In 2020, Google announced they’ll phase out third-party cookies over the course of a few years. That same year, Apple revealed their intentions to limit the use of Identifier for Advertisers (IDFA), a mobile device ID that enables advertisers to track users across different apps.
Digital advertisers and marketers have long relied on third-party cookies and identifiers to deliver targeted and personalized ads. This technology also helps them learn more about their website visitors.
However, things have changed in the past few years. There’s a growing interest in consumer privacy and greater consumer control online. That’s why many browser developers have decided to phase out third-party cookies, Google included.
By 2023, the three most popular internet browsers will have ended the support for third-party cookies. Firefox and Safari were the first to do it. Google is set to join them next year.
Their decision will have a huge impact on the online advertising industry. Preparing your brand for a cookie-less world is crucial if you want to adjust to what will soon be the new normal.
What Are Third-Party Cookies?
Websites rely on cookies to improve user experience. These cookies mostly remember a visitor’s action so that they aren’t required to perform the same task over and over again. Thanks to them, users get a personalized experience and a sense that their chosen brand “knows” them.
Third-party cookies specifically are cookies that are placed by other websites, i.e. not the one you are currently visiting. For instance, an advertising service, e.g. Google Ads, creates and places a third-party cookie on websites to monitor user behavior and actions. Even Brid.TV’s advertising partners use third-party cookies to collect user data.
The results are personalized ads which reflect what you searched for and liked.
Why are marketers and advertisers reliant on third-party cookies? Easy, because they collect the following data:
- Demographic information like age, gender, and location of website visitors
- User preferences
- Product and service preferences
- Information showing a user’s previous searches
This data is then stored and used to target customers with online display and video ads tailored to their unique cookie profile.
Come 2023, however, the way publishers and advertisers use cookies and Google ad-tracking tools may change. The tech giant plans to phase out third-party cookies on Chrome browsers.
The whole digital advertising industry will need to adjust and find new ways to deliver personalized ads to customers.
Third-Party Cookies and Digital Advertising and Marketing
Third-party cookies collect data which later identifies users on the internet. Thanks to this data, marketers and advertisers know consumers’ likes and dislikes.
Understanding and knowing your target audience is important in the digital advertising and marketing industries. It helps brands draw their customers in by showing them that they’ve taken the time to deliver personalized experiences to them.
To better understand how vital third-party cookies are, let’s go over their benefits.
Benefits for Advertisers
When advertising services implement third-party cookies, they’re able to track user behavior across a huge number of websites. That cookie stays on the user’s device, meaning the “owner” of the cookie can collect and store behavior that the customer exhibits on different websites.
Here are the main benefits of third-party cookies for advertisers:
- Internet users see relevant video and display ads which get them to click on them. This produces a higher advertising revenue.
- Use of targeted remarketing across websites which helps companies remind users of abandoned carts and re-engage people that have visited their website recently
- Access to aggregated insights to ensure brands target similar users with their ads
- Ability to gather data on individual users to improve segmentation efforts
- Access to more data than first-party cookies collect
Benefits for Publishers
Publishers can also reap the benefits of third-party cookies. Some of those benefits include:
- Their website delivers relevant ads to motivate visitors to click on them. This generates a higher revenue publishers get from ads.
- Chance to display ads often outside of the content users consume on their websites. For instance, if a customer is reading about current affairs, they can see ads about food, clothing, etc.
Why Are Third-Party Cookies Going Away?
Looking at the above benefits, you’re probably wondering why third-party cookies are being phased out by major browsers. After all, 80% of advertisers rely on this technology to track user behavior and deliver relevant ads.
So, why are these cookies going away?
The first reason would be the increasing use of ad blockers. According to statistics, almost 45% of internet users worldwide use ad blocking tools. Most ad blockers allow users to disable cookie notifications without allowing or declining the use of this tracking technology.
Obviously, companies can’t track and collect user data because of this. Customers using ad blockers are simply strangers to brands and they can’t deliver a personalized experience to them.
Another reason is the popularity of mobile website browsing. Statista reported that mobile devices generated almost 55% of global website traffic in the final quarter of 2021.
Most mobile browsers accept first-party cookies. However, some of them behave differently with third-party cookies. That is, they can choose whether or not to enable these cookies.
As a result, advertisers don’t have a complete picture of users. They don’t have enough data to determine which ads are relevant to a specific user.
The third, and most compelling, reason is the growing interest in consumer privacy. Many regulations like GDPR seek to protect the user’s personal data on the internet. This changes the way advertisers and marketers manage and use consumer data.
