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The Demise of The Third-Party Cookie & What It Means For Marketers

Posted by Zoë on 27-May-2021 09:09:34
| 6 Minute Read

Google Chrome has announced that it plans to end the use of third-party cookies by 2022. While this change appears to be quite a big deal, digital marketers have seen it coming for some time, largely as a result of changes in privacy regulations (GDPR, CCPA & ePR) and the increasingly invasive nature of the technology being used that now actively intrudes on user privacy. It’s worth noting that the planned changes will only affect third-party cookies and first-party cookies will remain unaffected at this stage.

The plan is to replace third party cookies with FLoC (Federation Learning of Cohorts) but what is FLoC, how will it impact paid advertising and user tracking and how can advertisers mitigate the impact of this change on their campaigns?

What Are Cookies?

The demise of third-party cookies in Google Chrome.Cookies are text files that a website or another online platform use to record and define your online choices and preferences. These tiny text files are saved and stored on your system (in browser related folders) and are used to track how you interact with the websites you visit in order to deliver better user experience but also target you with advertising based on your preferences and behaviour.

Cookies also help with automating processes for online marketers and site owners enabling them to better understand visitor demographics and behaviour.

What is the Difference Between First & Third-Party Cookies?

Essentially first and third-party cookies are the same thing, they both contain the same types of data and can do the same things. The real difference between them is related to how they are created and used.

First-Party Cookies are stored by the websites you visit, just on that domain, and help that site to collect analytics data about your visit as well as remember things about you that help them deliver better user experience during that visit and subsequent visits.

Third-Party Cookies on the other hand are created by domains to track user behaviour on sites other than their own and collect information that enables that third party domain to track users across different sites and target them there with advertising. They are stored on domains other than the ones you are visiting.

Why Are Third-Party Cookies So Important in Paid Advertising?

Advertisers use third-party cookies to track the overall behaviour of their website’s visitors in terms of other websites they frequently visit, purchases and interests. This data collection allows them to build robust visitor profiles that can then be used to develop and target ads to past visitors or groups with similar profiles.

Without third party cookie data, advertisers would be unable to collect and use that data about visitors to their websites and would also be unable to subsequently target those visitors via remarketing, with ads about their products and services across different websites.

What Else Are Cookies Used For?

Cookies are not only about online advertising/analytics though. You can also use cookies to make sure you deliver an exceptional user experience based on your visitors’ preferences and needs. For example, making sure that your visitors don’t have to re-enter information, log in again or make preference choices each time they visit your site. 

The last Third Party Cookies on Marketers Desk

Why Is Google Chrome Planning to Remove Third Party Cookies in 2022?

The key issue with third-party cookies is privacy. The arguments around this conversation are complex, but in essence, there is significant concern amongst the organisations involved in servicing and overseeing online advertising. They are worried that online advertising tracking technology has become excessively intrusive and manipulative, giving advertisers too much information about their target audiences and so allowing them to essentially violate user privacy online in the name of targeted advertising.

While protection of privacy is the shared driver, the various search organisations involved, Google, Safari, Firefox etc are taking different stances on both the when and the how of how to tackle the issue. Safari and Firefox have already phased out third party cookies and are taking an increasingly definite stance against cross-site tracking. Apple, owners of Safari, released an update to its Intelligent Tracking Prevention in March 2020 which allows Safari users to block all third-party cookies. In November 2020 they announced more measures to further prevent third-party cookie tracking across their browser. Google Chrome however is taking a less decisive approach, looking to roll out a staged solution over a period of a couple of years. They are also planning to offer advertisers alternatives, potentially in the form of the AI system FLoC (Federated Learning of Cohorts) that will work in a more general way via the proposed ‘Privacy Sandbox’. The Sandbox is a group of privacy enhancing technologies developed by Google designed to move the ad serving process to the browser, meaning all data stays on the user’s device. FLoC will work in a similar way to Netflix’s ‘You might like to watch’ suggestions algorithm, which groups users into cohorts based on similar interests rather than individual behaviour and so will offer advertisers the opportunity to target, but only to anonymous groups of people rather than to individuals.

