Google’s announcement to remove third-party cookies on Chrome by early 2025 has left many marketers and advertisers at medium-sized businesses wondering about the future of tracking, targeting, and measurement. While things will be different, this shift also presents an opportunity for collaboration on new and innovative approaches that can deliver significant returns. If you’re looking to thrive in a world without third-party cookies, check out this comprehensive guide that provides a path forward with strategies that you can deploy today.
The Origin of the Cookie
In 1994, at the age of 23, Lou Montulli, an engineer at Netscape, the company responsible for constructing one of the internet’s earliest widely used browsers, conceived the cookie. The motivation behind this invention stemmed from a prevalent issue on the nascent web— websites lacked
effective memory. Each time a user loaded a new page, the website treated them as a stranger, hindering the development of fundamental web features we now take for granted, such as persistent shopping carts across various e-commerce pages.
Montulli explored various potential solutions before ultimately opting for the cookie, a decision he later elaborated on in a blog post. A more straightforward approach could have involved assigning each user a unique, permanent ID number, revealed to every website they visited by their browser. However, Montulli and the Netscape team dismissed this option due to concerns about third-party tracking of people’s browsing activity. Instead, they chose the cookie.
The Netscape team’s initial intention was for the cookie to facilitate the management of “state” within a single website. However, the evolving demands of the open web, primarily fueled by advertising, led to the emergence of technologies and tools like ad servers and site analytics companies. These tools played a crucial role in driving growth but faced the challenge of managing and communicating state across multiple sites, particularly for functions such as counting and frequency controls. This necessitated leveraging the cookie framework but applying it to the domain of the enabling technology, such as DoubleClick.
Understanding the Different Types of Cookies
Navigating the intricacies of online browsing and user interactions requires a grasp of the various types of cookies. These digital markers play a key role in elevating user experience, facilitating website functionalities, and providing valuable analytics for publishers and advertisers.
Let’s explore categories of cookies and unravel their respective functionalities in more detail:
Understanding the two types of cookies is crucial in navigating the dynamics of online browsing and user interactions. Cookies are designed to enhance user experience, facilitating website functionalities, and aiding analytics for publishers and advertisers.
- First-party cookies: Website visitors willingly opt into first-party cookies. These cookies are crucial in collecting data for tasks such as counting page views and users. Publishers can then share this data with agencies or advertisers, enabling the delivery of targeted ads. Additionally, analytics tools leverage first-party cookies to gain insights into user behavior, contributing to a comprehensive understanding of website interactions.
- Third-party cookies: In contrast, third-party cookies are small pieces of data created by a domain other than the one currently being visited. Frequently used for tracking and collecting information about a user’s online behavior across various websites, these cookies serve a broader tracking purpose. Third-party cookies play a significant role in providing insights into user preferences and behaviors across the digital landscape, contributing to a more comprehensive understanding of user engagement and interaction patterns.
The Five Dimensions of Third-Party Cookie Depreciation
The initiation of third-party cookie deprecation by Google holds significant and potentially severe implications for the media activities of medium-sized businesses (e.g. those without direct ownership of or access to market-level data sets or comprehensive identity graphs). This change builds upon actions initiated by Apple and Firefox, involving the mediation/blocking of third-party cookies, as well as security software that routinely deletes them after a specific time period.
The focus here is on third-party cookies, so for advertisers exclusively operating within “walled gardens” (e.g., Google, Amazon, Meta), the impact is less significant. Yet, for mid-market advertisers who have established more comprehensive “full-funnel” models of engagement and price-performance advantage, there exists a significant risk. The risk is heightened when they depend on infrastructures (DSPs/bidders, etc.) that are not linked to comprehensive, permissioned identity frameworks. It’s important to note that media buys using CTV are less immediately impacted as they don’t rely on third-party cookies.
The phase-out of cookies further emphasizes the divide between advertising technologies with abundant resources “have mores” (scale, data, AI investment cloud infrastructure) and those with limited resources “have lesses” (reliance on in-house solutions, closed infrastructure, and dependence on single supply-side methods). This depreciation expedites a transition, compelling mid-level enterprises to strategically align themselves with capabilities that offer flexibility for making informed purchases on the open web or within walled gardens. This alignment is crucial in accordance with performance and the economics of performance.
1. Liability and Compliance: Third-party cookie depreciation cannot be seen in isolation of the changing compliance landscape and the increased commercial risk related to data, identity, and permissions. The new wave of US legislation breaks away from the traditional position held in the industry that data is separated between digital and analog. In Europe, GDPR established a model where all data is at some point identifiable and therefore needs to have adequate notice, choice, and consent. This should be a key driver of how mid-level enterprises consider their overall solution model. The penalty for getting it wrong is both fiscal and reputational.
2. Transit Mechanism: The deprecation of third-party cookies disrupts the stability and signaling of the transit mechanism across the open web advertising model, which is crucial for targeting, communicating state (cookies enable writing name-value pairs for basic functions like counting or remembering the last item in a sequence, etc.), and measurement. To effectively address the challenges posed by cookie deprecation, mid-level enterprises must ensure comprehensive coverage of every aspect of their solution framework affected by cookies. For those utilizing a multi-touch attribution (MTA) model, it is vital to monitor the performance of audience segments and how metrics are trending.
3. Targeting: The elimination of third-party cookies, removes the ability to pass variables in real-time and have that information drive a reaction if it is required to be stored. It also eliminates the “handshake” between partners that “synch” data to support targeting models. The solution for this is to align with partners that have strong permissioned identity graphs and data stores, this supports better, more transparent models (e.g. retail media and access to the enterprise-level DMPs such as TTD or Amazon DSP). There will also be improved options in contextual targets. These will be adequate for some use cases, as they are today but often fail on a price-performance scale.
