If you’re like me, you saw the news of Google removing third-party cookies from 1% of their users and thought, ‘It’s finally happening’. It feels like we’ve been hearing about the death of third-party cookies for the better part of the last 5 years. That might make it seem like significant progress has been made to replace cookies with a new identifier to improve advertising performance and ROI, but that would be wrong. In this article, we’ll discuss what this transition means for the industry, how it will impact advertisers, and what we can do about it.
But first, a quick refresher on first vs third party cookies, as we see a lot of confusion stemming from this delineation.
First Party Cookies track activity on a domain, and that domain only.
They are typically used to personalize the user experience (i.e. remember passwords, content viewed, add to carts), but also track things like site analytics. If an action happens on your site, a first party cookie can track it.
Third Party Cookies track activity across domains primarily for the purpose of advertising.
Let’s say you view a product on a popular retail site – then later that day read a news article on a different site and see an advertisement for the product you viewed. You were targeted using a third-party cookie.
Third-party cookies also allow companies to track user browsing data across the web. For example, you visit a site with the Meta pixel, and a 3rd party cookie is saved in your browser. Every site you visit after that cookie is generated is tracked by Meta, allowing them to build a robust profile on your browsing habits including what sites you visit, what content you consume, and how long you browse.
This second scenario flew under the radar for many years following the introduction of cookies, and while it’s not as visible to the naked eye, contributed significantly to the invasion of privacy that led to the phase out of third-party cookies.
That said, how will this impact the advertising industry at large?
The most profound effect will be felt by small businesses largely in the programmatic ad space that have relied on third-party cookies to build user interest profiles and track conversions on their advertisers’ sites. Large companies with robust troves of first party data (names, emails, phone numbers) will be better able to create identity graphs that tie their user browsing data to unique profiles. This means that moving forward, first-party data will only become more important than it already is.
We can also expect to see a growing number of publishers gate content behind paywalls as display advertising will provide less revenue to support a ‘freemium’ business model. Publications like the New York Times or Forbes have long restricted access to content on the site to drive revenue through subscriptions. It also allows them to better control the type of media that is delivered on their site including customized, high-impact ad units.
All this to say, we expect to see an increasing reliance on the large media companies (think FAANG) as those with the data and resources to build novel ways of tracking and categorizing user data will remain effective.
So, how will this affect advertisers?
It may sound like a lot of doom & gloom, but that wouldn’t be entirely accurate. There will still be ways to reach your audience that don’t rely on the data-rich (to the point of being creepy) strategies that have been effective over the last decade.
- There will be an increasing need to create engaging content that speaks directly to the concerns and pain points of one’s target audience. Rather than hyper-target users at the bottom of the funnel with ‘buy now’ messaging, leverage blogs and articles that speak about the benefits of one’s product or service. Educate first, sell later. Your audience will appreciate it.
- Some loss of attribution is also expected, though platforms are taking all the necessary steps to mitigate this. This will look like fewer conversions and higher CPAs in ad platforms, but that wouldn’t be the full story. Dig deeper into CRM data, and all conversion activity will still be visible. This means that advertisers will need to ensure they have a CRM setup and working properly to capture all the user data that is submitted on their site, not only for tracking purposes, but also for first-party data collection.
- Retargeting will lose effectiveness but won’t go away entirely. Ads that ‘follow’ you around the internet will go away (unless you run ads through Google’s Display Network), but social media platforms will still be able to see what content you engage with on their platform, and their advertisers’ sites. This allows for retargeting on social media that is just as effective as it is currently. We will address why in the next section.
What we can do about it now?
With only 6 months until the planned Q3 phase out of 3rd-party cookies, advertisers need to start implementing these in their strategies now.
- Server-side tracking: This will be the new gold standard in conversion tracking and custom audience creation because it does not require data to flow through the browser. Instead, a link between the website and client server is established, and an API access pulls data from the server into the connected ad platform. It’s very important to ensure hashed Personal Identifiable Information (PII) is being sent through the API as this will be the best way for the ad platform to match its user profiles to the user on your site.
- Enhanced Conversions: Introduced in response to tracking loss associated with Apple’s iOS 14.5 update, this Google-specific conversion tracking method involves the transfer of PII from the client to Google’s platform. As Google tags are 1st party cookies on Chrome, this setup will be available using the current method of tracking. Marketers will need to update their tags to include hashed PII to remain privacy compliant.
- Leverage 1st Party Data: There will be an ever increasing need to collect first party data in the form of account registrations, email subscribers, phone numbers, etc.…to build target leads and customers. This means newsletters, events, SMS will become more important than ever. We may even see the resurgence of Lookalike audiences as a way of leveraging this data.
- Build out engagement retargeting funnels: Despite losing visibility into cross-site user behavior, we will still be able to track user engagement with ads and videos. This will increase the need for varied messaging at different stages of the funnel so that a user can understand your offer without necessarily visiting your site.
- Contextual targeting: We’ve already started to see a resurgence with contextual targeting, especially as ad tech vendors develop better ways to contextualize pages including images and video. This method of targeting remains largely unchanged as it relates to a marketer’s ability to reach a niche audience.
- Customer Data Platform: Popularized in the last 10 years, customer data platforms herald a new age of audience targeting through extensive first party data capture. Data points are collected from user interactions on one’s site and are used to categorize users into audiences based on the actions, time, pages seen on site. Scale is needed to ensure audience sizes are robust enough to target, but this would be considered the gold standard of audience data capture.
If this all makes you feel a little concerned about the future of the industry, don’t worry. Chrome is not the first browser to remove third-party cookies. Firefox removed third-party cookies in 2013 and Safari removed them in 2020. This just means we as marketers will need to take more steps to set up the proper tracking systems to ensure high-quality, accurate data is being passed through to ad platforms.
If you have any questions, please feel free to reach out to me. I will also try to provide updates on this topic as they become available.