The Identity Crisis: The Instability of Cookies and the Rise of Privacy Walls

Cookies were a game-changer in the 1990s, enabling a personalized web experience and revolutionizing advertising. But by the early 2000s, cracks in the foundation of cookie-based tracking were beginning to show. The technology, initially designed to improve browsing and enable basic personalization, was stretched to its limits as the internet exploded with e-commerce, social media, and mobile use.

While cookies could track activity on a single browser or device, they fell short in a world where people bounced between multiple devices and platforms. Advertisers needed a more comprehensive way to understand and follow users. The rapid adoption and usage of mobile apps and social media platforms created a new powerhouse based on verified identity. As the platforms commanded the attention of users and dollars from advertisers the platforms ability it created a misaligned incentive between the platforms and the wider digital ecosystem. The users and the data they create by interacting with the platforms in likes, posts, image and video sharing allowed them to hold their data as an asset creating what is called “walled gardens.”

The Rise of Walled Gardens

Social media platforms like Facebook and Twitter, and later Instagram and TikTok, changed the game. These platforms didn’t rely on browser cookies to track users; they owned the data outright. By requiring users to log in, these platforms could monitor activity within their ecosystems and tie it to real-world identities.

Advertisers flocked to these platforms because they offered a treasure trove of first-party data — real names, interests, and social connections — all tied to unique user profiles. What was once an industry reliant on cookie crumbs now had entire cakes to devour.

But this consolidation of data into a few “walled gardens” came with unintended consequences:

• Control Shift: Platforms like Facebook and Google monopolized advertising data, sidelining smaller publishers and eroding the open web.
• Data Siloes: Advertisers could no longer track users across the entire internet but were instead locked into platform-specific ecosystems.
• Privacy Erosion: These platforms pushed the boundaries of user tracking, often without clear consent.

This was the moment when privacy concerns truly began to spiral out of control.

The Privacy Reckoning

By the 2010s, the aggressive data practices of walled gardens and the shortcomings of cookie-based tracking collided in a perfect storm. High-profile scandals like Cambridge Analytica exposed the scale at which user data was harvested and weaponized, not just for ads but for manipulation.

Regulators and consumers took notice. Laws like GDPR (2018) and CCPA (2020) demanded greater transparency and user control over data. Suddenly, the advertising industry’s reliance on cookies and invasive tracking practices was under threat.

At the same time, browsers like Safari and Firefox began blocking third-party cookies, cutting off advertisers’ ability to follow users across the web. Even Google, the largest beneficiary of cookies, announced plans to phase out third-party cookies in Chrome. Meanwhile, Apple’s App Tracking Transparency (ATT) forced apps to ask users for permission to track them — a move that sent shockwaves through the industry.

These developments were more than speed bumps; they were seismic shifts that made it clear: the era of unbridled user tracking was over.

The Consequences for Advertisers

The fallout of this shift was immediate and far-reaching:

• Measurement Gaps: Advertisers could no longer reliably attribute conversions across platforms and devices.
• Fragmented Audiences: Without cookies, it became harder to build unified user profiles across the web.
• Skyrocketing Costs: Walled gardens capitalized on their control, increasing ad prices and locking advertisers into their ecosystems.

While these challenges forced advertisers to adapt, they also created opportunities for innovation. The cracks in the cookie model were clear, but what could possibly replace it.

A bright horizon: Context Over Identity

As cookies faded and privacy walls rose, advertisers began to rethink their approach. The obsession with “who” gave way to a renewed focus on “where” and “when.” This is where contextual advertising started to make a comeback.

Instead of relying on invasive tracking, contextual advertising focuses on matching ads to the content users are consuming. It’s less about the individual and more about the environment. This approach not only respects privacy but also delivers relevance which

The instability of cookies and the dominance of walled gardens forced advertisers to confront a hard truth: the future of advertising isn’t in chasing identities but in understanding context.

What’s Next?

The cookie didn’t crumble overnight. Its decline — and the rise of privacy walls — was decades in the making. While these changes destabilized the advertising ecosystem, they also opened the door for more ethical, privacy-conscious approaches.

In the next article, we’ll explore why advertisers became so enamored with first-party data and how this obsession with ownership created new challenges of its own. Stay tuned for “The Identity Crisis: First-Party Data’s False Promise to Advertisers.”