Digital advertising has been highly dependent on third-party cookies for decades. While cookies collect valuable information on internet users, there’s been backlash about their impact on privacy.
With those concerns, Google began to chart a path for cookieless advertising but continuously delayed it.
In this article, Tyler Kollenborn, VP of Data, Analytics and Insights, will break down the latest on Google third-party cookies and what it means for digital advertising.
What You’ll Learn
- What Are Third-Party Cookies?
- Google’s Evolution of Third-Party Cookies
- Google’s Current Position on Third-Party Cookies
- Third-Party Cookie Action Items
Our Expert Insight on Third-Party Cookies
Google’s decision to keep third party cookies is a welcome breath of relief for marketers. However, marketers should not take their eyes off of implementing data best practices. We should all strive to keep up with the latest on Google’s Privacy Sandbox and continue to invest in endeavors that improve signal resilience like server side tracking.
Additionally, marketers should diversify their ability to evaluate their marketing performance and make critical decisions about how to best grow their business. The tools at the top of this list are predictive customer lifetime, media mix modeling, and incrementality testing. A healthy usage of all three will allow marketers to understand how much they can spend to acquire new customers leading to optimized spend caps, develop a clear picture of how each marketing channel they employee contributes to their success, and employ empirical data to answer the biggest questions they have for their marketing initiatives.
So, What Are Third-Party Cookies?
Third-party cookies are pieces of data that allow companies to track someone’s personal information online. They are a vital component for digital marketing, supporting ad targeting. When someone visits a site, another platform (not the site domain) monitors and records online activity such as which sites a user visits, how long they stay on those sites, and what actions a user takes.
While third-party cookies may not be something we talk about everyday, we do experience them quite often. It’s no coincidence that when you look for a product online, you suddenly start seeing ads across the internet.
There’s more than one type of cookie. First-party cookies are another type. Here’s how they compare.
First-Party Cookies vs Third-Party Cookies
First-party cookies also track your online behavior, but the domain you’re on is the one doing so. These cookies are responsible for important components of the user experience like storing your login information or your preferred language setting.
You must opt-in to accept cookies, something you encounter on almost any website. They also remember settings for you, like language or location.
Key ways in which first-party cookies differ from third-party cookies:
- Availability: First-party cookies are only accessible on the domain that created them. A third-party cookie could be accessible on any website that loads the code.
- Privacy considerations: Anyone can block first-party cookies by opting out. Browsers like Firefox and Safari already block them. Google, the largest market share leader globally, does not and will not automatically block cookies.
- Data ownership: Domains own the first-party data they collect. Third-party cookie data feeds into ad tech platforms and may be sold to other parties.
- Data quality: Third-party cookies aren’t people-based and treat every device differently, causing inaccuracies in targeting. First-party cookies offer a new and better approach to targeting. They use a hashing algorithm that enables publishers and advertisers to convert first-party data into anonymous, secure identifiers.
As previously mentioned, third-party cookies aren’t interoperable and are only domain-specific. Other issues include the fact that these cookies aren’t persistent, as they get deleted and cleared, nor are they consistent, as they only exist in the web environment.
As companies have more access to first-party data, the quality and accuracy of targeting rise, leading to better conversion rates and the ability to attribute these to the ad platform.
Google’s Evolution of Third-Party Cookies
Cookies were created to enhance user experience. Developer Lou Montulli at Netscape designed them for ecommerce shopping carts, ensuring items stayed in the cart if a customer left and returned.
Fast forward, and advertisers began exploiting them for tracking and targeting ads. As privacy concerns grew, ad blockers popped up and we started seeing privacy regulations like the GDPR, requiring user consent for data collection.
Google planned on removing these third-party cookies, until the end of June 2024.
What’s the latest update? Let’s break down the timeline:
- 2020: Google announced plans to remove cookies on Chrome and would begin trials on how to replace them. It also introduced the Privacy Sandbox, which uses APIs (application programming interfaces) to allow users to protect information while browsing in Chrome.
