The Death of the Third-Party Cookie—Part 1: How We Got Here & How Advertisers Will Survive

Remember when DVR first came out (or even VHS)? Advertisers went into a panic—many thought people would never watch ads again. But what happened? The market adjusted, advertisers focused their approach, and advertising still lives on. (In fact, plenty of people actually enjoy watching ads.)

These days, the digital advertising world is about to go through a similar shock in targeted advertising. The use of “cookies” on websites has steadily grown over the years, eventually becoming the standard for most online companies. Today? Everyone. Uses. Cookies.

So, when Google announced Chrome will no longer support cookies in 2023, there was quite a panic. But not to worry. Here’s how we got here and how we’ll move forward into the next great idea in advertising and marketing.

Wait, Remind Me: What Are Cookies?

If you need a short refresher on exactly how cookies work—the good news is you don’t need to be some kind of programming genius. Cookies are small bits of code that track, personalize and save data about each user. So, as you pop around the Internet, some cookies track you, some cookies follow you, and some personalize the content you see—and especially which ads you see.

First-party cookies can be super helpful. For instance, cookies allow you to save your username and password on a website so you don’t need to remember every time you log in. When shopping online, first-party cookies help retailers suggest other items of interest on their website. They know how a user has interacted with their site before, so they know what they want. The user is on the site, wants to be there, and is usually thankful for the helpfully targeted hints and suggestions.

Where most of the privacy concerns come into play is with the use of third-party cookies. These third parties are outside companies tracking user data, then using it to serve up relevant content or ads wherever that user goes on the Internet. For example, a consumer may be looking at a new pair of shoes, but they ultimately decide not to buy. For the next several weeks, they’ll keep seeing ads for those same shoes everywhere on the Web. Those ads are due to third-party cookies stored in their web browser, serving up targeted advertisements.

Why is Google Halting Third-Party Cookie Support?

Google is the gold standard of the Internet. To many people, Google IS the Internet. So, when Google announced its transition away from third-party cookies, advertisers were understandably confused and concerned. (Even alarmed.)

See, the great thing about cookies is they allow advertisers to drill down and target their audience. By using a little bit of code, you can find out a ton of important information. This data helps you get to know your audience, discover what they like, learn where they spend their time on the Web, and reveal what makes them click with your brand. Your advertising becomes targeted and bespoke—it’s curated just for that ONE particular user.

But that’s exactly where privacy concerns come into play. Most people want marketing tailored to their interests and likes, but not so tailored that it gives off a Big Brother vibe. It becomes a fine line that gets even finer when this data is traded, sold, and misused by third-party advertisers.

While cookies have (at least conceptually) been around since the 1990s, they used to be a somewhat rare phenomenon. Now they’re ubiquitous. The drawback for users is that their private data becomes less private when it’s tracked. Yes, users can clear this data or browse privately, but most don’t.

This is just one reason the European Union is creating tighter privacy laws like the GDPR: to address consumer concerns. So, as worldwide legislation crumbles those cookies, Google, in turn, has followed suit.

What a Cookie-Free Future Means for Advertisers

The good news for marketers and advertisers is that Google relies on its ad networks for revenue, and those ad networks are driven by user activity, search and content. In other words, targeted digital advertising isn’t going anywhere. It may, however, need to make a few changes.

The other good news? Google delayed their stop on cookies until 2023—AND instead of a hard deadline, it’ll be a phased rollout. The reason behind this approach is to give publishers, the advertising industry and regulators plenty of time to familiarize themselves and get comfortable with the new technologies for targeting ads. Digital advertising will still go on—targeting consumers with the right data, but without the traditional use of cookies.

For advertisers who have long relied on tactics like behavioral targeting and retargeting, you’ll have some time to experiment and get inventive (and if there’s one thing we marketers and advertisers are good at, it’s getting creative). With some new ideas and approaches, we’ll still reach our desired audiences online.

There’s also plenty of support and resources out there to help marketers know how to reach their target audience on a digital platform. The IAB’s Project Rearc, the Partnership for Responsible Addressable Media, and of course, Google have created some accessible methods to help marketers get solutions aligned and in place before the 2023 date.

3 Possible Replacements for Third-Party Cookies
A world without cookies may sound daunting (even if you aren’t Cookie Monster), but if you’re a marketer or business owner, don’t worry. The industry hasn’t settled on a hard and fast solution or replacement for cookies in advertising. But like the DVR panic in the late 90s and early aughts, the industry will most certainly come together to find solutions that make sense for advertisers, publishers, and users alike.

Right now, the three possible solutions for cookie-free advertising are:

1. Grouping + no individual IDs.
In this solution, algorithms still track users browsing behaviors, but they’re put into cohorts—groups that browse alike. The challenge of this approach is that data is more generalized and likely not as accurate. While statistics can be quite accurate in predicting human behavior, this solution still presents some concerns. The biggest concern is that separating users into cohorts may not be enough to appease the constraints of privacy regulators.

2. Universal IDs.
With universal IDs, targeting is based on data publishers obtain by asking for users’ consent. The concern here is that many users might opt out. It may be possible to incentivize content to capture users’ data—offering “opt-ins” and exclusive content to those who agree to share (but there will still be gaps in data collection).

3. Stronger emphasis on contextual targeting.
Contextual targeting is a great option and is already included in many digital buys. Website content and articles are scanned for keywords, then ads relevant to the content are shown. This solution doesn’t rely on private information at all—you’re simply looking at search trends and curating popular content.

For example, a user is looking up details on hiking the Appalachian Trail and finds an interesting article on an outdoor lifestyle website. As they read the post, they may see ads for a lightweight backpack or some hiking boots relevant to the post. The ads don’t follow them as they browse the Web, but they work well to pique users’ interest with ads relevant to their search results.

Users expect this type of advertising in their browsing experience. In a recent IAS study, 63% of consumers surveyed said they thought of ads as part of the experience—instead of distracting or disruptive to their browsing. When used wisely, contextual ads can enhance the user’s results, offering them a richer experience (and giving them more of what they want).

Many advertisers and ad networks have AI to scan posts for keywords and offer targeted ads related to the product or service. While contextual advertising is a tried and true digital ad targeting solution, there are still potential pitfalls. For instance, some content scanning tools may not recognize the context or may offer up ads based on negative connotations.

There’s also some concern about the precision of the targeting in broad content. But many technology companies are working hard to optimize their contextual advertising offerings and blocklist or safelist sites accordingly. So while it may seem like taking a step back to the beginning of digital advertising, these optimizations should still help advance the reliability of contextual advertising for the future, making it one of the most promising solutions.

Even Post-Cookies, Digital Advertising Will Go On

Ultimately, another positive result could emerge from these post-cookie solutions. Advertisers will realize the value of good SEO (search engine optimized) content and improving the quality and quantity of the traffic that visits a given site. As a result, marketing will improve and get even better, and more eye-catching and relevant to your users.

Rest assured, the results may lead to innovation, positive solutions and an even stronger connection with your target audience as we explore the path forward. People respect brands that respect their needs (including their need for privacy). When you combine that positive connection with even better digital content, you’ll see an improvement in quality all around—a post-cookie world where we can all thrive.

Need help navigating a post-cookie world? Jigsaw is here to help with targeted solutions to reach your audience. Contact us today.