The Death of Third-Party Cookies (What Marketers Need to Know)

By | January 14, 2022


The death of the cookie is inevitable. By 2023 marketers will no longer be able to track consumers online using third-party cookies.

Although Apple Safari and Mozilla Firefox blocked third-party tracking cookies several years ago, Google Chrome continued to use them. More importantly, Chrome controls 60% of the global web browser market share. So, not only are cookies going away, but so is a massive source of consumer data for the advertising industry.

The death of the third-party cookie will create more privacy for internet users as they move across the web. But, the change presents a large challenge for marketers who rely on third-party data and programmatic advertising to drive their campaigns.

Before Google cookies go away, marketers must adapt their strategies and find new ways to forge connections with their audience.

Understanding internet cookies

Person with dots on their face to represent internet touch points.

Before defining what exactly a third-party cookie is, it’s important to understand where it exists in the digital ecosystem. In general, cookies are files that collect data about internet users.

For years, web browsers have leveraged cookies to track users and save their personal information. Marketers rely on this information to improve audience segmentation, attribution ******, user experience, messaging, website analytics, and advertising campaigns.

Web browsers use two main types of cookies to collect user information: first-party cookies and third-party cookies.

What are first-party cookies?

Websites use first-party cookies to collect data on their own domain visitors. This information helps website owners understand who their visitors are and how they interact with their site. Marketers use this data to help them better connect with their target audience.

First-party cookies can also save user information for future visits. For example, the Chrome browser can save your username and password and quickly log you in next time you return to a website. Or, it can remember configurations for customizable pages you visit frequently.

First-party cookies also help inform basic website analytics, such as page sessions and user demographics. Once a user leaves the domain, first-party cookies can no longer collect their information.

For users and website owners, first-party cookies can be considered a positive tool — a mechanism that helps consumers have a more efficient and personalized online experience.

The use of third-party cookies, however, has been more controversial.

What are third-party cookies?

Website owners use third-party cookies to track users after they’ve left their site. Third-party cookies work by embedding a file on a user’s computer. This file collects data on the user as they move across the web.

Brand marketers use third-party cookie data to build profiles on their target consumers. They may also use this data to understand what their visitors are looking at on other websites. Ad tech companies also use third-party cookies to communicate and build larger data sets.

How exactly is user decision-making being influenced by cookies?

How do third-party cookies currently benefit brands?

Third-party cookies are the engine that drives the online advertising business model. When a user visits a website and consents to cookies, they can be tracked across the internet. In other words, brands utilize a consumer’s online history to influence them to make a purchase.

Third-party cookies aid brand marketing efforts in several ways, including:

  • Retargeting: Brands use cookies to track users and serve them ads for items or pages they previously viewed.
  • Ad targeting: Using information collected by cookies, brands can serve users specific ads based on their browsing history and individual profile.
  • Cross-site tracking: Third-party cookies can track user touchpoints after they’ve left a website.
  • Social media buttons: Publishers and retail sites use social media login buttons as identifiers to further track user demographics and interests.

Many brands dedicate large amounts of their marketing budgets to these strategies. When third-party cookies go away, the data marketers currently rely on will go with it.

Why are third-party cookies going away?

Privacy invading cameras pointed at people

While valuable to marketers, third-party cookies have raised privacy concerns among internet users regarding their browsing history.

According to the Pew Research Center, 72% of Americans report feeling like advertisers, technology firms, and other companies track most of what they do online. The growing anxiety around online data privacy has prompted big tech companies and lawmakers to take action.

In response to rising privacy concerns, lawmakers have already implemented new privacy regulations. The European Union’s General Data Protection Regulation (GDPR) states users must consent to cookies when they visit a site, typically by a pop-up. These regulations ensure users don’t automatically opt in to browser cookies when they visit.

The California Consumer Privacy Act (CCPA) also protects the personal information of California residents, including information that cookies collect. Under these laws, California residents have the right to reject having their data sold to third parties, the right to request disclosure of data already collected, and the right to request any data collected be deleted.

These trends will only continue as internet users become more knowledgeable about where their information goes. Instead of waiting for the other shoe to drop, Google and other big tech companies decided to control their own destiny.

Google’s 2023 deadline

Google initially announced their third-party cookie phase-out in January 2020, but pushed out the deadline last year. Google’s new plan is to completely get rid of third-party cookies by 2023. The new deadline gives Google and other industry leaders time to plan for the change.

Google’s decision is rooted in privacy protection and web accessibility, the company said in a blog post.

“If digital advertising doesn’t evolve to address the growing concerns people have about their privacy and how their personal identity is being used, we risk the future of the free and open web,” wrote David Temkin, Google’s Director of Product Management, Ads Privacy and Trust.

The delay also gives marketing teams more time to process the news and chart a new course of action. Marketers will have to reallocate their time and money to effectively connect with their audiences.

How will the death of the cookie change the advertising industry?

Person at a computer looking at an advertisement

Marketers are left wondering how they will target the right consumers online without the data provided by third-party cookies. Many believe the loss of these cookies will have a profound impact on the future of digital advertising.

In fact, many individuals in the marketing industry have expressed concern over how they will continue to hit their goals. According to a recent survey by GetApp:

  • 41% of marketers believe the inability to track the right data will be their biggest challenge going forward.
  • 44% of marketers predict a need to increase their spending by 5% to 25% in order to replicate their 2021 goals.

