Third-party cookies are an essential component of many programmatic and digital advertising tactics today. Since Google announced it would be removing all third-party cookies from Chrome at some point in 2023, many marketers and publishers are beginning to adjust their advertising and monetization strategy. Just how big of a deal is this, and what can marketers do to prepare for the inevitable?
Whether you're an expert in this space or just learning about cookie deprecation, don't panic. The one thing to keep in mind is that the loss of third-party cookies will force all of us to become more adaptable. Digital marketers will need to lean in, adopt new methods and test new strategies before we figure out the impact of the cookie deprecation.
There is no single solution that will replace cookies, but this change will require a more diversified approach that includes (and is not limited to): ID graphs, data co-ops, and universal IDs. The removal of third-party cookies represents a new opportunity for better advertising and more privacy and security for consumers.
Table of Contents
- Understanding Cookies
- Cookies Have Always Crumbled
- Dissecting the Use of Third-Party Cookies
- How Will the Removal of Third-Party Cookies Impact Advertising?
- If Not Cookies, Then What?
- How We Are Preparing
A cookie is a small piece of code stored on a user's computer by the web browser while viewing a website. There are two main types of cookies: first-party and third-party.
First-party cookies are set by the publisher or website owner when a user visits their site. These cookies allow the publishers to collect anonymous data about their readers, which provides them with a better user experience.
Avid golf fans might see recommended news about Brooks Koepka on a sports network homepage, while an avid football fan who loves the Cincinnati Bengals might see an article about their new GM on the same website.
Third-party cookies are created by domains other than the one the user is visiting and are used for ad retargeting and behavioral advertising as a user travels between different websites.
Cookies Have Always Crumbled
If you’re afraid of third-party cookies going away, don’t be. Yes, cookies enable advertising, but are they the most critical foundation? One could argue that cookies are not necessarily the best to target users online.
But what exactly is wrong with third-party cookies today?
Cookies Lack Transparency
Let's be honest: cookies are not exactly transparent, so consumers have little insight and control over how and what data is being shared about them.
Cookies Aren’t People, They’re Devices
Cookies represent devices such as a PC, laptop, or cell phone. They do not represent a person, which causes a lot of duplication and wasted ad impressions.
Cookies Lack Persistence
They're not long-lasting, and they're always subject to deletion by the actual browser or the individual user.
Cookies Are Not Common
Cookies only exist in a web environment, and because they're not supported on other great marketing channels (such as apps or connected TV advertising (CTV)), you can't use cross-channel tracking with third-party cookies.
Dissecting the Use of Third-Party Cookies
Third-party cookies are used for three main categories of advertising activities today: personalization, audience targeting, and tracking and measurement.
Personalization relies on audience data to recognize consumers and then serve each user the ideal experience—all of this is powered by third-party cookies.
For example, an auto brand might use personalization to show users the right make and model of cars to match their audience segment. In this case, you might want to show a family an SUV, whereas a sports car enthusiast might see a different type of car advertised.
Third-party cookies also power audience targeting, which allows marketers to send a specific audience a particular message. Rather than the older advertising technique of "spray and pray" messaging, where you show the same ad to everyone across the Internet, audience targeting allows you to deliver particular messages to specific audiences, with the goal of increasing engagement and clicks.
A good example of this could be a children's clothing brand trying to expand its reach to a new audience of moms. Without third-party cookies, we won't know who most users are online unless they are logged in or you already have first-party data about them.
Tracking & Measurement
One of the essential uses of third-party cookies is that they enable us to track and measure our ads. Third-party cookies allow marketers to track a user who sees an ad, clicks on an ad, and then goes on to an advertiser's website. This measurement and tracking are fundamental to marketers tracking the results of their activities in terms of KPIs such as form fills, webinar registrations, sales and purchases.
How Will the Removal of Third-Party Cookies Impact Advertising?
Google Chrome accounts for 62% of all users across devices, and by 2022 they're scraping all third-party cookies. This will have a massive impact on digital advertisers, and we need to get started if we're going to be prepared. Here are some aspects of digital advertising that will be affected.
Behavioral targeting refers to the process of showing an ad to a user based on their behavior across the different websites. It can include things like targeting users interested in rock bands versus metal bands or targeting consumers who are in-market to buy a car or a new phone. Behavioral targeting will be going away with the removal of the third-party cookies.
Retargeting refers to showing an ad to a user who has previously visited your website across the web. Without third-party cookies, this won't be possible in the future.
Frequency capping limits the number of times an ad is shown to the same user in a given time and is especially important for media efficiency. Without third-party cookies, we're going to have to find other ways to avoid bombarding the same audience with the same ad too many times.
Audience extension refers to the process of showing an ad to a publisher's audience across different websites beyond the publisher's site. This is similar to lookalike targeting, where you find matching groups across the Internet based on a specific group of audiences on your website. This won't be possible without third-party cookies.
