RIP Third-Party Cookies - Crisis For Digital Advertising

third-party cookie phase out

 

Are you also crazy about cookies just like Google, the Sesame Street monsters, and our team?

Well, we wish we had some delicious cookies to share with you but right now we want to bring your attention to the cookies that brands have been using for years to track the website visitors and Google has taken a massive decision to phase them out. 

 

third party cookies

 

Does the above image look familiar? You must have seen this on almost every site you visit. We mostly click on Accept All Cookies and proceed to browse the information we are looking for. By doing so, we allow the cookies to track our behavior that helps organizations to provide a better User Experience, and gather data that can be further leveraged to create targeted ads for the right audiences. Even when visitors are not on the website their online behavior can be tracked using these cookies. Let’s dig deeper to understand these cookies and the changes that Google is bringing in.

 

What are Cookies and why are they important for digital advertising?

 

Cookies are NOT programs. They are small pieces of code that generally contain at least 2 pieces of information: a site name and a unique user ID. These codes are placed in the browser to track a user’s behavior when a website is visited. Cookies are categorized as First-party and Third-party cookies.

 

First-Party Cookies: These are not in danger of being blocked by Google in the recent change. These cookies are owned, stored, and dropped directly by the website domain when a visitor visits a website. They are primarily used to remember the user preferences, provide a personalized experience, and collect analytical data. For instance, on a weather app, when you put in a default location, every time you visit the app the weather forecast is shown based on the preferences you had set which enhances your user experience by providing accurate information. 

 

Third-Party Cookies are not owned by the website that the user is visiting but comes from other places. For example, when you visit a website and see an ad displayed on the website, the ad can drop a cookie, saving your behavioral information and reporting it back to the advertiser. That is exactly the reason when you click on a product listing for Christmas lighting, ads on Christmas lighting follow you everywhere. It is because when you clicked on that product listing, the retailer saved a cookie on your computer identifying you as a potential Christmas lights buyer. These cookies can also be used to track your activities online including other websites you have visited. Thus the third-party cookies can be used for tracking ads on cross-sites, profiling and targeting a wider audience, as well as greater personalization. It is the death of these third-party cookies that Google has announced. They will be blocked from the Chrome browser by 2022.  These cookies have already been blocked by default by Safari and Firefox browsers.

 

However, cookies are not ideal if data privacy is considered. It is also scary in a way from the consumer’s perspective as nothing is hidden from what a user is doing online. People have been using Ad blockers and clearing cookies from their browsers but it's a default setting, hence the majority of the users just click on ‘accept cookies’. Although users have been reporting several security problems, cookies remain the most common way advertisers adopt to track user behavior. In fact, 80% of internet advertisers in the U.S. used third-party cookies, with 38.6% admitting they were “very reliant” on the technology.

 

“We became a little bit dependent on third-party cookies because it was easier, faster, and required less planning and integration [than traditional marketing],” said Matt Naeger, who heads US strategy for the performance marketing agency Merkle.

 

third party cookies

 

Still unsure what are these cookies?
Talk to our Expert Team.

 

The long impending change: Phase Out Of Third-Party Cookies

 

Let's talk about the change now. 

It is not recent news but has been circulating since 2020. In January 2020 Google announced for the first time that it will block all third-party cookies by default: “Our intention is to do this within two years.”

In February 2020, Google’s long blog post gave reasoning for the pivot and explained that it was being done to give more privacy to users. 

Quoting the blog post, Google said: "Users are demanding greater privacy--including transparency, choice, and control over how their data is used--and it’s clear the web ecosystem needs to evolve to meet these increasing demands." 

Firefox and Safari had already blocked all third-party cookies as a default setting since 2013 and Google planned to roll out this change on Chrome over the course of 2 years to give sufficient time to advertisers and not destruct online advertising. The change being made to Google Chrome will have a significant impact as more than 56% of the web traffic is from Google Chrome and Google Chrome also contributes to more than half of all global web traffic.

 

Statista statistics on browser usage

Source: Statista

 

The blog post further said: "Some browsers have reacted to these concerns by blocking third-party cookies, but we believe this has unintended consequences that can negatively impact both users and the web ecosystem. By undermining the business model of many ad-supported websites, blunt approaches to cookies encourage the use of opaque techniques such as fingerprinting (an invasive workaround to replace cookies), which can actually reduce user privacy and control. We believe that we as a community can, and must, do better."

 

Why are the third-party cookies phasing out? 

