Google has chosen to put a stop to its attempts to get third-party cookies out of Chrome after years of debate. The internet giant acknowledged in a statement on July 22, 2024, that it will continue to enable third-party cookies for users who do not want to disable them. Google will provide a one-time prompt that allows users to modify privacy settings, guaranteeing uniformity across its browser platforms, in order to strike a balance between user privacy and the efficacy of digital advertising.
Many industry observers are not surprised by this action. Prior to Google’s revelation, more than 60% of marketers thought the company will not phase out third-party cookies, according to Forrester’s 2024 Marketing Survey. In other words, Google’s dependence on this surveillance technique makes it challenging to stop using it without a good substitute.
This does not, however, imply that marketers can resume “business as usual.” Although Google has temporarily put a halt to its efforts to remove cookies, the move away from third-party tracking is still imminent. Although the industry is still unsure of what will eventually replace third-party cookies, the announcement provides advertisers more time to investigate alternatives.
Google first declared in 2020 that it would phase out third-party cookies in Chrome by 2022, following Mozilla and Apple. 86% of the global browser market is accounted for by Google Chrome (65%), Apple Safari (18%), and Mozilla Firefox (3%). A U.S. judge declared in August 2024 that Google’s monopoly in the search engine business is “illegal,” with Chrome’s dominance being a major factor in Google’s reach. In order to continue being the default search engine on their browsers, Google also pays Apple and Mozilla billions of dollars every year.
Google has chosen to adopt a more measured strategy, even though Apple and Mozilla have already imposed cookie limits. In order to prepare for a future with less reliance on third-party tracking, marketers must modify their data tactics, leaving them in a state of uncertainty.
We’ll examine the following crucial elements to gain a better understanding of Google’s new cookie strategy:
- What are cookies anyway?
- What is changing with cookies, and why?
- What comes next for cookies?
- How should marketers prepare?
What are cookies anyway?
Cookies have long served a number of vital purposes on the internet. In order to help websites “remember” the things a customer has put to their shopping cart, these tiny data packets were originally introduced in the 1990s. Their application grew over time to encompass tasks including saving browser history, tracking users across other websites, and authenticating login status.
In summary, cookies are a dependable method of gathering and disseminating data about user behavior online. But as time has gone on, their function has changed from being a useful tool to one that may violate privacy.
Although there are other kinds of cookies, first-party and third-party cookies are the two most important kinds.
The website a user is viewing stores first-party cookies. By assisting the website in remembering the user’s preferences, they improve the efficiency and personalization of the surfing experience. The current and impending modifications to cookie policy do not impact these cookies.
Third-party cookies are made and saved by websites other than the one the user is currently on. They let businesses to follow a user across several domains and show them tailored advertisements again.
Facebook, for example, has voiced concern that the continuing changes may hamper its capacity to properly target ads, estimating that tailored ads account for 50% of its ad income. Third-party cookies have had a notable impact on the efficacy of advertising, notwithstanding privacy concerns.
What is changing with cookies - and why?
Third-party monitoring cookies are a growing area of concern for lawmakers in the US and the EU. However, as laws like the GDPR and DSA cover far more than just cookie-based tracking, this matter needs to be seen in the larger framework of online data privacy.
Cookies are not the cause of the problem; rather, they are a symptom of it. There is evidence to the contrary, even if businesses such as Facebook point to the success of tailored ads as proof that customers like this type of advertising. For example, according to eMarketer, 31% of internet users have ad blockers installed on at least one device in 2023. Ad blockers work by preventing JavaScript code from creating cookies.
Online transparency is becoming more and more popular, and third-party cookies are frequently viewed as part of a “shadow economy.” Because ad tech companies gather and trade user data without consent, many users are unwittingly followed in this hidden economy. Furthermore, a lot of firms themselves don’t know how their ad tech providers collect and use consumer data.
Third-party cookies are a clear target in the drive for openness.
This makes logical in terms of regulations. However, why would Google support such a move given that it derives the majority of its advertising revenue from cookie-based tracking?
Google’s acceptance that change is unavoidable holds the key to the solution. Instead, they are putting themselves in a position to influence how digital advertising develops in the future. After all, Google might lose a big competitive advantage if a rival starts setting the new industry standard.
