The 3rd party cookie demise
We’ve heard it many times now – the era of 3rd party cookies is coming to an end – and the big question is ”Are we prepared”?
A cookie is a small piece of data sent by a website and stored on the user’s computer by the browser. There are two main types:
- 1st party cookies: Set by the domain you’re visiting.
- 3rd party cookies: Created by a domain other than the one you’re visiting.
Cookies are usually considered essential for internet functionality. They recognize visitors, enabling a better experience. Even 3rd party cookies, which track users across multiple websites, aim to deliver more personalized ads. In best case, that is.
Cookies in themselves are not inherently dangerous, but being tracked in this way has increasingly made people uncomfortable. Privacy wasn’t really a big concern when cookies were introduced back in the 90s; as a result 3rd party cookies can pose security risks for many different reasons, including unauthorized data access, cross-site tracking, and potential misuse of personal information.
This, along with new regulations from the EU, such as the General Data Protection Regulation (GDPR), is why there has been a shift towards phasing out 3rd party cookies. While almost all major browsers have already discontinued support for them, Google Chrome, used by a substantial share of the internet users (approx. 40% in Sweden and 64% globally) has yet to do so. This is likely a key reason why the preparations for a post-cookie era has been perceived as quite slow. As a result, advertisers continue to rely on 3rd party cookies even though they don’t really work for most internet users in Sweden.
Note – there was very recent news from Google at December 14, stating that the so called tracking protection will be rolled out at January 4, 2024 to 1% of Chrome users globally, meaning that the shift will happen over the first half of he year, instead of as previously believed, in July 2024.
The impact on digital marketing
As previously stated, the 3rd party cookie is already half dead. This means advertisers should have already seen a decline in the results attributed according to their adserver or search ads, but it will be more and more real as time goes on until mid 2024. It impacts how we work with advertising in a lot of ways.
- Targeting: The ability to create personalized ads based on a user’s web behaviour, interests and demographic data will be impacted, as these require cross-site tracking which relies on 3rd party cookies. There will need to be alternative methods used, such as leveraging first-party data and contextual targeting, which requires preparations from both publisher and advertiser.
- Measurement & optimization: Conversion optimization uses pixels that places 3rd party cookies on the user device when a conversion happen. This is in order to measure results. A shift to first-party data is needed here as well.
- Attribution and journey mapping: Understanding how different touchpoints contribute to conversions becomes more complex without 3rd party cookies. This means goodbye to Multi Touch attribution, even though I would argue that this never really worked in a satisfying way. Hello more traditional measurement methods such as Media Mix Modelling that uses historic data for insights.
This shift is huge and will change a lot in how we work with digital marketing, and I see a lot of things happening now that is the right way to go forward.
So what happens now?
There is a dilemma here. Customers want and expect personalization, and most even get frustrated when it doesn’t happen. But at the same time, they absolutely do not want to be tracked over the internet, so that is going away. But how can we make sure to be relevant and provide personalized experiences while still making sure everyone’s privacy is protected?
The most important thing is the shift towards first-party data. This is data collected directly by the company, so could be customer data, or behaviour data from app or web, or feedback from surveys and such. To get this data we need to get consent, and usually offer something in return for people to give it to us.
Good structured first party data will enable both the use of machine learning modelling, make you able to create look-a-like audiences and media optimization (with data sharing).
Ongoing trends because of the cookie death.
The demise of third-party cookies will push advertisers to prioritize their first-party data. This means finding ways to track users across channels and incentivizing them to share information. Loyalty programs and personalized website experiences will become key tools for building a rich first-party data asset.
As large advertisers leverage their first party data, publishers are doing the same. If they don’t they will likely lose huge shares of their income. This means that more direct partnerships between advertisers and publishers are going to happen, where data can be shared via data matching or analysed in data clean rooms. It also enables the creation of look-alike audiences based on matched first-party data, as long as the identifier can match.
Without the ability to track users across different sites, there’s also a renewed interest in contextual targeting. These are ads placed based on the content of the webpage rather than the user’s past behaviour. This is also cementing the trend on more direct partnerships. Programmatic guaranteed and private marketplaces in programmatic media buying for all different formats are thus increasing a lot.
Retail media (Advertising directly in retail media platforms, like amazon, Cdon or similar) is also increasing as a result of the cookie demise. Retail media platforms are direct channels between customers and retailers and are also rich sources of first-party data. It also enables a closed-loop approach to attribution, allowing for a direct link between ad views and conversions.
There’s also a lot of alternative tracking technologies, as first party data have less function when it comes to prospecting. Because of this there is ongoing development of a common universal identifier (UUID) that can be used in many places. This is still under testing in the US, but privacy issues might complicate the use of UUID in the EU. So, we’ll see if this will ever get here.
Summary and next steps
In summary, what do companies need to focus on now?
3rd party cookies were essential in digital advertising, used for everything from targeting to optimization to tracking results. The lack of support for them will force advertisers and publishers to adopt new strategies to remain effective.
This shift will necessitate a much greater emphasis on first-party data. It will also likely lead to a change in how we approach tailored advertising.
First and foremost, get your data in check!
It’s more important than ever to invest in your first party data. Ensure that all your first party data, regardless of source, is accessible in one place for activation across different channels. A customer data platform (CDP) is a really helpful system for this. It forces you to have common identifiers everywhere and brings your data to one place and makes it actionable. Of course, systems are not all – and thinking holistically on your whole MarTech strategy is crucial.
Second, Consent management. Without consent, the first party data is not going to be able to be used. Therefore it’s very important that consent management processes are working and that consents are kept up to date.
Third, look into your tracking and measurement. The old ways using pixels won’t work anymore, and is already useless for the people not using Chrome.
Finally, for more guidance on navigating the cookieless world, feel free to contact me.
