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Why Are Third Party Cookies Going Away?

David Stewart, vp, creative technology director & Bishop Zareh & Parker Weber, vp, media director | 

Why Are Third Party Cookies Going Away?

Who killed the cookie? You did. 

Why has data privacy remained the hottest topic in digital marketing over the past 18 months? And why is the third party cookie on the chopping block? Well, for one, according to Pew Research, 79% of consumers feel concerned about how companies are using the data they collect about them.

And this isn’t news to most of us marketers. We’ve known for years that consumers, once made aware, do not generally approve of the tracking advertisers use to target them. They’ve called data collection practices into question, and now it’s our job, as marketing professionals who target them, to listen to their concerns.

What is a cookie anyway? 

As defined by W3C (World Wide Web Consortium), a cookie is data, stored in small text files on your browser, invented to solve the problem of ‘how to remember information about a user’. The goal of the cookie was to help advertisers increase relevance and thereby conversion/transaction. But the cookie ecosystem was built on the premise of non-disclosure to the consumer and allowed the buying and selling of their information without their knowledge or consent.

Today, advertisers are using cookies to track people in a couple of different ways online. They use first party cookies and third party cookies. Let’s better understand the difference between First Party and Third Party Cookies to explain how they are used to track users.

First Party Cookies

When a user visits a business' website, first party cookies are placed in the user's browser. The first party cookie identifies the user as someone who has visited the website, shared their information with the business, and given explicit permission to the business to continue the relationship. 

Third Party Cookies

Third party cookies are data that is saved in your browser that tells other businesses, often advertiser platforms, information about you so they can target ads. So when a customer visits a site, the browser places a cookie, a piece of data, in the browser so that the ad or site can identify you as you travel around the Internet.

This all made sense 20 years ago, but the challenge with the third party cookie solution is it’s all behind the scenes. Advertising platforms are building robust profiles of customers who never really agreed to share their data with them in the first place. Ultimately this creates the uneasiness that consumers have, because they don’t know how their information is being collected, or what data they are sharing.

Recent Online Tracking Regulations

To combat this, governments have created regulations like the GDPR & CCPA to protect citizens from businesses collecting their information without their knowledge.  These regulations are designed to put the customer in control of their data, requiring businesses to explain their data practices and allow customers to remove their data from the business if they want to.

The challenge with these regulations is the amount of customer data already collected and the difficulty in removing it. This situation has prompted businesses and platforms to consider a better experience that allows customers to opt-in to targeted ads.

Preparing for a cookieless future

As a result of these regulations, we are approaching one of the biggest shifts in the way digital advertising works since its inception. And it’s all because of what’s changing in the world of identity. Driven by consumer privacy concerns and accelerated by technology changes, identifiers like third party cookies and mobile device IDs are endangered species. To continue to run data-informed digital advertising campaigns, a new approach will be needed… soon.

What you need to know right now, in July 2021

  • Google recently pushed back Chrome's cookie deprecation until late 2023 (nearly two years later than originally planned) in what's thought to be a response to the CMA's investigation into the possible anti-competitive impact of their new cookieless solution. This could be even further pushed back given the legal circumstances. 
  • Google has shared more detail about how and when cookie deprecation will happen:
    • Stage 1: publishers and advertisers are expected to migrate to new addressability and measurement solutions over a nine-month period starting late 2022.
    • Stage 2: Chrome will phase out third-party cookie support over a final three-month period, mid-late 2023.
    • It will only happen after their Privacy Sandbox solutions have been fully tested and deployed.
  • Is this the final timeline shift? Maybe not. Google even appears to be hedging on the new 2023 deadline. From the company’s statement: “Subject to our engagement with the United Kingdom’s Competition and Markets Authority (CMA) and in line with the commitments we have offered, Chrome could then phase out third party cookies over a three-month period, starting in mid-2023 and ending in late 2023.
  • In the future cookieless world, there will not be a single solution for the loss of third party cookies, but rather a suite of several different solutions, which makes the value that an agency brings to advertisers even more important as the ecosystem is getting more complicated.
  • While we all have 2.5 years until Google's potential cookie depreciation, it will be more important than ever for agencies to work with partners/platforms that have been preparing and will continue to prepare with a dynamic approach as this landscape continues to evolve.