It should also be pointed out that while the leading browsers are working on the issue of privacy, it is being driven somewhat by the way users are changing how they interact with third-party cookies too. Users are rejecting 3rd party cookies (where they are offered the opportunity to) in higher numbers than ever before, which impacts the value of those cookies to advertisers who then cannot use them to track those users, once rejected.

All in all, it seems the writing is on the wall for third-party cookies, the question is how long will it take, what will the alternative look like for advertisers and for users and how can advertisers use effectively target their audiences online in the future?

What is FLoC (Federation Learning of Cohorts) and How is it Different to Third-Party Cookies?

As outlined above, FLoC or Federated Learning of Cohorts is likely to be Chrome’s proposed alternative to third-party cookies.

FLoC will enable user behaviour tracking via features in-built in the browser and will be based on cohorts of anonymous users with similar interests. Where third party cookies track specific users cross-site and therefore obtain a lot of specific information about individual’s search habits and preferences, FLoC will offer a greater level of security and privacy for users by anonymising them as individuals while retaining information about their interests at group level, to allow privacy as well as targeted advertising.

 What Are The Pro’s & Con’s of FLoC?

Clearly, FLoC will limit the way online advertisers can target users online and will offer a greater degree of privacy to those users as a result. However, even at this fairly early stage it is possible to see that FLoC has limitations. It will not be a direct replacement for third-party cookies because it only works in Chrome, meaning cross browser, cross-device and offline data will not be captured. In addition, FLoC’s cohorts are likely to be relatively general, standardised and fixed by Google, meaning that it would be almost impossible to use FLoC to remarket effectively. Anonymised data also impacts how campaigns can be measured because attribution would be difficult to record accurately.

It’s also worth looking at the implications of FLoC outside of user and advertiser experience. As a Google development, Google will naturally have access to all the raw data that goes into FLoC, meaning that the industry would only have access to anonymised data but Google, well, would not. Taking that thought a little further, if Google has control of FLoC, then it’s possible to assume they could also adjust how it works over time. The question would be, for whose benefit though?

At this stage of the process, there is much speculation as to how advertisers can best forge a robust path ahead based on cookieless solutions, and we are monitoring developments intently.
As Safari and Firefox have already phased out third-party cookies, they will be a valuable source of data for advertisers looking for ways to accurately target their ads to the right audiences in a post-third-party cookies world. We anticipate the value of first-party cookie data to increase as well as the emergence of new tools and strategies to leverage user data available more effectively, while respecting privacy regulations more stringently.

How Can We Help You Prepare For The Removal of Third-Party Cookies?

At this stage, we are all learning about what a cookieless world will look like. However, we can focus on delivering the most relevant and friction-free journey for users by leveraging the information they choose to share with us intelligently.

We can work with you to analyse how your digital marketing is generating ROI, assess your digital marketing landscape and work with you to develop a data-led strategy for the future that mitigates the impact of these planned changes.

  • Increase focus on first-party cookie usage and personalisation on site
  • Manage paid advertising to reduce reliance on third-party cookies
  • Implement robust and long-term SEO strategies to build visibility and SERP ranking in advance of the change. This helps ensure that your business’s organic position is already established when competitors are faced with loss of revenue from their third-party cookie reliant paid advertising

It’s worth understanding that SEO takes time to build and take effect, so starting now will enable you to establish a position and competitive advantage in advance of the switch next year.

Contact Innovation Visual For Expert Advice

As paid and organic search experts we are ideally placed to help you guide your organisation through the planned changes to digital tracking and help ensure a smooth transition that minimises impact on your bottom line. Why not start a conversation with now us about how we can help equip you to navigate the changes to third-party cookies successfully and get ahead of the competition?

The quickest way to get in touch with us is by using our chatbot IVy or giving us a call on 0333 772 0509. If you prefer you can leave us a message here and we'll get back to you asap. 

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