Update

Google has scrapped plans to stop using third-party cookies for the forseeable future. Rather than depricate them outright, Google will experiment with ways to give users more control over their tracking preferences.

By Q3 of this year, Google has stated that Chrome’s third-party cookie jar will be empty — following similar moves by competitors, Firefox and Apple’s Safari.

This portends the beginning of an industry-wide shuffle towards a more privacy-forward online environment, meaning marketers will have to make do with first-person cookies and alternative, privacy-centric tracking methods.

Thankfully, there is a variety of options available to brands hoping to fill data gaps carved out by evolving privacy legislation.

In this article, we break down the banishment of third-party cookies, how the marketing world currently functions, the implications for marketers when said functions shift, and the avenues opening up for cookieless tracking and analytics.

The short version of events

In a nutshell, with the phasing out of third-party cookies on the horizon, the search for alternative data gathering techniques is in full swing.

The move towards more forthright forms of tracking poses some big challenges for marketers, but several innovative solutions are already part of the discussion, and leaders of the web browser industry are working on additional, more direct, replacements.

Google aims to read third-party cookies their last rights by Q3 of 2024. However, the full impact and practical implications may not fully materialise until 2025 or perhaps even 2026.

What are third-party cookies?

Third-party cookies have long been the backbone of targeted advertising, tracking user behaviour and measuring campaign success. These small pieces of code, stored on users' browsers, permit cross-site tracking, allowing marketers to follow users across the web, gathering data on their online activities and preferences.

Google Chrome, one of the most popular web browsers globally, has played a pivotal role in this ecosystem.

How do third-party cookies differ from first-party cookies?

The term "third-party" refers to the fact that these cookies come from a different domain than the one someone is interacting with directly. This is what differentiates them from first-party cookies, which are created by the domain a user is currently on.

Third-party cookies are set by entities, such as advertisers or analytics services, that have content embedded on a website. When someone visits that website, these cookies surreptitiously latch on to the user and report information about their behaviour to the third-party entities.

For example, if you visit Website A and it has embedded content (like ads or social media buttons) from Website B and Website C, you’ll be tracked by Website B and C’s cookies, even though you never visited their pages.

Website B and C can then use your information to sharpen their marketing strategies.

The situation as it stands

As of the current landscape, third-party cookies are still very much a part of the digital marketing industry. With the data gathered by third-party cookies, marketers can deliver highly personalised ads to users based on their browsing history, interests and demographics.

It’s an interactive process that involves a continuous cycle of data collection, analysis, and ad delivery in order to optimise campaigns, increase engagement and, ultimately, drive conversions.

However, user concerns about privacy and data security have led to a growing pushback against the unbridled use of third-party cookies — consumers are increasingly aware of how their data is collected, shared and monetised. 

As a response, several countries and regions have enacted or are considering stricter data protection regulations like GDPR in Europe and CCPA in California, which impose restrictions on cookie usage and require user consent for tracking.

Moreover, big names in the browser industry, such as Mozilla Firefox and Safari, have already taken steps to block or limit third-party cookies.

Google Chrome, with its market dominance, decided to take a different approach, announcing a gradual phase-out of third-party cookies — starting with 1% of users in Q1 of 2024.

Why 1%?

As is evident in the gradual rollout of their core algorithm updates, Google doesn’t like to make big, sweeping changes to any aspects of its service, as rushing things through increases the likelihood of mistakes and consumer dissatisfaction.

True to form, Google is applying their measured approach to the phasing out of third-party cookies, giving themselves plenty of time for privacy sandbox testing. In essence, this is a grace period during which Google is measuring the impact of removing third-party cookies — and trying to dream up alternative advertising tools that bring marketers most of the benefits of third-party cookies, sans privacy issues.

This incremental process also means that advertisers don’t have to go without third-party cookies cold turkey. Instead, web developers and marketers have plenty of time to transition their systems and gently acclimate themselves to a cookieless world.

As Google’s testing develops and the company grows more confident in its offering, the phase-out will broaden, with plans to draw the curtain on third-party cookies once and for all by Q3 of 2024.

It’s worth noting, though, that the phase-out was initially planned for 2023, and there’s every chance that Google could push the date back even further.

What is Google currently working on?

Google has had its best people racking their brains to come up with a solution to the impending problem. The favourite of hundreds of suggestions thus far is being referred to as Google Topics.

Google Topics functions by analysing a user's browsing history and assigning them specific groups or categories visible to any website they visit. This, in theory, would give marketers enough information to work with without divulging personally identifiable details.

