The advertising community has been in a commotion this week, following a momentous announcement from Google on Tuesday: within two years, the Chrome web browser will no longer support third-party cookies, spelling an end to programmatic advertising as we know it. Until then, the tech giant will be working with AdTech players to design and test new “cookieless” advertising features with an emphasis on privacy.
Although it has been anticipated for some time, the move has generated divisive reactions. On one end of the spectrum, some hail the end of third-party user tracking as a win for consumer privacy. On the other end, critics see an attempt by Google to quash its advertising competitors, forcing them to use the APIs in its Privacy Sandbox as an alternative.Whatever Google’s motives, one thing is certainly true: the end of third-party tracking definitely signals a struggle for publishers and AdTech companies in the years ahead. At the same time, it does not spell the end of online marketing or targeted advertising. In fact, a “cookieless world” has been on the horizon for some time, and many – from CMOs to CMPs – are well prepared.
So what should online marketers know about cookies, and what will the upcoming changes to Google Chrome mean for their digital strategy? In this article, we will answer both questions, beginning with an explanation of today’s AdTech.
How Third-Party Tracking Works
Most Internet users have – at least – a passing familiarity with “cookies,” which are small files passed from a website to a visitor. Cookies allow information to be stored between web sessions, keeping a user logged into their account, saving items in a shopping cart, retaining custom settings, etc.
While websites drop cookies directly on their visitors, third parties are also allowed to drop cookies on visitors of their partner domains. Advertisers therefore buy ad space across multiple websites and use cookies to track a user across the web, storing information about their online habits, demographic data and preferences.
There is a good and bad side to this technology: on the one hand, it gives advertisers a high degree of targeting functionality and makes the web experience more “relevant” to the end customer. On the other hand, it tends to creep users out, and some cookies can be used for malicious purposes.
How Will Cookieless Advertising Work?
With the emergence of data privacy legislation like GDPR, cookies are slowly becoming more trouble than they’re worth for many publications, and Google isn’t the first tech company to do something about it. Last year, Apple gave users of its Safari browser the option to disable third-party cookies, and Mozilla Firefox has done something similar.
But until now, cookies have also been very important to the digital economy: they bring in revenue for ad-supported websites and social media platforms – they also give businesses and marketers a way to connect with high-value prospects. So what will they do now?
Fortunately, there are other ways to target users without the use of third-party cookies:
First party cookies
Like before, websites will still be allowed to drop cookies on their users and offer personalized advertising. The difference is that advertisers will not be able to see their prospects anymore or track them across the web – but even this remains possible to an extent.
Universal ID
In the wake of Google’s announcement, there is renewed interest in Universal ID. Under this system, advertisers would be able to track and target users without the use of third-party cookies through an anonymized identifier. Universal ID has many advantages over third-party cookies for both users and advertisers, though it would require widespread adoption among Internet publishers to be useful.
Device Fingerprinting
More controversially, “fingerprinting” is a technique that advertisers can use to track users between browsers and devices. Although it is arguably more invasive than third-party cookies, it is also difficult to prevent, and many publishers have already adopted it as an alternative.
Impact on Marketers
Marketers are right to be concerned about the end of third-party tracking cookies since it will directly impact their ability to target customers. However, the extent of this impact is easy to exaggerate, and – thanks to the developments already mentioned – targeted advertising will continue to flourish.
There are three things marketers should keep in mind before the promised updates to Google Chrome are rolled out in 2022:
- Rapid recovery for CPM
Although advertisers suffered in the immediate aftermath of GDPR, their fill rates quickly recovered to pre-GDPR levels. Likewise, after the Chrome update, marketers will probably see a rise in their CPM rates (cost per thousand impressions) across advertising platforms. However, they should also expect a rapid recovery: the technology for cookieless advertising already exists, and by 2022 it will have reached maturity. - Quality over quantity
With the middle man out of the way, marketers should be prepared to build direct relationships with the publishers who can reach their target audiences. First-party cookies offer a smaller pool of prospects, but also higher quality ones: more than half of all CMOs believe they have barely tapped into the potential of their first-party data, and 96% say they are well-prepared for a cookieless world. - Invest in organic traffic
While advertising will survive the culling of third-party cookies, today’s online visitors are suspicious of targeted advertising, and there are better ways to reach them. With an inbound marketing strategy, a business can attract prospects organically through a combination of high-quality content, SEO, email and social media marketing.
To prepare for the future, marketers should make organic traffic a priority and – instead of relying on third-parties – work to build direct relationships with their customers.
