Google will soon put digital advertisers on a reduced-cookie diet.
In August of 2019, Google announced an eventual phase-out of third-party cookies from its Chrome browser. The latest announced ETA is the end of 2024. The original announcement sent shockwaves through the advertising sector. Those shockwaves have since subsided, but a cookieless future is coming. Digital advertisers are trying to develop strategies and tactics to cope with that future.
Here’s how to get your hand out of the cookie jar and make a successful transition to a profitable future.
What Are Cookies?
Cookies are small text files that contain data about a user. That data is stored for future use. There are a few different types of cookies:
- A first-party cookie is a bit of information that the visited website stores locally. These cookies typically perform functions that website visitors find useful. A prime example is a username and password. Without first-party cookies, you’d have to re-type your username and password every time you visit a website.
- Third-party cookies are created by domains other than the website you’re browsing. These cookies are used by digital advertisers; generally, they allow ads to be served on other websites. Say you’re browsing Amazon for a new kayak; hours or days later, ads for that very same kayak pop up within a news article you’re reading. Third-party cookies make this happen.
Cookies in Advertising
Both first and third-party cookies play vital roles in current online advertising. They allow marketers to suggest relevant ads, retarget users across the internet, and store key pieces of user information. Cookies drive ads, and ads pump up revenue. Cookies also influence analytic measurements, which will look different without cookies.
Why Third-Party Cookies Are Going Away
Recent rulings in Europe and growing privacy concerns in the U.S. are driving the demise of third-party cookies. Users want more control over data collected about them. Apple and Mozilla (Firefox) have already cut cookies from their browsers, and now Google will join in.
And yet, all is not lost for digital advertisers.
The Future of Cookieless Advertising
Digital advertisers now rely heavily on third-party cookies to track users and effectively target ads. But an end to third-party cookies doesn’t mean an end to targeted advertising. Marketers simply must pivot to collecting direct customer data and new alternatives.
Option 1: First-Party Cookies
Marketers/advertisers can continue to collect valuable consumer data directly from sites they control. First-party cookie data is pure – direct from the user. Such data offers better predictability and forecasting.
Option 2: Contextual Marketing
Contextual marketing delivers display ads that match the content a user is viewing, based on content, keywords, and topics on the page. The beauty of it: No cookies are required, and the display ads always align with the user's current intent. A user reading about home furniture, for example, will see an ad for couches.
Option 2.5: Intent-Based Marketing
Intent-based marketing applies to search advertising. Instead of obtaining possibly irrelevant data from third-party cookies, this approach matches ads to searches. The ads delivered relate directly to what the user seeks in the market. Say the user is searching for bikes – up pops an ad for Trek bikes. Third-party cookie data might deliver an ad for kitchen knives, based on week-old browsing history. Intent-based marketing is more likely to deliver actionable results.
Option 3: Email Marketing
The greatest marketing asset – now and even more so in the future – is first-party data. Collect it through email sign-ups, which can be a valuable source to fill in your customer's data profile. A collected email address opens many avenues to gather additional information. You can implement profile pages, polls, and target users directly. You can add your email lists to Google Customer Match for better ad targeting.
Option 4: Google
Google is working on developmental ideas for creating a more privacy-focused ad experience.
Shortly after Google’s cookie announcement in 2019, the company rolled out an alternative called the Federated Learning of Cohorts, developed around an open-source technology to build clusters of people with similar browsing activities. Privacy issues blocked this technology from leaving the gate; it could quickly lead back to hyper-targeting with the combination of personal identifiers.
Google’s next crack at a cookieless future was Topics. The long and short: The Topics API assigns five topic headings to a user for a week. Then, if a site’s content applies to any of those topics, an ad can be delivered. At present, 350 interest groups exist; the relatively small number has raised concerns over limitations on detailed targeting. But that number is likely to rise over time.
Another Google project in the works is FLEDGE – First Locally-Executed Decision over Groups Experiment. The concept: Deliver interest-based ads, as selected by the browser on the basis of previously visited websites. Like Topics, FLEDGE remains in the sandbox phase.
Tracking & Data Measurement
Google Analytics will operate differently without third-party cookies, and machine learning will continue to replace data that cookies formerly provided. Google Analytics will continue to delve deeper into behavioral reporting. Google’s Consent Mode will pair with Google tags to honor user preferences regarding cookies. If users opt-out of cookies, modeling will fill in the missing pieces.
The Big Picture
Advertisers mostly ignored the loss of third-party cookies on Apple and Mozilla platforms. Instead, they’ve been waiting for Google.
Chrome (Google’s browser) owns 65% of the browsing market share, and Google Ads accounts for 28.6%. That’s why the shift has been slow, but now change is imminent. Advertisers have viable alternatives in first-party cookies, email, contextual marketing, and Google's Privacy Sandbox projects. (To keep up with Google’s privacy initiatives, bookmark its Privacy Sandbox.)
It’s important for marketers and advertisers to be ready for the predictable period of adjustment to the loss of third-party cookies. But the future isn’t gloomy. It offers the potential of a better balance of marketing and customer privacy, and enhanced user confidence in an industry that clearly takes privacy seriously.
Our team is here to help you navigate and understand changes in the digital advertising space. If you have questions or need help with your digital advertising initiatives, don’t hesitate to contact us.