 

The change was adopted by Google recognizing the increasing concerns of data privacy, particularly after Facebook's Cambridge Analytica scandal. The scandal had nothing to do with cookies directly but it brought into question the use of user data when a third-party analytics company used Facebook’s user data to manipulate voters in the elections. Media threw light on the unethical ways companies employ to exploit the user data and public awareness around data protection continued to grow. 

 

Google took into account the public opinion from the Pew Research Center Poll that demonstrates 72% of Americans worry about all their online activities being tracked by advertisers, tech firms, and companies whereas 81% believe that they are at high risk from data collected which outweighs the benefits. 

 

The GDPR law passed in 2016 in Europe restricted the use of cookies for tracking user behavior. Complying with the GDPR rules, companies have to get opt-in consent from users before saving cookies on their computers.

 

At Lambourn Digital, we completely comply with all GDPR regulations while working on our client's marketing campaigns to ensure that any data tracked and collected on behalf of the clients are with the user's consent. 

 

GDPR regulation on cookies

 

 

Who will be affected by phasing out of third-party cookies?

 

The US Association of National Advertisers and the American Association of Advertising Agencies expressed their disappointment with this major update and concern that the change would “threaten to substantially disrupt much of the infrastructure of today’s Internet.” However, with time, these agencies have also voted in support of this change.

So, do we need to panic as digital advertisers?

Yes, we do. If your advertising has been focused on collecting individual data or third-party data for audience targeting, then it is a big concern for you. Such privacy efforts by the giant browser Google Chrome could impact many areas of marketing and advertising but other tactics on tracking user behavior remain the same.

How to prepare for third-party cookies phase out?

 

To handle this change without losing the ability to track user data, we have laid out the top 3 steps:

 

#1- First and foremost, focus on your own data: improve first-party data collection:

Google’s phase-out is only related to third-party data. The first-party cookies that we discussed earlier are still in place and can allow you to track user’s behaviors when they are on your site. Google's 2021 announcement, called first-party relationships "vital". So, ultimately, any first-party data you gain from your website's visitors on all browsers will still remain intact.

HubSpot lists a few strategies for gathering first-party data in their blog post but email addresses are the best first-party data and it is high time for you to start leveraging email marketing.

 

Check out our blog post on how to create effective email marketing that can lead to conversion. Focus on improving this data gathered and incorporate inbound marketing tactics for effective targeting as well as personalization of the content.

 

#2- Familiarize yourself with Google’s Privacy innovations:

Google announced developing a "Privacy Sandbox” in August 2020 and shared more information about it in a blog post. Justin Schuh, Director of Chrome Engineering wrote in the post "We’ve started sharing our preliminary ideas for a Privacy Sandbox -- a secure environment for personalization that also protects user privacy. 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. Our goal is to create a set of standards that is more consistent with users’ expectations of privacy."

In a more recent post, Google shared information about the browser-based model which Google calls the Federated Learning of Cohorts (FLoC) model. In this blog post, Google shares that the technological advancements made in aggregation, anonymization, on-device processing, and other privacy-preserving technologies offer solutions to replace individual identifiers. Google further shared that their “latest FLoC tests show one way to effectively take third-party cookies out of the advertising equation and instead hide individuals within large crowds of people with common interests”. The post further added that "Chrome intends to make FLoC-based cohorts available for public testing through origin trials with its next release this month, and we expect to begin testing FLoC-based cohorts with advertisers in Google Ads in Q2. Chrome also will offer the first iteration of new user controls in April and will expand on these controls in future releases, as more proposals reach the origin trial stage, and they receive more feedback from end-users and the industry."

#3- Finally, provide elevated customer experience that can bring greater returns:

Despite this move raising concerns for digital advertising, Google has to take the steps to ensure privacy. It's time to tickle the innovative minds and create personalized messages targeting not just the right audiences but at the right time. Gaining the customer’s trust that their data is only being used by you with their consent to help them stay up-to-date with your business information and not pushing them to breach their privacy is how the customer’s trust can be strengthened.

 

Stay updated with all the news on Google Chrome's phase-out of third-party cookies. 

 

DON'T PANIC!! We are here to help you devise strategies to reach your audiences even without cookies, hyper-targeted ads, or mass amounts of data. 


Get In Touch With Us To Discuss More On Tracking Your User Data In The Cookie-less World.

Book A 20 Minute (no-obligation) Consultation For Your Business Today.

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