Demise of 3rd Party Cookies? What’s Next?

Uday Kumar | Date: June 24, 2020

At the start of 2020, Google announced its plans to phase out support for third-party cookies in Chrome within the next two years. Google Inc. earns most of its revenue from ads running on the Google network and YouTube. They will mostly be unaffected, since they run on first-party cookies.

The strategy to enhance privacy across the web is nothing new. Apple made the first move, Mozilla and Google followed. The privacy race is heating up and Alphabet Inc’s new initiatives attempt to address the rising concern about online privacy.

What will replace them? The answer lies in Google’s Privacy Sandbox, a proposed set of web standards designed to protect privacy while still giving advertisers the ability to target and measure campaigns.

What is a Privacy Sandbox?

In August 2019, Google introduced an undertaking called Privacy Sandbox that aims to “create a thriving digital ecosystem that is respectful of users and private by default.” It includes a bunch of proposals to set open web standards instead of merely providing new privacy features.

Chrome’s Privacy Sandbox is open, and any ad tech company with a third-party cookie offering would be able to call the API

The loss of third-party cookies endangers a number of marketing activities on Chrome, from targeting to measurement. Google Chrome will next explore how to run interest-based advertising without third-party cookies.

Google’s massive share of the browser market — Chrome commands 70% of usage on desktop and 41% on mobile, according to Statista estimates. Cookies have been an essential pillar of online ad targeting, collecting small bits of consumer information to inform marketers and publishers’ campaigns.

Third-party cookies are a powerhouse of digital advertising as they let marketers track site visitors across cyberspace. The tech giant’s decision will impact the entire Online industry considering Chrome’s massive market share.

Chrome’s SameSite cookies

Currently, the Chrome SameSite cookie default is: “None,” which allows third-party cookies to track users across sites. But from February 2020, cookies will default into “SameSite=Lax,” which means cookies are only set when the domain in the URL of the browser matches the domain of the cookie — a first-party cookie.

The SameSite update will require website owners to explicitly state label the third-party cookies that can be used on other sites. Cookies without the proper labelling won’t work in the Chrome browser, which has 64% of the overall browser market.

Things to Know on 3rd Party Cookie Phase-Out

Google isn’t banning all cookies.

Google is only planning to phase out the third-party cookie on its browsers. However, first-party cookies that track basic data about your own website’s visitors are still safe.

Without Chrome-based third-party cookie data, you’ll still be able to leverage and target Google Ads, which will be powered by Google Chrome’s first-party cookies and the Privacy Sandbox tools.

Build own data-ecosystem with data partners:

​For publishers​ ​with million-plus users, the first step is to build their own ecosystems to control audience activity through data. This can help publishers charge a higher CPM for the inventory. Specialist partners can help build these segments with more persistent IDs through cross-device technologies.

First-party data would be the new goldmine:​

The use of first-party data gives the audience a seamless user experience and offers publishers privacy-compliant data that is authentic and willingly provided by the users.

Advantages for Google in three ways.

First, this move gives Google a way to defend against GDPR regulators.

Second, Google can push for this approach to be an industry standard for browsers, putting counter-pressure on other browser vendors to follow Google’s lead and support account-based CMPs.

Third, Google would also have full control over which 3rd-party tracking vendors show up as options in their CMP. For example, they could allow only Google approved vendors (their Google vendor list) to show up and require certain behavior from those vendors, limiting its overall GDPR liability exposure.

If this is indeed Google’s intention, there will be some major implications to the industry.

Google lists will decide between winners and losers. Those who don’t win, will have figure alternative modes if operation that do not rely on 3rd party cookies.

My recommendation to Publishers and Agencies is to put in place strategies and tools that maximize the value of their 1st party data. This will allow then to create versatile solutions that are agnostic of Advertising platforms.