Third-party cookies are crumbling. What does this mean for advertising beyond 2022?

For advertisers, the cookie is crumbling.

Brands have long used cookies, small tags that attach to your computer when you visit a website, to track information about you and millions of other visitors.

The insights cookies have provided are invaluable, providing demographic information and details about what you like, what you visit and what you buy. In turn, advertisers have turned that information into targeted advertising on your desktop, laptop and smartphone.

Why is Google phasing out cookies on Chrome?

In January 2020, Google announced that it was responding to increasing demands for privacy by users by phasing out third-party cookies in Chrome, the world’s most popular web browser.

“Users are demanding greater privacy-including transparency, choice and control over how their data is used-and it’s clear the web ecosystem needs to evolve to meet those increasing demand,” the company wrote.

At the same time, the company announced it was committed to providing options, like its Privacy Sandbox, to develop new tools for ad-supported websites to allow for publishers and advertisers to have viable options.

While the company initially intended for the changes to go into effect in 2022, Google has extended the timeline, with the phase-out of cookies now scheduled to begin in mid-2023 and conclude later that year.

For other browsers, the cookies phase-out is not as critical an issue. Mozilla’s Firefox and Apple’s Safari have not allowed for third-party cookies for several years. However, given Chrome’s dominance in the browser market, the change will have a significant impact.

How is the industry reacting (and what are they so worried about)?

What will the end of cookies mean? It depends on who you ask.

Advertising trade groups were up in arms at the news, with one group calling the decision having “major competitive impacts for digital businesses, consumer services, and technological innovation” and would “choke off the economic oxygen from advertising that startups and emerging companies need to survive.”

Google has assured advertisers that it will develop other products that will provide results for advertisers and publishers while preserving user privacy expectations.

But is there as much cause for concern as the industry has claimed?

First, Google is not eliminating all cookies. In fact, the critical first-party cookies remain viable. First-party cookies are those codelets that are generated by default whenever you visit a website. It’s used for remembering user preferences, storing passwords and basic data about you.

The first-party data provides lots of information – how often you visit a website and what you do once you visit. That information will continue to allow advertisers to build and automate marketing strategies.

Advertisers will still have access to dashboards that show the number of web sessions, pages visited, browser type, geographical information, and referral websites.

But you will not be able to see what visitors of your site do on other sites that aren’t a part of your domain. That’s where third-party cookies have been so valuable.

Third-party cookies give advertisers a more complete understanding of your online behavior. These cookies are placed on your computer by advertisers to track information on other websites you visit.

The detailed data contained in these cookies is immense. It includes what websites you visit, purchases you make and interests you show. Collectively, this information provides advertisers with detailed personas about who you are and what you like.

Unlike first-party cookies, you must be informed and accept the third-party cookie.

Are advertisers prepared for the shift?

The end of third-party cookies is not a complete surprise. Increasingly, regional, federal and state regulators have tightened the grip on privacy.

For example, the European Union adopted the General Data Protection Regulation (GDPR) in 2018, requiring holders of personal information – from retailers to credit card companies – to secure personal and special data (e.g., name, email, address, phone, credit card information, race, ethnicity, health information) and secure it properly. In addition, GDPR requires entities to report when asked about how their data is being used and to “forget” an individual in their systems.

GDPR and other regulatory mandates apply to website information, too.

How The Google Privacy Sandbox will play a role

A few months prior to the cookies announcement, Google released the Privacy Sandbox, which has APIs that advertisers can use to target advertising while maintaining privacy. Publishers and advertisers could still circulate ads to target audiences but would not have access to the data.

The different APIs use various technologies. The trust token API, for instance, requires users to fill out a form to receive a token, but sites will not receive user data. The aggregated reporting API provides information on views, reach and impressions but does not allow cross-site tracking. A conversion measurement API tells advertisers if visitors converted to customers by clicking on an ad or buying a product.

Google is moving carefully with the development of the Privacy Sandbox. Once testing and launch of the APIs is completed, the company will move to Stage 1 of its cookie phase-out. In this phase, advertisers and publishers will be able to migrate to new options, which Google estimates will take about 9 months.

In Stage 2, the cookies phase-out will take place, and is expected to take 3 months.

The cookie revolution has begun and it will likely be several years until it’s fully understood where the crumbs will land.

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