What’s the third-party cookie apocalypse all about?

What’s the third-party cookie apocalypse all about?

Big Ideas

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July 8 2021
Big Ideas
Author: Natalia Ferrari

What’s the third-party cookie apocalypse all about?

The whole Cookie Apocalypse deal started when Google announced in January 2020 that third-party cookies were going to be phased out of Google Chrome as of January 2022.  


While this created its fair share of panic at the beginning of 2020, the advertising industry then calmed down and thought that since Google is not only Google Chrome’s owner but also Google

Ads creator, it should come up with a new way of identifying users that is not cookie-related (Spoiler Alert: they didn’t). 
 
Panic re-emerged when Google announced in March 2021 that they would not replace third-party cookies with other user-level identifiers, nor will they use them in their products. 

Even though browsers like Firefox and Safari have already phased out third-party cookies since 2013, Google’s announcement has a greater impact on the whole advertising industry, seeing as Google Chrome is the most used browser worldwide, with more than 60% of users according to StatCounter

With GDPR (General Data Protection Regulation) and CCPA (California Consumer Privacy Act) having already taken effect and with more upcoming legislation about online privacy on it’s way, user-level identification is not scalable and Google knows it. So... what happens now? 

 

Before we go deep into the world of cookies let's take a step back to the basics and describe the terms:

What’s a cookie?

We’re not talking about the soft, chewy variety that fills your stomach, we’re talking about browser cookies. A cookie is a text file with ID tags that is stored in your computer’s browser directory so that when you visit a website it can keep track of your browsing history and configuration (like login information, preferences and other customization functions). Which can be very helpful to auto populate your information on sites that you visit frequently.  

 

What’s the difference between first and third-party cookies? 

A cookie is a cookie whether it is first or third-party, the only  difference is how these cookies are created and how they will be used. 

  • First-party cookies: are stored by the website you are visiting directly and are used to provide you with a better browsing experience. 
  • Third-party cookies: are created by other websites (different from the one you are browsing) and they are used for retargeting, ad-serving, live chats and cross-site tracking, among other things. 

 

Are cookies a bad thing? 

Not at all! First-party cookies can help you get a personalized browsing experience: imagine having to re-enter your information and preferences every time you visit a site like it is your first time (what a pain!).  The thing with third-party cookies is that they have been widely used for building behavioural profiles and retargeting audiences to be used in digital advertising. Thanks to third-party cookies, advertisers can make good use of their money by being able to serve ads to people who are more likely to engage with them, and users get to see ads with products that are more likely to interest them.  However, this way of collecting user’s information has been flagged for being privacy invasive and that’s where the whole “Third-Party Cookie Apocalypse” began. 

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What does the end of third-party cookies mean to Marketing Teams? 

It means that you will not be able to advertise the same way you used to on some platforms, but it does not mean the end of the world or a super-drastic change of revenue based on the way we used to do things. 

It means we will need to learn to build the users trust earlier in the sales funnel so that they can provide us with information sooner. In other words, we will need to begin crafting strategies to earn client identification data earlier in the funnel so we can in-turn take that data and send it back to platforms to optimize. For example, creating “Must-have content” in exchange for a form submission with client data. 

Also, all marketing measurement should be based on first-party data. Having a direct relationship with customers should be the first step for every marketing strategy. Some of the best ways to do that are: 

  • Install sitewide tagging. 
  • Used enhanced conversion measurement.  
  • Set up tags so that you can use consented hashed first-party data (like emails) for improving measurement, even across devices. 

It is also advised that you enable users to make choices about their data.  

  • Use Consent Mode: A new tag setting to customize how Google tracks user behaviour before and after cookie decision. 
  • If people opt out of cookies, you’ll have gaps in your measurement. That’s why Google has built Conversion Modelling through Consent Mode for filling in these gaps. 
  • Tag Manager integrates with Consent Mode and as per Google’s Marketing Livestream 2021 announcements, they are adding new content capabilities to Tag Manager too. Businesses that already use consent management solutions on their website can integrate those solutions directly to Tag Manager. 

How to advertise without third-party cookies? 

Well, it depends on the platform and campaign type you are referring to. Let’s look at some examples: 

 

Behavioural Targeting

Nowadays, we can go into Google Ads or any Programmatic Advertising vendor and choose between a wide range of interest audiences for targeting. Without third-party cookies, these audiences will not be created the way they were created before and, thus, we won’t be able to use them as such.  