This may not be a top worry of yours at the moment, if you are more used to the last click as an attribution model. But view-through attribution is crucial because it gives marketers the full story of their media marketing mix, what's truly working, and where they should invest their dollars based on performance. Without view-through attribution, the way we see campaign performance will be skewed.
Dynamic Content Optimization
Some of the other high-impact areas are DCO, or dynamic creative optimization, which automates creative personalization by the audience. That is going to be much harder to do in the future.
Brand Lift Studies
Without their third-party cookies, we won't understand who was in a controlled vs. exposed group for brand lift studies, so we won't understand the impact an ad had on that user. If you run a lot of brand lift studies, you might want to think of other ways of measuring the effectiveness of your campaigns, such as measuring sales or time on site of new users.
If Not Cookies, Then What?
So, if we don’t have third-party cookies, then what other resources are available to power our advertising? Thankfully we can pull out other data from the jar.
You can still use first-party data and your DMP data. Now is a great time to think about your tech stack and make sure you have a plan in action for growing first-party cookies.
Today we also have people-based IDs, which we can continue to use in the future. Examples of these are email addresses, loyalty IDs, or credit card numbers. This data could be uploaded and hashed for data matching.
New IDs in Development
Across the AdTech industry, many different companies are working to develop alternate identifiers. When cookies go away, there will be innovations to come. This could be a user-authenticated universal ID where everyone who wants to access the Internet will have to log in or a different type of development.
Groups of companies have begun sharing and organizing pooled data from online consumers. Within a data co-op, members offer relevant marketing data gathered from browsing and purchasing online consumers in a jointly accessible data store. In most cases, these are member-owned and member-controlled businesses that operate for their members' benefit. Co-op members own, control, and use the products and services of the co-op. The goal is to provide members and customers with the best possible product or service at the best price.
How We Are Preparing
The first step is to start with an audit. We're motivated to understand how this change will impact your business and won't have a firm grasp until we know the current landscape.
Looking at your current media setup will help us understand how many impressions will be behaviorally targeted in third-party cookies. If you are currently serving 95% of your impressions towards behavioral targeting, only 5% is left for contextual placement or other tactics. This instance could signal that the loss of the third-party cookie could have a dramatic impact on your media plan. We are taking the time to examine your media plan and understand the impact.
Expanding First-Party Data
We are also planning to leverage and grow first-party data. We’ll use previous years as data to grow your audiences and enhance and diversify our data collection practices. Such tactics may include:
- Running email marketing campaigns to capture audience interests, demographics, email addresses and phone numbers
- Continuing to architect via database or CRM to compile email data and enhance offline information such as completed surveys, customer feedback, and other customer information
- Establish and identify critical touchpoints throughout the customer journey to capture behaviors, actions, or interests demonstrated across your website(s) or app(s)
- Capturing campaign data from cross-channel marketing strategies
Understanding Your Audiences Contextually
Contextual targeting is coming back, and we are spending time identifying the key categories where your audience exists and building on those to create inclusion and exclusion lists.
It is possible that we will pivot away from retargeting and behavioral targeting, and no longer have the luxury of having “run of network” (RON) campaigns. RON campaigns were previously safe when you layered on things like behavioral targeting, third-party audiences, frequency capping, and retargeting. But without those safeguards in place, we will only be running on contextually relevant spots where our users exist. That’s going to help combat ad fraud and the media wastage that exists.
We are also thinking of how we can block bad performing publishers (via an exclusion list) and at the same time include either great publishers where your audience is or publishers that see a lot of conversions for your campaign.
Using Cookieless Signals
We are exploring leveraging probabilistic data like location and device models married with carrier data to build new targeting strategies. For example, a Samsung Galaxy 8 user on T-Mobile and an iPhone customer are likely two very different audiences with different interests. How could you look at device type, carrier, and location to make inferences about households or interests?
Some possible data signals to consider when building customer information without cookies are:
- IP addresses
- Postal addresses
- Online/offline transactional data
- Geo-fenced mobile data
- Device ID
Cookies were never stable foundations. As mentioned, they represented devices, not people. And moving forward, there won’t be a single universal standard that is going to replace the cookie. So get ready to work or keep working with multiple IDs.
Tracking conversions will become harder, but it’s also going to accelerate things like machine learning, especially for conversion tracking.
As marketers, we are staying engaged to work with partners to help navigate through this evolving technology. We have some time left to test out some new theories, gather as much first-party data as possible, and try out new tactics. But at the end of the day, agility will be the key to success.
We’re always looking for scale and alignment with your brand’s data ethics and outlook on regulation. This will help determine what solutions to test and help future-proof.
Still curious about a cookieless world? Reach out to TKG today so we can discuss the changes further.