Amazon sees opportunity amid the demise of third-party cookies

Forget Google for a sec. Amazon could emerge as an unexpected beneficiary from the end of third-party cookies in the Chrome browser.

Once those cookies disappear, Amazon will stand as one of the few and largest platforms where marketers can precisely target and measure their advertising.

It’s a compelling narrative for a media seller, especially one aiming to expand its ads business to boost its overall bottom line. And Amazon is not holding back in exploring this opportunity.

What’s more, it’s become quite commonplace for discussions with Amazon’s ad executives to veer into the territory of third-party cookies (or the lack thereof in the near future).

“Here the ad industry is thinking about cookie depreciation and IP depreciation and more widely the end of third-party addressability at scale and there’s Amazon sitting on the sides with one platform for acquisition and purchase,” said Sam Bloom, head of partner strategy at PMG.

A recent pitch deck underscores this: It highlights Amazon’s “durable solutions” like Amazon Audiences and Modeled Conversions tools, which aren’t reliant on those cookies to measure audiences.

Focusing on measurement like this is smart. Sure, everyone’s freaking out about how no cookies in Chrome will affect targeting, but the real game changer could be how it messes with a marketer’s ability to measure ad effectiveness. Because, let’s face it, there’s no use in advertisers targeting ads if they can’t verify whether those ads actually did what they wanted them to do.

But Amazon isn’t stopping there. It has far bigger plans to thrive during this transitional period.

A critical part of those plans could be its own identifier, supposedly called ID++.

Amazon’s been tinkering with this since 2021, and it’s been talking to publishers and ad tech vendors about it for the past six months. Nothing concrete has emerged from those discussions yet, at least not from the two ad executives who spoke to Digiday.

With that said, it’s still early days. So early, in fact, that Amazon’s still on the hunt for fresh talent to beef up the internal team overseeing the development of the identifier, according to Ad Age.

Needless to say, there isn’t a ton of detail floating around about this identifier just yet. What’s been whispered to ad execs so far suggests it will be something exclusive to Amazon’s ecosystem, accessible to advertisers via Amazon’s DSP and open to publishers through its publisher services division.

Based on these details, it sounds like Amazon’s cooking up something akin to Google’s publisher-provided ID or encrypted signals. They let publishers work with data partners without leaking audiences’ identities or characteristics.

If Amazon successfully rolls out this identifier, it could significantly enhance its ongoing efforts to expand the availability of inventory beyond its own walled garden. Or to put it another way, the identifier would act as a proprietary Amazon connection to publishers’ authenticated inventory.

“Having an Amazon-sponsored ID could really strengthen the off-site component of its ads business,” said Evelyn Mitchell-Wolf, senior analyst for digital advertising and media at eMarketer. “If an advertiser is already advertising on Amazon’s platform and is maybe skeptical about funneling more money into the off-site inventory that Amazon offers through its DSP, having an identifier that is pervasive throughout the ecosystem, could be really valuable to draw more advertisers.”

However this shakes out, the chances are it won’t single-handedly replace third-party cookies. Instead, it will be one piece of the puzzle, part of a range of solutions that advertisers will use to patch up as much of the gap left by those cookies as possible.

Contextual alternatives are going to be part of this discussion, which is why Amazon is also making moves there. Its offering to connect the dots between publishers’ first-party contextual data and its own transaction data as a retailer.

This means Amazon can offer advertisers opportunities alongside contextually relevant content on publisher titles. Already, both Dotdash Meredith and Reach plc have jumped on board with this partnership.

It’s clear Amazon’s playing the same game as everyone else, betting that without third-party cookies, the future of advertising on the open web looks bleak. So it’s hustling to snag the parts that still hold promise.

“The end of third-party cookies will help those who have the most logged in data,” said Rob Webster, global vp of strategy at digital marketing consultancy CvE. “Amazon stands to be a big winner, with a high logged in user base across its e-commerce platform as well as its streaming service. It also has the infrastructure and clean room-type capabilities to be a leading identity system.”

But let’s be honest — contextual targeting, measurement tools, and identifiers will only get them so far. Amazon must dig deeper, operating at an infrastructure level if it wants to ride out this rough patch and secure a solid slice of the market. After all, its ads business still trails Meta and Google by some margin. For example, this year, eMarketer predicts Amazon’s ad revenue will reach $58.5 billion, while Meta is set to make $98 billion and Google a whopping $189.1 billion.

Given this gap, it’s no surprise to see Amazon taking its plan to the cloud.

Now, more than ever, there’s a need for data flexibility and the tech that CMOs need to support it all. And guess what? Cloud computing does just that — and Amazon happens to be the largest provider of those services in the world.

But with Azure and Google ramping up their efforts, Amazon’s share is naturally shrinking. Winning over advertisers and publishers won’t completely solve this issue, but it sure makes it a bit easier to handle.

There’s a lot to this plan, but ultimately it boils down to this: Marketers have to make some tough calls about how much customer data they’re collecting. Then, they have to pick a handful of partners to share that data with in a privacy-compliant way. Think retailers, publishers or ad tech vendors.

This way, both parties can leverage their first-party data to reach more people — though it might be through lookalike audiences, given the privacy concerns.

“Having an identifier and a clean room solution powered by Amazon’s cloud business could be a powerful way to close the measurement gap for advertisers that are not selling on Amazon’s platform,” said Mitchell-Wolf. “It could bring a new client base close into the Amazon ecosystem.”

But here’s the thing: It’s still early days for this aspect of Amazon’s pitch to really strike a chord with marketers on a large scale. Not many of them are actively hunting for alternatives to third-party cookies just yet. And it’s probably going to stay that way until the cookies are actually gone or there’s a clearer timeline for it to happen. Turns out, most marketers aren’t too keen on facing a cookie-less world in Chrome until they absolutely have to.

Yet, eventually, the time will come when they’re ready to make the shift. And when that moment arrives, Amazon will be right there in the mix, ready to capitalize on the opportunity. Not that it will need to do much to stoke interest, given the buzz from CMOs and agency execs already.

“Amazon is the most powerful retail media platform there is because of what you can do with the data,” said Catherine Lautier, Danone’s global head of media and brand communications. “For us, it’s almost the simplest place to invest.”

And this sentiment isn’t unique to Danone.

Some of the advertisers behind digital ad agency Tinuiti are already gearing up for this shift.

Elizabeth Marsten, Tinuiti’s vp of commerce strategic services, elaborated on their preparations: “The average brand, at least the DTC ones we’re working with, is probably ready or getting ready [for cookie deprecation in Chrome]. It’s something to be taken advantage of — at least in the short term while things even out.”

However, Amazon won’t have it all their own way. There are plenty of other companies vying to remain relevant and effective in the post-cookie era, especially in the realm of curating the best parts of the open web.

As James Leaver, CEO of supply-side ad tech firm Multilocal, said, “Curation is about finding the right audience for an advertiser’s campaign, amalgamating multiple data and supply sources, overlaying audience data and targeting parameters to curate purpose-built, personalized publisher PMP deals, at scale, that can be activated in any DSP. It’s a powerful tool that I believe will have a big part to play in digital advertising’s cookie-less future.”

Also published in: Digiday