Some apprehensions have surfaced regarding the privacy implications of Google's latest privacy sandbox, as, although the information is slightly less specific, the data gathering process shares similarities with third-party cookies.

But Google suggests that if users are - legally speaking - anonymous, there is no privacy violation. Thus, browsers are running with the idea.

A question for the future is… will privacy legislation build towards a broader definition of anonymity to further fortify the privacy of users? If yes, then it’s back to the drawing board for Google.

Implications of the phase-out for digital marketing

With third-party cookies gradually becoming obsolete, advertisers will face challenges in delivering personalised ads, but what will this actually equate to in cold hard cash? Well, the immediate financial fallout is projected to collectively cost businesses something to the tune of $10 billion per year in lost advertising revenue.

There’s also the matter of rising social media ad costs to consider, which will inevitably deepen the economic burden of the third-party cookie’s absence — we’ve already witnessed ad fees nearly double in response to Apple’s iOS14 privacy update.

We’ve also already seen a glimpse of the cookieless future in GA4, with some data being withheld to protect user privacy. Data modelling is helping to fill the void in cookieless analytics, but it doesn’t completely resolve the fact that some first-party data is no longer present.

Moreover, as privacy concerns gain prominence, marketers must prioritise obtaining explicit permission for data collection and personalised targeting. This not only aligns with ethical practices but also helps build trust with users who are increasingly wary of how their information is used online.

Where users choose to withhold information, popular marketing approaches, such as programmatic and display advertising, become less effective, as they rely on the insights delivered by third-party cookies. 

Precise remarketing becomes tricky too, as, without third-party cookies, once users leave your website, they disappear into the digital ether.

These shifts demand a re-evaluation of advertising strategies to ensure relevance and a strong ROI without compromising user privacy. In preparation for a cookieless future, marketers must take steps to optimise proprietary digital channels for data gathering. This will lay a strong foundation for the implementation of alternative, consent-driven tracking techniques.

But what exactly are the alternatives?

How will cookieless tracking and advertising work?

There are several ways to approach cookieless tracking and data gathering that can minimise the impact of the third-party cookie’s demise.

• Contextual advertising: One prominent alternative gaining traction is contextual advertising, which relies on the content of the web page rather than tracking individual user behaviour. By aligning ads with the context of the content, marketers can still deliver relevant messages without relying on intrusive tracking mechanisms.

• First-party data: Underutilised in comparison to third-party data, first-party data is emerging as a cornerstone of the new marketing landscape. As mentioned earlier, first-party data is gathered by the website a user is on. This approach not only ensures compliance with evolving privacy standards but also allows for more accurate targeting based on explicit user preferences and behaviours.

• Zero-party data: Sourcing information directly from willing users, zero-party data completely removes privacy concerns from the equation. These data-gathering techniques can take many communicative forms that start a discourse with users, such as questionnaires, contact forms, registration forms, etc.

• Combed data: While zero-party data is willingly offered by users when a website or brand reaches out, it's not the only way to gather valuable data from user opinions. Brand management tools can be used to comb the web for any mention of your brand, products or services. Although this data is gathered beyond proprietary spaces, it is still freely offered by users and does not contradict any current privacy legislation.

• Predictive analysis: Using advanced AI technology, marketers can fill data gaps with precise estimations of user behaviour without relying on what could be considered personal information.

• Cohort targeting: Technological innovations, such as Federated Learning of Cohorts (FLoC) proposed by Google as part of their Privacy Sandbox initiative, are also being explored. FLoC groups users with similar browsing habits into cohorts, enabling advertisers to target broader audience segments without individually identifying users.

• On-device targeting: This refers to the practice of delivering personalised content via data processed locally on individual devices, meaning no external servers or third-party platforms are involved.

• Measuring conversions: With third-party cookies on the way out, conversion measurement becomes an even more important aspect of analytics. By focusing on conversion click-throughs, marketers can build a picture of campaign efficacy and make optimisations without dipping into personal data.

• Simulations: Another aspect of technological advancement in this field involves the realistic simulation of both user and online environment to test ad performance, avoiding customer data altogether.

Final Thoughts

The impending demise of third-party cookies on Google Chrome is forcing a paradigm shift, demanding a recalibration of strategies and a pivot towards privacy-friendly alternatives.

As legislation intensifies, the goal of marketing with precision whilst simultaneously respecting user confidentiality becomes something of a moving target — but TDMP can help.

Contact us today to discuss how we can assist in developing a flexible approach to cookieless advertising that ensures privacy and efficacy coexist in your strategies both now and in the future.