharing constraints outside closed environments.
Implications for Data Privacy and Market Dynamics
The study concludes that large publishers will be in a better position than smaller ones, who will need to cooperate or merge to reach critical mass and address interoperability issues.
CNIL’s cooperation with the Competition Authority is crucial for monitoring market changes, identifying privacy and competition risks, and developing regulatory synergies. Their joint approach was published in a December 2023 declaration.
Renewed Role of Data
The upcoming changes will not significantly reduce tracking but will renew the role of personal data through new types of data, sharing channels, and synchronization methods. The CNIL will closely monitor compliance with these evolutions, particularly the use of purchase data for advertising purposes.
Market Skepticism Towards “No-Consent” Solutions
The researchers note skepticism towards “no-consent” solutions, which may still involve personal data processing and are less favored by advertisers. These solutions require strong regulatory support to become viable alternatives.
Uncertain Market Choices
The market has not yet settled on clear choices, with multiple emerging solutions still in testing phases. The recent delay in ending third-party cookies in Chrome from July 2024 to January 2025 adds to this uncertainty.
Economic Approach to Reduce Uncertainty
In conclusion, the study shows that current uncertainties are driven by the economic strategies of major digital players and regulatory changes. The consent rule is well-integrated, and the market is exploring various competitive solutions. The CNIL’s plan of action shows that user refusal rates for targeted advertising have stabilized below 40%.
The study provides valuable insights for CNIL’s regulation of targeted advertising, demonstrating its commitment to engaging with market actors to develop appropriate regulatory tools.