End of Third-Party Cookies: What It Means for Digital Marketing

Introduction

The online world is about to undergo a significant change as third-party cookies get phased out. Cookies are pieces of code that collect user behaviour information across the internet and have been essential to digital advertising for over a decade. However, with increasing concern over data privacy and security, some web browsers have blocked out third-party cookies by default and Google has announced plans to phase them out entirely.

The end of third-party cookies will have far-reaching implications for the advertising industry, making it crucial to adapt to new alternatives to collect user data for effective targeting and campaign optimisation. Those who fall behind will risk losing data of their potential customers, while their competitors will gain a fast mover’s advantage to build their own pool of audience cordoned off to the outside world

The History of Third-Party Cookies Deprecation

The use of third-party cookies became widespread in the early days of the internet as a way to track user behaviour and serve them targeted ads. The concern over deprecation of third-party cookies began sometime in 2019 when Google announced phasing out third-party cookies in its Chrome browser. This was in response to growing concerns of privacy and the fact that major tech companies such as Apple and Mozilla began to take action to limit their use. In 2017, Apple introduced Intelligent Tracking Prevention (ITP) in Safari to limit the use of third-party cookies. Mozilla followed suit with its own tracking protection features in Firefox in 2018. Then in 2020, Google, which dominated the browser market, first announced its plans to phase out third-party cookies in Chrome by 2022; which has now been delayed to the end of 2024. This has sparked discussions about alternative tracking methods and the future of digital advertising.

Implications of the End of Third-Party Cookies

The end of third-party cookies has significant implications for digital marketers. It will affect businesses of all sizes, including marketers, advertisers, and publishers. Industries that rely heavily on targeted advertising, such as e-commerce, will be more impacted than industries that focus on brand awareness. These cookies allow advertisers to serve the users with targeted ads and optimise for conversion on ad platforms like Google & Meta. With the loss of third-party cookies, advertisers will have less information about users’ online behaviour to target and optimise for conversion. This will result in an inevitable lower conversion and high costs.

Alternatives of 3P cookies

The limitations on tracking and retargeting resulting from the end of third-party cookies have forced digital marketers to explore alternatives. Such as

Contextual targeting: This involves serving ads based on the content of the webpage rather than the user’s browsing history.

Cohort-based targeting: This method groups users based on their common interests or behaviors, rather than tracking individual user behavior.

AI- based Probabilistic targeting: This involves using machine learning algorithms to analyze user data and make predictions about their behavior and preferences.

Privacy-first data sharing:Companies working together to create privacy-focused data sharing agreements that allow for more targeted advertising without compromising user privacy.

First-party datawhere companies can collect and use their own first-party data to understand their customers and target ads based on that data. This is the most reliable and also the most scalable alternative that industry is rapidly adopting.

Recommended alternative

We recommend First-party data as the preferred alternative as its based on privacy-first framework of First-party cookies (these aren’t going away) that’s based on users’ consent on tracking information such as website behaviour, purchase history, and user preferences and login information directly from consumers; and therefore its considerably more reliable unlike third-party data, which is obtained from external sources, that is use for interest based audience segments on Meta and Google and even used forLookalike targeting.

Challenges in Adopting a First-Party Data Approach
One big challenge is the need for significant investment in data collection & management platform, which is both capital and tech intensive. Another big challenge is that it requires a deep understanding of user behaviour and preferences, which can be challenging to obtain. Finally, first-party data is subject to data privacy regulations, which can be complex and challenging to navigate.

Conclusion
In conclusion, the end of third-party cookies has significant implications for digital marketers. However, by adopting new strategies for collecting and utilising data effectively, marketers can continue to serve relevant ads and create personalised experiences for users. The rise of first-party data provides an excellent opportunity for marketers to improve targeting, increase engagement, and optimise campaigns. By building a first-party data strategy and working with data platforms like CDPs, marketers can stay ahead of the curve and prepare for a world without third-party cookies.