Google is only waiting for the ideal opportunity to replace third-party tracking with something just as successful and lucrative. It is not giving up on it because it is ineffective. This explains Google’s decision to take a more gradual approach that gives users more control over their data rather than completely phase out third-party cookies.
What comes next for cookies?
“Technology does not need vast troves of personal data stitched together across dozens of websites and apps in order to succeed,” said Tim Cook, CEO of Apple, at a 2019 conference, expressing an optimistic outlook. Without it, advertising flourished for decades.
Apple appears to be enjoying its new position as a privacy advocate despite not depending on advertising revenue.
But the truth for advertisers is that the most successful marketing initiatives are driven by personal data. If they have a good substitute, they are unlikely to give up on data-driven tactics.
The main question facing Google and other ad tech firms like Criteo is whether they can provide cookie-like tracking features while guaranteeing user privacy.
This seems like a difficult problem. Any short-term fixes that don’t preserve privacy will probably come under regulatory scrutiny. Google’s updated intentions have already drawn criticism from the UK’s Information Commissioner’s Office (ICO), which stated, “We are disappointed that Google has changed its plans and no longer intends to deprecate third-party cookies from the Chrome browser.” Although it’s uncertain if more will be done, the ICO is probably going to advocate for more measures to restrict intrusive tracking.
Google launched its “Privacy Sandbox” program in July in response to these worries. This initiative aggregates and anonymizes data from individual devices using federated learning. This strategy offers a possible balance between privacy and efficient advertising by allowing data to remain on the device itself while allowing the algorithm to continue learning from patterns across various groups.
As with remarketing, advertisers would no longer be able to target specific consumers under this idea. Rather, they would concentrate on identifying demographics based on actions that indicate a desire for their goods or services.
Google reports that marketers should anticipate “at least 95% of the conversion per dollar spent compared to cookie-based advertising,” indicating that early tests are yielding encouraging results. It’s crucial to remember that this test was limited to affinity and in-market audiences, making it simply a preliminary indicator. It’s encouraging for advertising, though. In the near future, third-party tracking of some kind will probably persist, but more research and innovative approaches are anticipated in this field.
Facebook, which has access to a multitude of first-party user data, is also looking into other strategies to supplement its conventional retargeting strategy. “Aggregated event measurement,” a popular choice, is comparable to Google’s cohort-based federated learning. Retailers like Amazon and Walmart stand to gain as well, since they can use their own extensive first-party data to develop advertising solutions inside their own ecosystems. Rich insights into what individuals purchase and search for are provided by this data.
The direction of these efforts is clear, even though the precise results are yet unknown: big platforms and ad tech firms are trying to find ways to deliver cookie-like advertising performance without depending on cookie-based tracking.
If marketers are prepared to adjust to the new environment, this change may enable them to attain comparable performance levels. Even though the overall performance is equal, they shouldn’t anticipate the same degree of reporting transparency.
Future digital marketing techniques will undoubtedly be impacted by this.
How should marketers prepare?
The industry is obviously going in a different path, regardless of whether Google chooses to keep utilizing third-party cookies or completely phase them out.
The biggest change is the adoption of more contextual advertising in place of individual user tracking. Instead of following a person’s journey from start to finish, this entails concentrating on comprehending the larger trends of the client experience.
In the automotive sector, for example, companies may create content specifically for each stage of the purchasing process by focusing on the habits of potential customers. This may be displaying YouTube footage of recent advertising efforts or putting advertisements next to articles that review particular car models.
In this new environment, advertisers will need to use first-party data to better understand their target audience. Building stronger ties with clients is one way to collect this data. Businesses must carefully handle this data and demonstrate to consumers the advantages of disclosing personal information in return for a more improved, customized experience. When creating their websites and applications, marketers should give “data privacy by design” first priority.
In light of these developments, marketers don’t need to panic. It’s a good thing that the online ecosystem is moving toward a more customer-centric strategy. Future rules won’t be as big of a problem if marketers concentrate on protecting consumer privacy and providing value in exchange for their data. This change encourages us to abandon a business strategy that depends on intrusive tracking, even while it doesn’t remove the incentive to provide results.
There is hope because Google, Facebook, and the larger ad tech sector are working together to develop innovative alternatives to intrusive tracking. Whatever direction these new techniques take, one thing is certain: marketers will need to reconsider how they use data. Now is the moment to begin fostering closer, more open connections with clients.