After years of delays, Google is once again calling out the punter to tackle third-party cookie deprecation another day. In what was thought of as a bold move to let brands and advertisers know it was serious, Google phased out 1% of third-party cookies in Chrome at the start of 2024. But alas, Google announced that they aren’t sticking to their self-set deadline due to regulatory and industry pressure and are setting a new target for early 2025.
While Chrome isn’t the only browser to discontinue or limit third-party cookies, it is by far the largest. To paint a picture of its scale, Google Chrome dominates with over 65% of the browser market.
For brands and advertisers that have put off a post-third-party cookie strategy until the last minute, there is yet another chance to prepare and test alternatives before third-party cookies go away, eventually.
But what will the future look like without third-party cookies? Here, we look at alternatives to incorporate into your strategy, what will impact the digital landscape, what will remain unchanged, and how you can prepare the end of third-party cookies if you haven’t already.
What will change with the elimination of third-party cookies
As late as 2023, many advertisers in industries across the board persisted in utilizing third-party cookies for targeting purposes, despite being aware of the impending transition away from them.
For years, proactive brands and advertisers have explored alternatives to cookies. Digging into privacy-first strategies has provided a significant advantage in understanding the benefits and drawbacks of this seismic change. But everyone will need to adjust to this new privacy-focused landscape, whether you were a brand that embraced it early or are still developing a new strategy.
From changes like lack of tracking to growing legislation and privacy-compliant technology, here’s what you can expect to happen when third-party cookies go away:
Reduced Ad Personalization
Let’s start with the obvious. Without third-party cookies, advertisers lose the ability to track the ability of a user’s movement online. This means less targeted advertising, but also potentially less intrusive ads.
For example, if you’re reading a sports news article, you might see ads for athletic apparel companies, even if you haven’t recently looked at running shoes.
While consumers want privacy, they also look for ads that are personalized to what matters to them. According to BCG, two-thirds of consumers want ads that are personalized to their interests. This presents a greater opportunity for brands to make their advertising more compelling or create a first-party data strategy that aligns with incentivizing users to share information.
Rise of Contextual Advertising
Technically, contextual advertising can be classified as something that won’t change. Contextual targeting, which matches ads to the content a user is viewing rather than their browsing history will be counted on to do a lot of the heavy lifting in powering the technologies at our disposal.
Contextual targeting can analyze the meaning of content (like news articles or recipes) to find relevant places for ads. This means alternative data providers will need to focus on contextual signals instead of following users across websites with cookies.
According to research conducted by DoubleVerify, nearly 70% of consumers will look at an ad if it is relevant to the content they read, and 67% of consumers are open to viewing relevant ads from new brands. It’s also been estimated that purchase intent increases by 14%.
Data clean room adoption is taking off
If 2024 was the year that everyone thought the cookie was crumbling, it has also been the year that brands are getting serious about adopting data clean room solutions. If you aren’t exactly sure what they are and how they work, here’s a quick rundown:
• Secure environment: It’s a controlled space where multiple companies can bring their data together for analysis, often under the supervision of a neutral third party.
• Focus on privacy: Strict rules are in place to make sure no one gets access to raw, identifiable information. Data might be anonymized or encrypted before it enters the clean room.
• Collaboration: The key idea is to combine data sets from different sources to get richer insights.
Imagine an advertiser who wants to understand how effective their campaigns are across different platforms. They can use a data clean room to combine their data with anonymized data from social media platforms to track ad performance.
A survey by the Interactive Advertising Bureau found that nearly 4 in 10 (39%) of US brands and agencies plan to increase their focus on data clean rooms in 2024.
Brands and advertisers must decide what they should do for their data clean room solutions. There are two main types of data clean rooms:
• Walled garden data clean rooms: These are controlled by large tech companies like Amazon, Google, and Disney. They allow advertisers to bring their own data (called first-party data) and combine it with the tech company’s anonymized customer information (aggregated data) within a secure environment. This helps advertisers understand how their campaigns are performing without revealing individual customer details.
• Independent third-party data clean rooms: This is run by companies that specialize in data clean room technology, like Snowflake or LiveRamp. They provide a neutral space where advertisers can bring their data together from various sources, including walled gardens, to gain insights into their marketing efforts.
Data privacy laws
Data privacy laws are continuing to expand at the state level. Privacy laws such as GDPR, CCPA, and others aim to safeguard customer privacy by placing legal constraints on advertisers, restricting their capacity to track and retain data. While there has not been much movement from a federal level, you can expect more state regulations on a yearly basis.
Use this time to understand the laws that are currently implemented and keep an eye on future legislation and what it means to where you conduct business. Create a plan now and make sure that there are stakeholders in your organization that are prioritizing any new changes.
What will stay the same
With so much change on the horizon, there are a few areas in which you can anticipate business as usual.
