What Will the Cookieless Future Mean for Marketers?

The impending removal of third-party cookies from Google Chrome has created a justifiable sense of anxiety among marketers and advertisers. As a core technology behind programmatic advertising, third-party cookies drive revenue for brands, with McKinsey predicting that publishers will lose up to $10 billion thanks to the cookie’s decline.

But it’s not all doom and gloom: from a marketing perspective, many argue that third-party cookies were never all they were cracked up to be, and the pros of our cookieless future could easily outweigh the cons. In this article, we’ll explain the role of third-party cookies in today’s digital ecosystem, what might replace them, and how it will impact the future of online marketing.

What are Third-Party Cookies?

Most Internet users have heard of “cookies,” which are small files passed between a website and a visitor. Cookies allow information to be stored on a user’s browser between web sessions which the website can later retrieve to keep a user logged into their account, save items to their shopping cart, retain custom settings and more.

But cookies can also be saved to a user’s browser by third parties – especially ad exchanges like OpenX or DoubleClick, which access the user through embedded code. The cookies which they drop enable the third party to track users across any website where its code is present, building a highly accurate profile of their identity and personal preferences.

In theory, data gathered via third-party cookies allows publishers to present users with more “personalized” messages, resulting in a higher engagement and clickthrough rate (CTR). But the practice is not without controversy.

The Cookieless Push

Consumers are getting tired of rampant data collection – according to Pew Research, more than 80% of Americans feel they have little control over the data companies collect from them. In general, they’re right: third parties frequently gather information from consumers through apps and websites without their knowledge or consent.

In response, regulations like the California Consumer Privacy Act (CCPA) are requiring organizations to obtain a user’s consent before collecting their data, and browsers like Safari, Firefox and Brave now disable third-party cookies by default. Today, only one holdout remains on the web browser side, and that’s Google Chrome.

Google Joins the Game

As the world’s most widely used web browser, Google Chrome has a big impact on the Web: so when Google announced in 2020 that it would be removing support for third-party cookies by 2022, many believed that the death of third-party cookies had finally come.

In 2021, however, the company changed its deadline for a cookieless rollout to the end of 2023, with a trial period beginning in late 2022. In defense of this delay, Google cited the need to “move at a responsible pace” and “avoid jeopardizing the business models of many web publishers which support freely available content.”

It’s a fair point: Web 2.0 is largely powered by advertising, enabling publishers to provide users with free information and services. Before it can disable third-party cookies by default, Google feels it must develop a new and less invasive alternative for targeting web users, and it has spent considerable resources on the endeavor.

The Privacy Sandbox

By now, Google has experimented with numerous alternatives to third-party cookies through its Privacy Sandbox initiative. In June of 2021, it was actively testing four, with thirty proposals on the table. But the main ones have been FLoC and Topics.

FLoC – which stands for Federated Learning of Cohorts – would cluster groups of similar users into one of about 30,000 cohorts which advertisers could target as a group, while Topics would categorize users based on their top 5 interests out of 350 interest categories at a browser level.

While Google initially leaned towards FLoC, attentions from the UK Competition and Markets Authority has pushed the company towards Topics – by far the simpler and least invasive of the two solutions. But while it seems thar Topics will be the future of Chrome, not everyone is happy about it.

A Monopoly on Data?

On balance, the ad industry has not been enthused with the direction of Google’s Privacy Sandbox or any of its cookieless tracking alternatives. In a blog post, Trade Desk CEO Jeff Green argued that “Google wants fewer cars on the road” – the company will retain vast amounts of granular data about its users while forcing other companies to depend on high-level audience segments.

As an alternative, Green promotes Trade Desk’s Unified ID 2.0, an open-source tracking identifier that acquires permission from users before tracking them across the Web, with the ability to opt-out at any time. But while Unified ID 2.0 and other post-cookie identity solutions address many of the concerns prompting the death of third-party cookies, Google has disavowed them.

Ultimately, any replacement for third-party cookies must track something – the ad industry just wants that “something” to be as close as possible to a discrete user, while Google is headed more in the direction of anonymized groups (cohorts and high-level browser identifiers). Both parties have an agenda, and both approaches have a trade-off – but so far, Google’s direction seems to be the one most aligned with privacy, while open-source identifiers are more aligned with the status quo.

Impact of Cookieless Alternatives

• Increased user trust – returning control of data collection to users will increase their confidence when interacting with brands across the Internet. With their privacy concerns addressed, consumers will feel they can visit new websites and download apps without the risk of being targeted or tracked.
• Reduced cost from targeting – segmentation based on third-party data costs a premium – and sometimes that premium comes with little to no return. With third-party cookies out of the picture, organizations will spend less on programmatic advertising and more time crafting creative marketing strategies.
• Reduced ad fraud – personalization features have arguably contributed to the incidence of ad fraud, which drives up the cost of online marketing campaigns. As organizations move away from third-party cookies, malicious actors will have fewer opportunities to steal their adspend with fraudulent clicks.
• Better customer relationships – in the absence of third-party cookies, organizations will have to build more trust with their visitors and prospects. This means relying on first-party data and targeting small publishers with a highly engaged audience. Among other things, this will help marketers to make a greater impact on Gen-Z audience members.

In short, the cookieless web is altogether not as bleak as it may seem. For consumers, it provides a better and safer web experience; for marketers, it provides new challenges and opportunities that could pay off for years to come.

Web 3.0 and the Future of Privacy

As Google prepared to trial a cookieless version of the Chrome browser later in 2022, many are asking whether we ever needed third-party cookies in the first place. The answer seems to be “not as much as we assumed” – and that is a reason to be hopeful for the future of Web 3.0.

Web 3.0 is purported to give users more control over their Web experience through a decentralized structure that promotes privacy and consent. While this is not a foregone conclusion, the latest innovations from Google’s Privacy Sandbox suggest that it’s possible to target users in relevant ways without unauthorized tracking or targeting.

These are exciting times – and as we move into the cookieless future, Conveyance Marketing Group is here to help you with constructive marketing strategies that put trust over tracking, and relationships over automation.

Related Blogs:

• Everything You Need to Know About Position Zero in 2022
• How Digital Marketing is Advancing with Technology in 2022