The End of Third-party Cookies
In January of this year Google announced its decision to end support for third-party cookies in its popular Chrome browser. The announcement is welcomed by privacy advocates but will present challenges for advertisers and publishers when it goes into effect two years from now.
In this article we’re taking a look at what this announcement means for the future of digital advertising, what the effect will be on businesses, and what brands need to do in order to continue to succeed with digital advertising in the absence of third party cookies.
First, what are third-party cookies?
Third-party cookies are little snippets of code that are stored on a user’s browser for the purpose of tracking the user’s behavior on the web. Cookies of all forms allow for a user’s preferences to be tracked and remembered. Cookies created by anyone other than the host domain (i.e.; third parties) are termed third-party cookies. Third-party cookies can provide advertisers with a wealth of valuable information about users, including demographics, geographical information, and preferences, which are in turn used to develop more finely-tuned advertising campaigns.
Third-party cookies differ from first-party cookies, which are placed on the user’s browser by the host domain (aka the domain the user is visiting). For example, if you’re shopping on an ecommerce site, that site will use a first-party cookie to keep products in your shopping cart from one session to the next.
First-party cookies are essential to providing an efficient and enjoyable experience using the web. Third-party cookies, on the other hand, are considered by many to be an invasion of privacy, but they have become the bedrock of a significant portion of digital advertising strategies over the past two decades.
What does the end of third-party cookies mean for advertisers?
Mozilla’s Firefox browser and Apple’s Safari disable third-party cookies by default but Google Chrome, the internet’s most popular browser by far, has yet to do so. The impending change means it will no longer be possible for advertisers to rely on third-party cookies to target users. In the long term this means that very granular, one-to-one targeting will likely become impossible.
Without third-party data providers, publishers will gain greater positions of power in the advertising landscape. Indeed, many publishers who have already been disillusioned by the poor quality of third-party data have already begun relying solely on their own first-party data.
But as the biggest ad platform on the web, Google has an interest in offering alternative targeting options in a world without third-party cookies. The company’s Privacy Sandbox was launched to spur innovation around solutions that would enable effective targeting without compromising user privacy.
The end of third-party cookies will also present advertisers with challenges tracking ROI, which may have broader implications for justifying ad spends.
What changes should businesses implement to their marketing strategies?
Though the impending death of third-party cookies will undoubtedly shake up digital advertising as we know it, there are things your business can do now to begin adapting to the new status quo.
Reevaluate investment in alternative channels — Consider whether there are alternative channels you can be investing in now in order to strengthen your brand’s positioning when the third-party data tap is shut off permanently in two years’ time.
Wean your business off retargeting — If retargeting has been a big component of your advertising strategy in the past, you’ll need to start rethinking your approach to customer acquisition. The end of third-party cookies will mean the end of retargeting.
Look for ways to generate first-party data — If there are ways you can generate your own first-party data, it may be strategically advantageous to invest in them.
Focus on alternative targeting options — Even without third-party cookies there are many options for effectively targeting users. Though it may seem retrograde by today’s standards, the end of third-party cookies may bring about a resurgence in contextual targeting, for example.
Though Google’s announcement that it would end support for third-party cookies in Chrome was not entirely surprising, it will nonetheless have vast implications for advertisers and publishers alike. Digital advertisers have two years to prepare for the change but the time is now to begin developing alternative targeting strategies that do not rely on third-party tracking.