 

Google’s approach: 

  • Google has released a whitepaper, explaining a new way for browsers to enable interest-based advertising on the web that, instead of observing the behaviour of a single user (like it is done today and it is thought to be invasive), can observe the behaviour of a cohort of similar people for single-user privacy purposes. 
  • According to Google, “browsers need a way to form clusters that are both useful and private: Useful by collecting people with similar enough interests and producing labels suitable for machine learning, and private by forming large clusters that don't reveal information that's too personal, when the clusters are created, or when they are used.” 
  • Google’s plan for replacing third-party cookies are FLoC cohorts (Federated Learning of Cohorts). Instead of tracking each user individually, FLoCs will be formed by at least 1,000 users derived by the browser from its user’s browsing history. Browsers will use machine learning algorithms to develop a cohort based on the sites that an individual visits and to find other users with the same online behaviour.  
  • In fact, Google claims to have tested FLoC-based advertising, reaching 95% of the conversions per dollar spent when compared to cookie-based advertising 
  • So, if you are using Google Ads as your primary behavioural-targeting advertising method, you could be facing around a 5% decrease on your key result which is not ideal, but it could be worst, right? 
  • Also, Google announced that Customer Match Selection audiences in Google Ads will now be available for most advertisers. 
  • There will also be a new Modeled Behavioural Reporting on Google Analytics that will provide powerful insights of complete customer journey, even with unavailable cookies. 
  • And as per attribution reporting, in addition to Search and Shopping Campaigns Google will include new touchpoints for YouTube and Display campaigns for more complete measurement. 

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Social Media: 

If your behavioural targeting is made primarily on social media, then fear no more! Social media demographic and interest-based targeting will not be affected by the elimination of third-party cookies. However, behavioural retargeting will be affected. 

 

Programmatic and Direct Media Buying Advertising: 

Programmatic,  Direct Media Buying Advertising platforms and websites are the most affected players when it comes to behavioural targeting since those who currently rely on third-party data will need to pivot to only using first-party data after January 2022. 

In this case, fortune will favour the large and who already primarily use first-party data. Some players already have paywalls that keep their users logged in and identified (ex. When you log into New York Times to read an article online). This allows them to know who you are earlier and send that first-party data directly to the ad platforms instead of relying on cookies. They can then serve you ads according to your interests and behaviours on their website. 

For these large vendors, it could mean the CPM will go through the roof after January 2022. Charging advertisers, a premium to access top-tier user data build behind the paywall. 

For those vendors who don’t have paywalls or any other way for identifying users, what is likely to happen is that they will A) move to contextual advertising (keyword rather than previous website behaviour) or B) they will start implementing paywalls or logins in exchange for valuable content as soon as possible. 

There could also be some budget re-allocation to new addressable media like retail media networks and connected TV, since they use retailers’ customer data to target consumers. 

Retargeting

Retargeting will be available for advertisers, but the way we do it might have to change.  

Powerful tracking tools like Facebook or Google Ad pixels will be limited in their ability to measure web-events and match users.  Platforms can’t match people as easy when they return or across multiple devices This has already begun to take effect for Facebook  due to the new iOS 14 update. To read more read our article here 

Retargeting based on website events will have to pivot from leveraging “browser-based cookies” (third-party) to “server-based tracking” (first-party). When a user completes a website event that involves entering a unique identifier (email, phone number, etc.), you can capture it through server-side cookies and using Facebook’s Conversions API and Google’s Floodlight (a conversion tracking system that’s part of the Google Marketing Platform) send your own first-party user tracking data back to the ad platforms after it has been hashed (scramble). All without needing browser-based cookies to do so. 

On the other hand, if you own an e-commerce or a website where users are logged in, email automation or in-app notifications can be a good way to go for retargeting purposes. 

Finally, small pivots in your advertising strategy can help. For example, you could create a dedicated landing page that is unique to each campaign so that you can create retargeting strategies for visitors of that specific landing page. 

People-Based Advertising: 

Finally, people-based advertising allows marketers to target customers across devices and channels without relying on third-party cookies but on other user-level identification like email. 

This involves finding and using platforms that can link people across different devices (ie. Phone, tablet, connected tv) , For example, Roku does a great job at People-based Advertising. This could be a great opportunity for some companies to pivot their current strategy to gather more and better first-party data in exchange for something valuable for users in exchange to log into their websites. 

What does the end of third-party cookies mean to me as a user? 

 
It means more privacy and, perhaps, less ads related to recent searches or websites that you visited and more ads based on contextual targeting.  

If you would like help pivoting your marketing strategies in light of these changes, send us a message.  

References: 
https://www.allaboutcookies.org/cookies/ 
https://gs.statcounter.com/ 

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