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Big changes are coming to digital advertising. Google has announced that it will phase out 3rd party cookies in 2023. This is a part of their Privacy Sandbox initiative, which aims to “create web technologies that both protect people’s privacy online and give companies and developers the tools to build thriving digital businesses.”

The phasing out of 3rd party cookies will have huge changes on the way companies use digital advertising. At present, Netsertive recommends using both 1st and 3rd party data in campaigns to ensure a healthy mix of high-intent targeting and extended reach.

As more and more companies change their approaches to using 1st and 3rd party data, digital advertisers will need to pivot and develop new strategies for reaching customers online. Here’s everything you need to know about thriving online in a “cookie-less” world.

What is a Cookie?

Cookies are small blocks of data created by a web server while a user is browsing a website and placed on the user's computer or other device by the user’s web browser. Marketers use cookies to target and personalize advertising and promotions based on what the cookies know about that unknown web user (a few examples of targeting options by Google here).

Without third-party cookies, if someone visits a brand’s website and leaves without making a purchase or providing contact information (e.g. subscribing to a newsletter), that prospect cannot be targeted for 1:1 retargeting. Without this data and the ability to target unknown users based on the info cookies collect, marketers are worried their advertising won’t be as effective as it is today.

Especially those who have built a lot of their strategy around data-driven segments that use third-party cookies for personalization and optimization. Without these cookies, marketers won’t be able to make the same types of segments for potential customers.

What are First vs Third Party Cookies?

First-party cookies are created, published, and controlled by the website you visit and help with things like remembering your shopping cart, items you viewed, and preferences to improve the user web experience. First-party cookies collect behavioral data to help the website owner improve their services. This type of data collection only relays data back to the owner of the web domain.

Pro-tip: 1st party data is going to become more and more valuable, so marketers should think about their content and commerce strategy to continue to acquire and build their 1st party data. Developing strong relationships with customers has always been critical and will be even more vital in a privacy-first world.

Third-party cookies are set by a third-party server (ad-tech) via a code placed on the web domain by the owner of that domain. The data collected on third-party cookies are accessible on any website that loads the third-party server’s code. Third-party cookies allow advertisers to track users across the internet (cross-site) and target advertising wherever that user goes.

Something important to note is that although third-party cookies might be going away, third-party data is not. Businesses will have to find other ways to access this information through membership cards, loyalty programs, email subscribers, social media insights, and more.  

Pro-tip: Cookies sometimes get mixed up with other nomenclatures such as pixels, tags, and scripts, but it’s important to understand that they are not the same thing.

What is a Cookie-less world?

Cookieless describes a way of marketing in which marketers are less reliant on cookies. Recent policy shifts by web browsers include the deprecation of 3rd party cookies in the name of consumer privacy.

Cookies are not completely disappearing — and consumers don’t necessarily want cookies to go away. If you added something to your shopping cart, you want that website to remember what you added to that cart if you leave the website and return later.

That said, consumers do want their privacy concerns respected, and there will be some significant changes. Third-party cookies will undergo the most changes, which will impact personalization and how you acquire customers online.
The biggest question that marketers are asking is, “How do we restore targeting and personalization capabilities?”

What Netsertive Partner’s are Doing

All the big tech companies (Google, Facebook, Microsoft, TheTradeDesk, etc) are taking different approaches to handling the depreciation of 3rd party cookies, with the same end goal to protect user privacy while still supporting advertisers and publishers. For example:

The TradeDesk (TTD) developed an alternative to cookies called the Unified ID Solution, which uses consumers’ anonymized email addresses that are gathered from a user logging into a website or app (mobile or connected TV)

Google said it will not build alternate identifiers like TTD to track individuals and is testing a Federated Learning of Cohorts (FLoC), which proposes a new way for businesses to reach people with relevant content and ads by clustering large groups of people with similar interests. This approach effectively hides individuals “in the crowd” and uses on-device processing to keep a person’s web history private on the browser.

Facebook has long relied on its 1st party data and tracking pixel (a first party cookie) to target Facebook users and retarget those who have visited certain websites. Because they are less reliant on 3rd party cookies, there is less of an impact to advertising there. However other recent changes, such as the iOS 14 update, has impacted Facebook as the upgrade asks users to opt-into being tracked on apps vs defaulting to being opted in.

To overcome the disadvantages of each different type of data, one recommendation is to have a combination of first- and third-party data to optimize for both precision and scale.

How Will this Affect Digital Advertising?

We do anticipate decline in digital marketing effectiveness when 3rd party cookies are phased out, but as new technologies and methodologies are developed will see this bounce back.

There is no one set industry standard being used by the big players like Google, Facebook and Microsoft. As a premier partner to all the major players in the space, our tech and people monitor and stay on top of where the highest return for your investment is coming from and shift media spend accordingly.

This is what our tech is built to do, and our campaign strategy and performance teams also stay on top of the changing trends weekly to ensure your dollar goes where its most impactful.

It’s uncomfortable not knowing exactly what the future without 3rd cookies looks like, but without change there is no innovation and Netsertive is excited about what a more privacy-first world of advertising can look like.

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