THE FUTURE WILL CONTAIN TWO CLASSES OF DIGITAL ADVERTISING DATA:

  1. AUTHENTICATED USER DATA

    Opt-in data on individuals, encrypted for security. Some of this data is made available via open industry initiatives (such as UID 2.0), some of it sits behind walled gardens & inside data clean rooms. It is expensive and limited in scale. But, it is highly insightful and provides a real-time window into consumer behavior. It’s the world’s most powerful marketing panel.

  2. ANONYMOUS DATA

    Individual data that is secure because it is grouped into cohorts. These groups of users might all be consuming media in the same context right now, or might all have displayed similar behaviors in the past. Data tied to cohorts is truly anonymous and as a result can be executed at scale, to reach any user in the world without an ad blocker. In addition to contextual ads and publisher-curated segments, edge computing & Google Chrome’s Privacy Sandbox promise exciting new ways of executing cohort-based targeting. To win, marketers must be able to extract maximum intelligence from the authenticated world, and then activate this at scale through anonymous targeting, to their entire addressable audience. This connected approach is the only path to deliver the high reach, high relevance, high ROI campaigns of the future.

There are currently 27 different alternatives/solutions to authenticated IDs. There is not a one size fits all cookieless solution.

Three non-cookie based targeting data sets

  • Contextual targeting leverages keywords, content and domains to reach your target audience
  • Macro Data  (such as weather targeting or cold/cough/flu data targeting) 
  • Cookieless Channels such as OTT, Audio and leveraging ACR data to target with advanced TV (ATV).

Some things to consider

  • Think about the user's privacy. We will only have access to anonymous data that is secure because it is grouped into cohorts. These groups of users might all be consuming media in the same context right now, or might all have displayed similar behaviors in the past.
  • Consider data clean rooms to share & analyze your data in a privacy-first environment
  • A cookieless future will present a challenge for retargeting from an activation standpoint since site retargeting is currently 100% reliant on cookie-based audiences. Programmatic platforms that do not adjust and evolve their methodologies will suffer, along with the advertisers that rely solely on them. There isn't a silver-bullet solution here, but the big two strategies to be aware of are:
    • Retargeting registered users within an advertiser's CRM, using a partner like LiveRamp which anonymizes those CRM-based identity files into IdentityLinks, and then targeting these IdentityLinks when users are logged in across Liveramp's network of publisher partners which is gaining coverage and currently includes 65 of the ComScore top 100 publishers 
    • Using the browser API framework per the proposal laid out by Chrome in their Privacy Sandbox. This is currently just a proposal and not available for testing but we expect this to be available before Chrome removes third party cookies altogether
  • There could be other innovations that happen, for example some businesses are exploring rewards to see ads and share data. Rewarding customers with small increments of crypto currencies seems to be something that is trending in the market and an example is how Brave browser rewards you with BAT coin.

How Karsh Hagan and their partners are preparing as the market continues to evolve

  • Over the past 18 months, Karsh Hagan has been working with our partners to ensure our campaigns and partnerships are increasingly futureproofed for the evolving identity landscape.
  • Advertisers and agencies need to be dynamic and ensure that the partners they work with are able to maximize retargeting scale across multiple platforms.
  • Our position as an agnostic programmatic media agency remains a strong one. Our partners have the ability to operate across multiple ID spaces and open & closed DSPs gives us continued agility and protection as the marketplace evolves.
  • In summary, change is the law of life in technology.  The digital media ecosystem is a dynamic one, with new platforms, methodologies, tools, and opportunities emerging every day. We are at the dawn of a new era for ad tech—one filled with opportunity and room for innovation in the way we connect with our audiences. And, at the end of the day, if we remain focused on the intersection of what benefits your customers and also benefits your business, we will help our clients to  continue to thrive by building trust and relationships with those customers.

 

. Sources/Partners: Centro, MiQ, Pew Research, W3C

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