While Google’s plans to phase out 3rd party cookies has been delayed several times, they plan to remove them from Chrome browsers starting in 2024 with a complete phase out by the end of the year. The largest impact will no doubt be felt by advertisers as strategies shift away from the use of 3rd party data to a more 1st party data dependent ecosystem. This will make the use of 1st party cookies more important than ever.
1st party cookies vs 3rd party cookies. What’s the difference?
- 1st party cookies: A code that is generated and stored on your website visitor’s computer when they visit your site. These are used to enhance the site experience by keeping track of browsing information. For example, remembering logins, preferences, or shopping cart items.
- 3rd party cookies: A code placed on web visitor’s browser, but hosted by an offsite domain like an ad server or social media site. They are used to track across domains to enable features like ad retargeting, cross-device tracking, and multi-touch attribution.
Advertisers will need to overcome many changes in the way campaigns are targeted and measured. Without a universal identifier to track actions across websites, visibility into cross-site user behavior (and the ability to profile users) will become increasing diminished.
What does 3rd party cookie deprecation mean for advertisers?
- Loss of Ad Targeting: Interest-based user profiles have historically been built using third party cookies by tracking frequently visited websites, purchases, and content interests. Personalized ads and retargeting campaigns rely on this user behavior graph to deliver the correct messaging at the right time.
- Multi-Touch Attribution: Tracking what ads a user has seen or clicked, and the path of interactions which led to a conversion has allowed advertisers to gain insight into which channels and tactics are most effective at driving ROI. Without a user ID, like third party cookies provide, tracking this will become increasingly challenging.
- Cross-Device Tracking: Similar to MTA, user profiles enabled by third-party cookies allow advertisers to build a device graph, or a group of devices that belong to the same user, and retarget them no matter where they browse.
However, all hope is not lost. There are steps you can take now to start preparing. The use of first party data will become necessary to target audiences with precision. Collecting data with onsite tracking, stored in a CRM or CDP will be the most effective way to segment customers in the future. We are also seeing a revival of contextual targeting as new tech like Page Context AI, a way to assign a topic to the content in a page, crop up and start to become more effective. The ultimate solution would be a universal ID – however, the market is very fragmented at the current moment, and most users are not choosing to opt-in.
How do advertisers solve for the loss of ad targeting?
- First-Party Data: Data collected on site directly from users including user behavior on a website or app, purchase history, and demographic information has always been important to build out robust persona profiles and customer lists. Without targeting segments from 3rd party cookies, CRM match and interest and behavior-based audiences from website activity will become primary ways to reengage potential customers as well as build customer loyalty.
- Contextual Targeting: Alignment of messaging with the contextual environment will become even more vital to personalize ads to an audience. Ad vendors have already started investing more heavily in building out page context AI tools that crawl websites for keywords and related terms to build contextual category sitelists.
- Universal ID: Nearly 50 companies have already started providing ID solutions on a global basis. One that has gained the most attention to date is the TradeDesk’s Unified ID. However, universal identifiers operate on an opt-in only basis, so adoption by users has been low. We don’t recommend waiting for a widespread adoption of a universal ID solution to start building a post-cookie strategy.
Ad platforms have already started to address the changes that will take place with solutions that pass back hashed user data to match against profiles or server-side communication to avoid storing PII in the web browser. Data clean rooms are also becoming more popular among enterprise-level companies as way of consolidating data across many channels in a privacy compliant manner.
How do advertisers solve for the loss of attribution/measurement?
- Google’s Enhanced Conversions: This new feature utilizes first party data to improve the quality of conversion modeling within Google ad products. Customer data, typically email addresses, are captured at the time of conversion onsite and hashed to be privacy compliant. This data is passed back to Google where it is matched against Google logged-in profiles allowing for more accurate reporting and robust ad optimization.
- Facebook’s Conversions API: This measurement solution developed in response to the iOS 14.5 update which limited tracking on iPhone devices creates an API connection between the server hosting your website and Facebooks ad server. In doing this, data captured on your site’s server (i.e. purchases) can be passed to Facebook Ads Manager without the need for a 3rd party cookie.
- Data Clean Rooms: While this solution comes with a rather hefty price tag, Data Clean Rooms, or DCRs allow for the aggregation of advertiser’s data in a privacy-preserving way by removing an Personally Identifiable Information (PII). This is done by uploading dataset that is then anonymized and matching this data using a common identifier (i.e. hashed email address) with data from other advertisers.
All in all, it’s clear that marketers and advertisers alike will have to shift strategies as they relate to targeting and attribution. A loss in the granularity of insights in both of these areas is likely to accompany the change. However, there are steps everyone can take now to start testing and educating clients and we will likely see new solutions crop up in the next year that look to address this change in web functionality. Check back for updates!
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