Advertisers’ Transaction Methods Won’t Be Affected
Over the past decade, there has been a significant shift in the transaction methods within the programmatic display market. In 2013, open auctions dominated, representing 74.5% of transactions, but currently, their share has plummeted to just 10.2%. This decline coincides with advertisers’ growing reliance on private marketplaces and direct platforms, including social media channels and retail media networks. This shift is driven by a strategic pivot towards prioritizing first-party data, prompting advertisers to invest more heavily in closed and private ecosystems. These platforms offer benefits such as reduced hidden fees, minimized risk of data leakage, and lower carbon usage.
First-Party Cookies
While third-party cookies are being phased out, first-party cookies are not going anywhere. These cookies, which are created by the domain the user is visiting, can still be used for personalization and other purposes.
In fact, every business should be using its website to its potential. To thrive in a privacy-centric world, businesses should prioritize conversion rate optimization (CRO) for their websites. This will improve the efficiency of your campaigns across all channels. You’ll see a rise in conversions while bringing down the cost of customer acquisition.
The Importance of Consent
The importance of user consent in data collection will remain paramount. Businesses must continue to obtain clear and informed consent from their users before collecting any data.
Regardless of the demise of third-party cookies, one thing that won’t change is consumer expectations around privacy and data protection. Brands that prioritize transparency, consent, and data stewardship will earn the trust and loyalty of their customers in the long run.
The Need for Personalization
Despite the changes, the need for personalized experiences will remain. Businesses will still need to find ways to provide personalized experiences to their users, even without the data from third-party cookies.
With less focus on hyper-targeted ads, the quality of content will become even more crucial. Businesses will need to create engaging experiences to capture and retain your attention.
Topics API and alternative identifiers are front-runners to replace third-party cookies
Google’s latest Privacy Sandbox proposal, Topics API, is a promising alternative to third-party cookies for ad targeting. It provides a balance between user privacy and ad relevance by assigning users temporary browsing topic categories.
Topics API operates as a contextual technology backbone, analyzing browsing habits and providing targeted advertising based on a user’s interests. It works by web crawlers analyzing online content and organizing it into thematic categories, grouping similar content together. As users browse the web, they are assigned to groups based on the topics of the content they interact with. Advertisers can then utilize the Topics API to target users across various websites, relying on these categorized groups rather than individual user data. Each user is associated with up to five topics at a time, with this data expiring after three weeks to further safeguard privacy.
Currently, its scale is limited to Chrome users, potentially excluding users of other browsers. Additionally, the API does not account for subdomains, potentially leading to inaccuracies in topic categorization. With only 350 categories available, advertisers worry about the granularity of targeting, fearing that it may not be precise enough to effectively reach their desired audience segments. These concerns highlight the need for further refinement and expansion of the Topics API to ensure its efficacy while maintaining user privacy.
Alternative identifiers bridge gaps as well, signaling a shift away from traditional cookie-based targeting toward consent-based, authenticated traffic solutions.
These identifiers, such as email-based authentication through services like OpenPass, bridge the gap across the web, allowing publishers to monetize user data more effectively while maintaining free access to content. Despite the availability of alternative identifiers and other targeting methods like device IDs, IP addresses, and geodata, concerns persist about privacy implications and the sustainability of certain tracking methods. Fingerprinting, for instance, faces scrutiny due to its non-consented nature, while IP addresses may become increasingly restricted in the future.
As the industry navigates evolving privacy regulations, the development of cleaner, consent-driven solutions like clean rooms may represent the go-to solutions in ad targeting strategies.
What you should start doing now (if you haven’t already)
Brands are placing more emphasis on their own websites and apps to cultivate first-party data and directly connect with their audiences.
• Focus on First-Party Data: Businesses will need to get creative and focus on collecting data directly from their customers. This could involve building email lists, loyalty programs, and other ways to cultivate first-party relationships.
• Audit Your Third-party Cookie Usage: Determine the volume of third-party cookies you rely on to target your audiences and start putting a plan in place now for alternative solutions.
• Privacy-Preserving Solutions: Explore privacy solutions like data clean rooms and Google’s Privacy Sandbox that offer anonymized data for ad targeting while respecting user privacy.
• Lean Into New Technology: Breakthroughs in AI are making it possible to deliver personalized advertising to a large audience, even without cookies or tracking IDs. By using AI-powered marketing tools, you can target the right customers and ensure your marketing strategy stays effective in the long run.
If you continue to depend on third-party cookies until the bitter end, it will likely put you at a disadvantage when transitioning to a new strategy. Not only will a new way of targeting potential customers take time, but waiting for third-party cookies to dissolve will deprive your business of historical data that may impact your strategy.
Treat the extended deadline as an opportunity to build a strategy that tests third-party cookie alternatives to see what works best for your business.
While third-party cookie deprecation presents challenges, it also opens doors for innovation and a more user-centric approach to media buying.