Last month, Google made a significant announcement: it is cancelling its plan to eliminate third-party cookies in its Chrome web browser. With the news causing the third-party cookie to hit the headlines again, we thought now would be a great time to dive into the world of cookies and what this latest announcement means for marketers, businesses and consumers.
Let's start by taking a step back from the recent news and looking at what we mean by a third-party cookie and some background to the latest announcement. Broadly there are two types of Cookies we use as marketers:
First-party cookies which are created and stored by your website or sites you visit directly. When you navigate to a site, this site generates a cookie that is saved on your device. These cookies are key to user experience and enabling websites to function properly. First-party cookies are responsible for things like Analytics and Performance Tracking. These cookies allow website owners to track user behaviour on their site. They can gather data on how often users visit, which pages they view, and how long they stay on each page.
Third-party cookies, on the other hand, are created by domains or ad-tech platforms other than the one you are currently visiting. They are typically used by advertisers and analytics companies to track browsing activities across different websites. Here's how third-party cookies work:
- Cross-Site Tracking & Targeted Ads: Third-party cookies enable tracking across multiple sites. For example, if you visit a news website and then a retail site, a third-party cookie can record your behaviour on both sites. This allows advertisers to build detailed profiles of your interests and browsing habits. By collecting data from various sites, third-party cookies help advertisers serve personalised ads.
- Data Sharing: These cookies facilitate data sharing between different websites and advertisers. This means that a single third-party cookie can provide insights to multiple entities, enhancing the reach and effectiveness of targeted campaigns.
Over the last four years Google has been attempting to remove third-party cookies, which some users see as obtrusive however first-party cookies remain unaffected. However, Google is not the only player removing the third-party cookie from browsers.
Starting with the IOS update 13.1 in March 2020 and continuing to be refined in every update since Apple has let users opt-out as default from cookies. As Apple has about 35% of the smartphone market in New Zealand this led to a significant loss in data signals for advertisers. In addition, there are other privacy-first focused browsers such as Firefox and DuckDuckGo where third-party cookies are not enabled. This further erodes the percentage of the web marketers can ‘see’ clearly. All of this has led to a slow erosion of data signals marketers can use, previous targeting methods become less effective and we have black spots in our reporting data.
Google initially aimed to enhance user privacy by phasing out third-party cookies. However, after receiving feedback from various stakeholders and considering the importance of maintaining effective advertising, the company shifted its stance. Third-party cookies will remain, at least for now, while Chrome users will gain new options to control their data preferences.
As Google first announced the third-party cookie would be depreciated in 2020 the industry has had a while to develop a replacement, right? Unfortunately not, while platforms like The Trade Desk developed the unified ID and larger publishers started gathering huge amounts of first-party data the industry was fragmented, clinging to legacy systems and seeing what emerged from Google's Privacy Sandbox before making decisions.
The latest Google announcement and the U-turn on its plan to scrap third-party cookies, after years of promising otherwise, has left many in the ad tech industry frustrated (How many ‘cookieless future’ articles and webinars have we consumed). However, marketers must remain focused, especially when it’s uncertain if Google’s pivot will render efforts for a third-party cookie-less Chrome world obsolete.
In the short term, this decision is a win for advertisers. We can continue using third-party data for targeted campaigns, which means better performance insights and transparency. However, this move also delays the adoption of Google’s Privacy Sandbox APIs, which are intended to provide privacy-friendly advertising solutions.
Privacy concerns are not disappearing. Google’s new approach includes a one-time opt-in prompt and ongoing privacy setting adjustments in Chrome, giving users more control. However, the continued use of third-party cookies may keep some data tracking worries alive. Chrome’s new browser prompt will allow users to set preferences across Google browsing experiences, impacting solutions that rely on third-party cookies.
We still don’t know what this one-time prompt will look like, we can only speculate as to the impact it will have. Will the uptake be the same as when GDPR rules in the EU meant users were given a choice to opt-out, leading to approximately a 30% drop in measurable browser traffic? Or will it be an opt-in, mirroring the Safari browser which could lead to an even bigger signal loss? The impact of this will be a further decline in retargeting effectiveness and reach. Additionally, as conversion signals erode the path to conversion and channel attribution our view on performance will become even less reliable.
The future of tracking people in a privacy-respecting way will require a mix of solutions, not just a single one like third-party cookies. This mix will include Google’s Privacy Sandbox, authenticated IDs, probabilistic IDs, contextual data, and first-party IDs. How these solutions come together will depend on what an advertiser is trying to achieve, based on the market and desired outcomes. It won’t be a one-size-fits-all approach. With the latest announcement, Google has put to bed the hopes of marketers that a new catch-all solution would emerge.
As the industry awaits more answers, particularly regarding user consent and measurement, advertisers must continue to adapt and innovate. The key takeaway is that something is better than nothing, and while the road ahead may be uncertain, the journey towards a more privacy-conscious digital advertising landscape is well underway.
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