- 2021: Google updated its Privacy Sandbox timeline with Stage 1 in late 2022 and would launch it in Chrome with a third-party cookie phaseout set for 2023.
- 2022 – 2023: Google delays third-party cookie deprecation multiple times.
- January 2024: After multiple delays, Google shared that it had disabled cookies for about 1% of users (approximately 30 million users).
- April 2024: Google said it would delay third-party cookie deprecation again.
- July 2024: Google abandoned plans to deprecate third-party cookies.
Why Did Google Decide to Delay Plans?
What’s behind all the delays and the latest decision to end deprecation completely? It’s complicated.
First, Google pushing back its end to cookies had much to do with insufficient replacement. Without an adequate alternative, Google and digital marketers faced significant revenue losses. Ads fund the internet and a key source of revenue for Google, after all. Finding the balance between user privacy, equitable advertising, and revenue was apparently insurmountable.
Second, there were a lot of hiccups in testing the Privacy Sandbox. Google published some of this, and while the results for recovery of ad performance weren’t terrible, there was still a significant decrease in performance. Additionally, the sample size was small, and there were ongoing technical issues with the Privacy Sandbox regarding latency. Finally, publisher adoption of the Privacy Sandbox was low.
The new era in Google cookies begins now. Here’s what it looks like.
Google’s Current Position on Third-Party Cookies
Google’s July 22 post from Anthony Chavez, VP of Privacy Sandbox announced they are no longer removing third-party cookies from Chrome. They cited feedback from stakeholders and continued work on the Privacy Sandbox as ongoing.
Chavez noted that the Privacy Sandbox APIs “have the potential to achieve” outcomes that publishers and advertisers expect. However, it’s not there yet. The company will keep working on it and improving it. Much of the conversation still centers around privacy, so Chrome users will now get a choice. They will be able to opt into browser tracking or reject it.
At this point, digital advertising has two courses running toward the future—one that keeps third-party cookies to target customers and another that relies more on first-party data and contextual targeting to reach customers. First party data usage practices have become much more in vogue of late and marketers should continue to lean into these practices. Additionally, contextual targeting has grown into popularity and continues to evolve as a strong method of reaching customers.
Contextual targeting focuses on the content on the websites where ads would appear. It assumes that people visiting those sites have certain interests. For example, sports-related advertisers would find audiences on websites like ESPN.
Many digital advertising tactics don’t require contextual tagging, including CTV/OTT ads, social media ads, and paid search.
Third-Party Cookie Action Items
Consider these action items for your next moves:
- Continue pursuing first-party data strategies to collect more information from customers with website tracking, surveys, loyalty programs, and account registrations.
- Add progressive fields to forms that ask new questions to those already in your database.
- Ensure you are centralizing first-party data in your CRM so you can segment accordingly.
- Use contextual targeting as the basis for third-party digital advertising.
- Move budgets to cookieless advertising tactics.
- Explore alternatives to tracking and measuring, such as the alternative identifiers that some demand-side platforms (DSPs) are piloting.
- Review compliance with privacy regulations around first-party data collection; using consent management platforms (CMPs) enables transparency and standardization.
- Stay informed about Google’s progress with the Privacy Sandbox and user choice for sharing browsing data.
- Work with trusted partners that understand the ever-changing digital advertising landscape.
- Research tools that support first-party data collection, including marketing automation platform form management, customer data platforms, and Google Tag Manager.
- Add to your measurement arsenal with tools like incrementality testing, media mix modeling, and predictive customer lifetime value.
Moving Forward With Third-Party Cookies
Even though the deprecation of third-party cookies is no longer hanging over our heads, change is still coming. With privacy concerns and the shortcomings of third-party cookies, Ignite Visibility can help you:
- Move forward with first-party data collection
- Contextually target customers
- Gain compliance with existing and new laws
- Expand your analytic tool kit to measure performance
We’re evolving with the entire industry and are ready to support your organization with marketing solutions with or without cookies. Our services enable brands to target, attract, and convert high-quality leads.
Want to know how we do it? Let’s talk today.
