It’s official: the death of the (third-party) cookie is coming, which has big implications for any business that does digital marketing.
Cookies are small bits of code dropped onto your browser to record user activity. When somebody visits a website, the domain creates a cookie and stores it in the user’s browser. The cookie contains a unique ID that allows the website to identify them when they return to the site. It helps websites track user behavior and store data like usernames and passwords, shopping activity, or items left in your digital shopping cart.
There are two types of cookies, first-party (which doesn’t share data with other websites and advertisers) and third-party (which is typically placed on a website by someone other than the website owner and collects user data that is shared with other websites and advertisers).
Cookies have been in use since the 1990s, practically the dawn of the internet. But in 2020, Google announced that it will end support for third-party cookies in Chrome, and the cookie is expected to be fully phased out in 2024.
This is hardly a shocking development for anyone who has been observing trends in the media industry, marketing technology and privacy sensitivities in recent years.
The digital media industry acts as if this is the end of the digital marketing world as we know it, but the truth is that the demise of the cookie is probably good for everyone involved — consumers, publishers and even marketers.
Both Mozilla Firefox and Safari have restricted third-party cookies since 2013, and Safari became the first to block all third-party cookies in 2020. In February 2021, Mozilla Firefox also blocked all third-party cookie tracking by default for all users. In April 2021, Apple made major privacy changes and required users to opt-in to tracking on apps and websites in the iOS 14.5 update on iPhones and iPads. In 2022, Google followed suit with Android phones.
Overall, the digital marketing industry has not been as dramatically affected as anticipated, and in some cases, the data accuracy has improved!
To better understand these changes, let’s separately go over some of the facts and explain the reality of what these facts really mean for digital marketing.
FACT AND REALITY: THIRD-PARTY COOKIES
FACT: Third-party cookies are going away from browsers. This means that companies
will no longer be able to track consumers online using third-party cookies.
REALITY: Targeting using third-party cookies has been slowly crumbling for years!
This change really only impacts browsers — Google Chrome, Firefox, and Safari — on computers and mobile devices (tablets and phones).
As we discussed earlier, Firefox and Safari have been restricting third-party cookies for a decade. Google is the last to adapt and will stop using cookies by 2024, after three delays since 2020.
The media is making this a bigger deal than it is as this is all about privacy for consumers, especially in the wake of regulations like the GDPR and CCPA (which are only the beginning).
For programmatic advertising companies, it’s about improving the targeting by making it more reliable and accurate. The reality is that to target consumers, there needs to be multiple identifiers to give a clear match rate for a targeted audience. On a good day, third-party cookies only ever had a 50-60% match rate. Even if governments weren’t regulating the consent to track, programmatic companies needed to find a better solution.
Walled gardens, such as Apple, Google, and Amazon are gathering their own first-party data and doing a great job of re-targeting their consumers.
Other companies should follow suit and have a strategy for their first-party data.
FACT AND REALITY: PRIVACY CHANGES ON MOBILE DEVICES
We talked about third-party cookies, but what about the changes that have to do with my iPhone or Android phone? Or all those apps?
Again, the answer is that it all has to do with privacy.
FACT: With Apple iOS 14.5 and Android 12 privacy updates, consumers have the ability to not be tracked if they so choose.
REALITY: Third-party apps, similar to third-party cookies, are how companies have collected and shared data for targeting on mobile devices for many years.
As a consumer, you have always had the ability to turn off tracking through your settings. Recent phone updates, the iOS 14.5 update specifically, simply bring that setting front and center so more consumers are given the chance to choose not to be tracked on their phones.
This means that users are now prompted to “Allow” their behavior to be tracked and their information to be shared for advertising purposes, or to “Ask App Not to Track” to opt-out.
While Apple requires prompts from each new app a user downloads, the Android12 update requires a user to opt-out through the settings on the app, so no prompt is required.
Keep in mind that Google owns Android. They need to show they are adhering to privacy regulations, but they also make billions of dollars on tracking users’ behavior. They are not going to make it as easy on consumers as Apple did.
Another major privacy change involves location. In iOS 14.5, Apple allowed users to turn off precise location for more approximate location. But some apps like Yelp, Uber, and Maps need your precise location to work. Because of this, most consumers are choosing to leave the location tracking on.
Prior to the iOS 14.5 change, when the tracking was at the device level, you were sending off just one signal or identifier (IDFA) from the device. Now with the changes, apps are sending off more signals. This means more data to track, which ultimately this can lead to better targeting if done right.
IMPACTS ON TARGETED DISPLAY ADS AND VIDEO/OTT ADVERTISING
Programmatic companies have been dealing with the slow death of the third-party cookies for a while, but many companies are still relying on third-party cookies for targeted advertising. Like how Google has delayed the death of the cookie three times, many programmatic companies are putting off their need to change too.
Make sure that whatever agency you are partnering with for targeted advertising is not reliant on third-party targeting using cookies. They should have already moved away from this form of marketing. Ask them what platforms and vendors they partner with and how they are targeting consumers.
As we prepare for continued privacy changes on our computers and mobile devices, it’s more important than ever to maximize first-party data. You can start preparing by watching our webinar Death of the Cookie: How Marketers Can Use First-Party Data Now To Prepare and subscribe to our blog for future posts about first-party data.
Shannon Allen is the Chief Revenue Officer for Federated Digital Solutions. She has over 25 years of experience in sales and marketing and over 15 years more specifically working in the digital world. Her passion for digital marketing is what drives her to find the best digital solutions for clients as well as for FDS. Shannon believes that true marketing starts after the sale with strategic campaigns and detailed reporting to help all FDS clients with an ROI, so they see the value in digital marketing.