What it means for advertisers and future tracking
On July 22nd, Google made headlines by announcing a major shift in its approach to third-party cookies, revealing that they will no longer move forward with their planned phase-out of these tracking tools. After years of speculation, delays, and initial testing, this decision marks a significant turning point for the digital advertising landscape.
While the full implications of this update are still unfolding, Google’s revised plan aims to enhance user control over web browsing and tracking. As the industry grapples with this news, it’s crucial to understand what third-party cookies are, why their potential removal has been a focal point, and how advertisers can adapt their strategies in response to this evolving landscape.
Why does this matter (and what is a third-party cookie anyways)?
You might be asking yourself: Why does this matter? Does this affect me or any of my marketing or paid media tactics?
Google isn’t the first tech giant to address third-party cookie management. Apple and Mozilla have both implemented browser changes over the past few years aimed at providing consumers with more control over how they are tracked online. However, Google’s (now abandoned) plan to phase out third-party cookies from Chrome browsers stood to have the biggest impact on the advertising industry as Chrome makes up over 60% of online browser usage globally.
While this week’s announcement means that third-party cookies will remain on Chrome in some fashion, this doesn’t turn back the clock on cookies disappearing. With Google Chrome’s new plan to allow users to select their cookie preferences, Chrome will likely experience similar implications to its third-party cookie tracking as Meta did when Apple rolled out iOS 14, the update that highly restricted use of cookies for tracking on Apple devices. 96% of iOS Facebook users in the US opted-out of cookie tracking when the Apple update was pushed in May 2021 (according to Meta and Statista). In recent years, 67% of all adults in the US have already turned off cookie tracking across all online platforms (Pew Research study in May 2023). While we can’t predict the future, given what Meta experienced, we can assume that the impact to third-party cookie tracking on Chrome will be significant given the likely consumer desire to opt-out.
Targeting Alternatives to third-party cookies
Anticipating the deprecation of third-party cookies, advertisers have spent the past few years testing alternative targeting strategies with increasing emphasis being placed on first-party data, contextual targeting and AI and machine learning powered audience strategies. Advertisers should consider adding the following tactics to their toolset alongside third-party cookies:
- First-party data: First-party data from the client’s own CRM (i.e. email addresses) is often considered the gold standard when it comes to data quality. However, first-party data can often be limited in scale. First-party data can also serve as the basis for lookalike targeting, which can be an effective means of increasing scale, though lookalike functionalities vary by platform.
- Second-party data: Second-party data is data that is owned and collected by a specific platform or publisher, for example native targeting options within Meta and Google. These segments tend to be highly reliable and effective as they are based on subscriber data and users opt into sharing parameters as part or terms of service agreements.
- Contextual targeting: Contextual targeting aligns ads with the context of the page on which they appear, allowing advertisers to ensure ad relevance without relying on demographic or firmographic audience targeting.
- Alternative identify graph solutions: Alternative identify graph solutions like The Trade Desk’s UID 2.0 are designed to provide marketers with enhanced targeting and measurement that parallels third-party cookies with an increasingly privacy conscious internet in mind. Here’s why we’re excited about UID 2.0’s potential:
- UID 2.0 could rival the third-party cookie when it comes to effectiveness. From The Trade Desk: “By converting email and phone number data into hashed, salted identifiers, UID2s could serve as a superior signal to cookies in myriad ways.”
- UID 2.0 is an open-source framework that many publishers AND buyers are adopting – sustained success will only come in the form of higher adoption as a truly ‘universal’ solution.
Measurement implications
Google’s announcement that third-party cookies are here to stay will not change the industry’s desire to move beyond third party cookie-dependent measurement. Third-party cookies allow marketers to track sales and actions across their campaigns. That visibility and accuracy is becoming murky at best with cookie deprecation on the rise.
Measurement solutions like media mix modeling and more responsive attribution models will continue to grow as must-have tools for measurement, especially to make the case for marketing’s impact on the total business.
In short, while cookie deprecation may no longer be industry-driven, given Google Chrome’s announcement, it is now consumer-driven. The significant rise in consumer behavior to opt-out of third-party cookie tracking will continue to drive a need for more holistic and non-cookie dependent measurement solutions that show marketing’s impact on the total business. This will also push advertisers to invest in technology that bolsters first-party data (i.e. a customer data platform) and requires them to consider and invest in a diverse set of data and targeting solutions to reach their target audience.
Technical background on cookies:
Cookies were introduced in 1994. To over-simplify, the internet has pretty much been built on cookies to track user behavior. These little pieces of code have powered marketing, specifically paid media, campaigns for decades. To date, third-party cookies have played a significant role in media plans and targeting strategies, given their ability to track user behavior across sites and serve ads based on browsing history. They can provide valuable data signals to advertisers to optimize their campaigns toward relevant audiences and reduce media waste. However, their use has been subject to increased debate amid growing demand for greater online privacy and legislation like GDPR and CCPA.