Last month, Google announced that it would delay the phasing out of third-party cookies until mid-2023. The tech giant had previously planned to phase them out by the end of 2022. The reason for this delay was attributed to intense criticism from its competitors and regulators. This news gives enough time for companies that are completely reliant on third-party cookies to find an alternative solution.
We had previously explored the concept of third-party data, third-party cookies, and their significance for marketers in the foreseeable future. In this article, we are aiming to get down to the basics of third-party cookies, why they have become redundant, and what’s in store for the days ahead.
What are Third-Party Cookies?
Cookies are small snippets of code that are set on users’ devices by a website or third-party and are stored in web browsers. They are used by marketers to track and gather the behavioral data of consumers.
The data that is collected by third-party cookies include details such as user affinities and personas, the overall website browsing patterns, etc. These data help brands target users on broad and precise intent indicators. Traditionally, online advertisers and Data Management Platforms (DMPs) heavily rely on third-party cookies for cross-site tracking, retargeting, and ad-serving.
Third-Party Cookies: Redundancy & Impact
Third-party cookies have been the favorites of advertisers for years as they gave them easy access to consumer data. As consumers became more aware of their digital privacy, there have been calls and appeals to make the web a more private space. They wanted more transparency from companies that stored and used their data. They demanded more transparency, choice, and control over how their data is used. This is when third-party cookies started becoming slowly redundant.
Tech giant Apple first took the stance to block third-party cookies altogether in a move called ‘Intelligent Tracking Prevention (ITP)’ from its Safari web browser. Mozilla then followed suit with ‘Enhanced Tracking Protection’ for its Firefox browser. Later, Google also announced its plans to make third-party cookies obsolete by 2023 in its Chrome browser.
Digital marketers have traditionally used third-party cookies for the following reasons:
Marketers used these cookies to target consumers who are likely to buy products as they browse the internet with the goal of acquiring them as visitors.
Impact: With the death of 3rd party cookies, brands will now see a drastic reduction in the richness of online user personas. For the Acquisition goal, this means having to now rely on broad-based segments recommended by publishers and ad exchanges. The implication is brands getting less for more – reduction in CTR and CVR, and an increase in CPA.
User conversions are another way in which these cookies were used by digital marketers. Users who dropped off from other publisher websites and social media platforms were re-targeted with the goal of converting them into one-time and (later on,) repeat customers.
Impact: Traditionally, DSPs (Demand Side Platforms), advertisers, and social platforms have relied on third-party browser cookies to send event information to their servers via individualized tracking pixels. Without third-party cookies, precise targeting triggers based on events (e.g., drop-off, cart abandonment, product comparison, amongst others,) will fail to deliver. This will have a negative impact on brands’ abilities to nudge users along evaluation and purchase journeys.
3. ROI of Media spends
Third-party cookies enabled marketers to know users’ online behavior better with the intent of sharper ROI predictability.
Impact: If marketers continue to rely on third-party cookies, they will have difficulty finding new customers and knowing their existing customers better. Furthermore, the cookies will not be usable to send conversion-level events to advertising platforms. Continuing to target those who have already converted will not just impact media spends, but also customer experience as a whole.
Google’s move is definitely going to affect businesses (both large and small) which use third-party cookies to track web users, often stretching boundaries of user knowledge, consent, and permissible storage times. DMPs that aggregate data against hordes of anonymous users and track them on the basis of short-lived third-party cookies, will soon find such methods unsustainable.
It is important to note that not all cookies will be phased out. First-party cookies very much continue to serve the needs of marketers in ways that are more accountable, safe, and sustainable to business continuity. These cookies are set by brands via the websites that the users are browsing. They are used to keep track of users and their activity as they navigate from one website page to another.
To know more about how marketers can utilize first-party cookies to future-proof customer experience, do download the following whitepaper:
By Bijoy K.B | Senior Marketing Manager at Lemnisk