Bayan Ishtaiwi, digital media manager at Vizeum, explains how Google’s phasing out of third-party cookies is going to scramble the market.

There is not a single person I know that wasn’t targeted with an ad after browsing content somehow related to that ad. To the point that we often hear the words ‘creepy,’ ‘annoying,’ ‘too much,’ associated with targeted ads. However, they could be coming to an end.

On January 14, Google announced the two-year phasing out of third-party cookies from its Chrome browser, aimed at enhancing user’s privacy and data protection.

“Users are demanding greater privacy […] and it’s clear the web ecosystem needs to evolve to meet these increasing demands,” Justin Schuh, Google’s Director of Chrome Engineering, wrote in a blog post.

Considering how many advertisers rely on third-party cookies to track and target users with relevant ads, as well as to measure campaigns’ success, it’s clear that this move will have an impact on the advertising industry.

But before we talk about that, let’s discuss cookies first.

What are cookies?

Cookies are tiny bits of data sent from a website and stored on your computer by your web browser while you’re on the Internet. They create a user’s digital footprint: based on the websites you visit and the online content you interact with, they will show that you are a fitness buff, a foodie or a fashionista. The more websites you visit, the stronger your digital ID becomes, based on the data these cookies harvest.

First-party cookies are set by websites that you visit and as such, are perceived to be trusted and reliable. Third-party cookies, that are set by a website other than the one you are currently on, don’t have the same reputation, often being perceived as privacy invaders.

How are cookies used?

• Remarketing campaigns: retargeting users who previously visited a site/performed a certain action.
• Storing and retaining data (i.e items added to a shopping cart, auto-complete forms, etc.).
• Saving user preferences and login details (guilty for forgetting all my passwords!).
• Cookie syncing: matching user ID between data management platforms (DMPs) and demand-side platforms (DSPs), which is important for programmatic buying and helps create and segment audiences for a more personalized ad experience.
• Tracking conversions across domains and attributing them to the right channel.

What does Google’s announcement mean?

Since cookies are domain-specific, matching users on different domains for precise targeting can be difficult without having a way to identify them or create unique user IDs – which is what third-party cookies are currently used for. Removing these cookies can make it difficult for brands to target audiences and for publishers to sell those audiences.

For many advertisers, brands and publishers who rely on third-party cookies, Google’s announcement can be a game-changer: Chrome has a majority market share for web browsers on desktop, and slightly less than half on mobile, which means vast numbers of players will be affected by this change.

As Schuh wrote in August, citing Google ad manager data, “When advertising is made less relevant by removing cookies, funding for publishers falls by 52% on average.”

The move can also have a negative effect on campaign tracking and measurement, conversions assessment, channel attribution, and user tracking across multiple domains.

How to prepare for a cookie-less world?

• Google is pitching its Privacy Sandbox (five application programming interfaces (APIs)) as an alternative to third-party cookies and a way to continue proper targeting and tracking. Be prepared to hear a lot about it!

“Privacy Sandbox – a secure environment for personalization that also protects user privacy. Some ideas include new approaches to ensure that ads continue to be relevant for users, but user data shared with websites and advertisers would be minimized by anonymously aggregating user information and keeping much more user information on-device only. Our goal is to create a set of standards that is more consistent with users’ expectations of privacy,” wrote Schuh.

• First-party data will gain more popularity. If you haven’t started collecting, segmenting and using first-party data, now is the time to start!
• Social ads might become brands’ favorite channel, which might result in price increase (expect your CPMs to go higher, if competition increase for the same audience pool).
• Start investing in ad tech and data tech platforms.
• Understand your digital media strategy and make the most out of it by focusing on data and by measuring campaigns properly, based on relevant objectives.
• Consider search ads!
• Email marketing lists to the rescue?
• Direct deals with publishers will come back to life; publishers should focus on solid rich content to attract brands.

Digital advertising is constantly evolving, whether it is a big or a small change. We only need to find ways to cope with those changes and turn them into new opportunities.