It was this final reason that prompted Mozilla’s Firefox and Apple’s Safari to block third-party cookies by default. Google is following suit, with plans to block cookies by default in 2023 mainly because of consumer privacy.
We at Brid.TV are closely following Google’s planned third-party cookie phaseout. Our goal is to ensure our publishers continue to maximize their ad revenue with us regardless of the end of third-party cookies.
One study determined that only 11% of website visitors accepted cookies. A whopping 76% of visitors completely ignored the cookies banner. Catering to consumer wants and needs is a top priority for companies, even for browsers.
How Might the End of Third-Party Cookies Affect the Industry?
When Google announced their decision to phase out third-party cookies, numerous advertising agencies criticized their move. Their main concern was the impact Google’s decision would have on the advertising industry.
Due to their dissatisfaction, GetApp conducted a survey to find potential marketing impact of the end of third-party cookies. The company learned that:
- 41% of marketers say the biggest challenge will be the inability to track detailed user data
- 44% of marketers estimate they will need to increase their spending by 5% to 25% to reach the same goals as 2021
- 23% of marketing experts predict they will invest in email marketing software because of Google’s new policy
Google Ending Third-Party Cookies in Chrome
As we said, Google revealed the phaseout in 2020. Although initially planned for 2022, the phaseout has been postponed to 2023. If no further complications happen, Google Chrome will block third-party cookies by default next year.
Although not the first browser to phase out third-party cookies, Google Chrome is the biggest. According to Statista, Chrome makes up more than 55% of the global web browser market. So, why did Google opt for this move?
In a released statement, Google explained that they wanted to protect users who asked for more privacy. These users want transparency, choice, and control over how their data is used. To make this happen, the web ecosystem needs to undergo certain changes.
Google’s decision might confuse you. After all, the company’s biggest income comes from ads. In fact, Google’s ad revenue amounted to $209 billion in 2021.
One reason why the company is able to generate such an amount is because of third-party cookies that collect user data. We’d go as far as to say that third-party cookies fuel Google Ads. They are the primary tool used for tracking.
However, the end of third-party cookies does not entirely mean the end of tracking. Google’s plan is to avoid jeopardizing publisher business models. This means that Google is working towards a solution that won’t affect the wider industry as much.
Is There a Replacement for Third-Party Cookies?
Considering Google’s ad revenue, it’s no wonder the company wants to create a solution that will ensure publishers and advertisers don’t feel the effects of third-party cookie phaseout.
That solution has come in the form of Privacy Sandbox — Google’s latest product. What is the Privacy Sandbox? Although still not released, Brid.TV has analyzed this product to see what it will bring to advertisers.
According to Google, the Privacy Sandbox is a collaborative initiative to develop privacy-preserving technologies that would serve as an alternative to third-party cookies. Its aim is to protect user privacy online while ensuring advertisers and publishers have tools to build their online businesses.
Without cookies, Google still needs ad targeting, measurement, and fraud prevention to happen. The safe way to do that is through the standards set by the Privacy Sandbox which consist of numerous proposals.
The new privacy-preserving technologies will protect anonymity and generate results for both advertisers and publishers. It will achieve that through these proposals:
- Interest-based tracking. Without collecting personal and identifying user data, marketers can still know their audience. This is thanks to a proposal called FLoC (i.e. Federated Learning of Cohorts). What it does is group people with similar interests together, without revealing their personal data.
- Interest-based advertising. It will be possible to enable interest-based advertising without tracking the websites a user visits. The proposal for this is called the Topics API. Basically, advertisers will deliver ads based on the user’s interests inferred from the sites they’ve recently visited.
- Click and conversion tracking. This proposal will make it possible to measure when an ad click or view results in a conversion, e.g. a purchase on an advertiser website. It is known as the Attribution Reporting API.
- Combat fraud. Google wants to detect fraud, e.g. bots clicking on ads, and prevent it from happening. That’s why they will rely on the proposal known as Trust Tokens. It attributes trust tokens to users as they browse the web to verify they are not bots.
Based on the above four proposals that are currently in development, it seems that Google has found a way to deliver relevant ads to users while protecting their privacy.
Conclusion
Although the digital advertising world without third-party cookies may seem daunting, you shouldn’t panic. It’s highly likely that new technologies will appear that will help you provide a unique experience to consumers while respecting their rights to privacy.
Brid.TV will certainly monitor these new technologies to ensure you have the right solution by your side.
For instance, Google’s Privacy Sandbox sounds as a valuable alternative for ad targeting. You don’t need to follow individual users to understand what kind of ads you should serve to them. It’s enough to group them together with people expressing similar interests.