It’s true that digital marketers will be forced to find new ways to target their audiences. This may require a shift in strategies, channel investments, and marketing budgets.

In order to change with the times, the industry will need to reexamine its approach to genuinely connecting with customers. In a cookie-less world, marketers have to come up with fresh strategies to win.

What will replace third-party cookies?

So, what’s next? The good news is: you won’t have to rebuild your marketing strategy from scratch. Google has already announced its own solution — the creation of new technologies that would provide similar user insights.

For example, Google announced an initiative called the Privacy Sandbox as an initial replacement for third-party cookies. The Privacy Sandbox aims to block invasive tracking techniques and replace them with more collaborative initiatives.

Browsers will track consumers in new ways

Google’s Privacy Sandbox proposes that all individual user data remain in the browser, rather than ad agencies and technology companies controlling and selling it. Google claims this shift would support consumer desires to control their privacy, but still allow personalized ads to reach them.

“Some ideas include new approaches to ensure that ads continue to be relevant for users, but user data shared with websites and advertisers would be minimized by anonymously aggregating user information, and keeping much more user information on-device only,” wrote Justin Schuh, Director of Chrome Engineering, in a Google blog post.

Our goal is to create a set of standards that is more consistent with users’ expectations of privacy.

Google also proposed a new technology called the Federated Learning of Cohorts (FLoC). FloC aims to collect user data and organize it into groups rather than build out individual profiles. Google would then share those user profiles with advertising companies. This would allow Google to permit targeted ads while maintaining control over the data.

Critics of Google’s approach say the tech giant is simply finding new ways to infringe on user privacy. Some even claim Google’s approach may lead to discrimination and predatory targeting.

As we get closer to Google’s third-party cookie phase-out, the industry will continue to learn more about these technologies and debate the ethics. For now, brands and advertising agencies will want to consider what their overall strategy looks like with and without Google’s alternatives.

First-party cookies will still be used

Two people holding an iphone

It’s important to note that Google’s decision will not discard all cookies. First-party cookies will still collect data from website visitors. Google has even stated first-party data will become even more important to support the company’s Privacy Sandbox initiative.

“We will continue to support first-party relationships on our ad platforms for partners, in which they have direct connections with their own customers. And we’ll deepen our support for solutions that build on these direct relationships between consumers and the brands and publishers they engage with,” wrote Temkin.

In order to get the most out of first-party data, marketers will have to consider new tactics to connect with users and earn their trust. This might mean thinking beyond e-commerce product page optimization or retargeting items from a user’s shopping cart.

Instead, brands should consider publishing relevant content throughout the conversion funnel to attract the right audience. Not only can marketers retarget users based on their actions, but they can also leverage premium content to collect contact information. For instance, you could offer a webinar or a white paper in exchange for an email and phone number.

Revival of old strategies

What’s old can be new again — and now is the time to reinvest in tried and true strategies. For example, contextual advertising is an alternative to behavioral advertising that brings relevant ads to website visitors.

Contextual advertising is the practice of inserting relevant ads into a piece of content. The strategy allows you to target websites based on similar keywords. One example might be to place furniture ads within articles about home decorating.

Contextual ads aren’t tailored to a user’s actions and personal data. Instead, they’re tailored to the content itself. These types of ads are far less jarring to privacy-conscious users. As government regulations and laws evolve, marketers will want to revisit these less-invasive advertising techniques.

How marketers can prepare now

Marketing team in a strategy meeting

Marketers don’t have to wait until Google officially kills third-party cookies to update their approach. The change presents a challenge and an opportunity for marketing teams that need to modernize their strategies. Those that adjust their game plan now will have an advantage over competitors that wait.

To prepare for the phase-out, teams should closely watch industry news and the discussion around current cookie alternatives. As the discussion evolves, industry leaders and tech giants will present us with new ways to reach consumers.

Marketers should also consider what channels are providing the best overall return on investment (ROI). Are your digital advertising dollars truly driving the most value?

Look beyond the advertising channel

As the end of third-party cookies approaches, digital marketers must rethink their budgets rather than seek workarounds.

Marketing teams should consider looking outside the advertising channel altogether. Many in the industry are worried that digital advertisements will not hold the same value they once did.

A report published by Epsilon stated 70% of marketers said they think digital advertising will take a step backward as a result of third-party cookie deprecation.

70%

70% of marketers said they think digital advertising will take a step backward as a result of third-party cookie deprecation

Epsilon

To remain at the forefront of competition, marketers should consider reinvesting a portion of their ad spends on more tactful channels.

For example, investing in the organic search channel offers a superior return on investment (ROI) and greater compounding value than paid media. By analyzing search data, marketers can understand exactly what consumers are asking for and connect with them early on.

Marketers that diversify their strategy now can begin to see results far before the competition does. As the privacy revolution continues and lawmakers step in, brands and individuals that stopped relying on invasive advertisements will reap the long-term benefits.

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When will cookies go away?

Google states that it will depreciate third-party cookies by late 2023.

What are third-party cookies?

Third-party cookies are files that website owners use to track users after they’ve left their site. Third-party cookies work by embedding a file on a user’s computer. This file collects data on the user as they move across the web.



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