4. CTV: The current actions on cookies do not directly affect CTV, which is more household-orientated and IP-based. However, we believe this is more of a short-term gap as Apple’s Safari browser offers the ability to block IP in their settings, and Google is considering options in this area. Additionally, it’s crucial to note that all the streaming platforms require logins using email, introducing an element of user identification that may undergo changes in the future. Again, we believe the best remedy is to align with capabilities that connect to enterprise-grade solutions offered by Choozle.
5. Measurement: The biggest net impact to mid-level enterprises from cookie deprecation is measurement. Again this is particularly impactful to those advertisers that have developed (or are developing) integrated strategies that blend open-web strategies that may include directly sourced CTV, retail media, native with search social, and “walled garden inventory”. While the click will still be able to pass parameters that can associate traffic, we will see an overall degradation of measurement capability that is based on view-through or other associated measurement methodologies. This challenges a model that is arguably already over-invested in the last click (visible measurement). As measurement drives investment, audience planning, and decisions related to channels and tactics, addressing this issue becomes paramount. Mid-level enterprises must ensure their partners provide a comprehensive solution for this. The emergence of AI-based causal modeling is making solutions available at an effective cost and scale, and this capability should be a top priority for your partner.
Before you get too concerned, consider that the third-party cookie-matching rates, representing the percentage of cookie IDs synchronized between two distinct platforms, significantly vary among AdTech and MarTech platforms. Generally, third-party cookies aren’t very effective, with attribution accuracy hovering between 40% and 60%. Advertisers should see this as the right moment for a much-needed infrastructure overhaul. Necessity not only sparks invention but also helps overcome inertia.
Why is the Use of Third-Party Cookies Under Scrutiny?
The decline of third-party cookies in web browsers is due to the changing privacy landscape. While cookies are not inherently bad and are used by most websites to ensure a seamless experience for returning visitors, tracking individuals across the web using third-party cookie tracking is becoming more regulated. Governments and web users are demanding more privacy and transparency regarding their data, introducing new privacy laws worldwide to protect user privacy and secure their data.
Privacy Regulations and The Current Climate
The Network Advertising Initiative (NAI), established in 2000, functions as a self-regulatory body within the online advertising industry, primarily focusing on addressing privacy concerns associated with online behavioral advertising. NAI actively develops and enforces industry standards and best practices, promoting responsible data collection and usage among its member companies.
Additionally, the NAI offers an opt-out page, allowing users to manage their browser’s opt-outs from interest-based advertising. Although the NAI facilitates the page, participating members are individually responsible for configuring and honoring opt-out cookies. Users can utilize the page to identify companies engaged in interest-based advertising, learn about individual privacy practices, check their browser’s current opt-out status, and selectively opt out of interest-based advertising from specific companies. It’s important to note that while opting out doesn’t eliminate online ads, it ensures they are not tailored to user interests. The service employs opt-out cookies, and users should be aware that browser settings may impact this process. Furthermore, the NAI recognizes the evolving landscape of advertising technology and provides guidance on non-cookie technologies.
Notably, Safari, and Firefox, two major browsers, emerged as pioneers in championing user privacy by taking a proactive stance against the setting of third-party cookies, blocking third-party cookies in 2020 and 2017, respectively. Apple heightened its commitment to privacy with the Intelligent Tracking Prevention (ITP) feature, significantly restricting third-party cookies. Governments, notably the European Commission, echoed this sentiment in 2021 by proposing a ban on third-party cookies across all sites, prompting updates to the EU General Data Protection Regulation (GDPR).
Response to increased privacy concerns has been slower in the United States. However, specific states, such as California, have enacted comprehensive laws like the California Consumer Privacy Act (CCPA), granting consumers rights over their personal information.
Navigating the Evolving Landscape: A World After Third-Party Cookies
The elimination of third-party cookies signals a new era. Google’s strategic move to phase out these cookies on Chrome is driving a global shift, ushering in a host of emerging alternatives and possibilities. As we navigate this exciting terrain together, let’s explore the avenues shaping the future of digital advertising post the third-party cookie era.
1. Google’s Privacy Sandbox: Google is phasing out third-party cookies on Google Chrome, starting this year, following a two-year delay from its original announcement. It’s worth mentioning that the first stage of Google’s update, affecting 1% of Chrome’s global users in Q1 2024, has a minimal impact on US internet users. Globally, this amounts to approximately 30 million users, with roughly 1.5 million in the US. With a total browser usage globally hovering around 4.6B worldwide, of which Google Chrome represents 66%, an additional 3B people impacted by Googles elimination of cookies this year.
2. Universal IDs and Unified ID 2.0: The concept of Universal IDs has evolved as a strategic response to the limitations and privacy issues associated with third-party cookies within the digital marketing ecosystem. Historically, ad tech agencies heavily depended on third-party cookies, causing websites to become slow and buggy due to the necessity of third-party software to synchronize cookie information across platforms. Recognizing these challenges, industry stakeholders embarked on exploring alternatives to not only improve user experience but also to address privacy concerns.
In addition to this shift, the emergence of IDs for mobile has become noteworthy. It’s essential to acknowledge that IDs for mobile leverage distinct mechanisms, notably Mobile Ad IDs. This distinction is crucial in understanding the evolving landscape of identification methods in the digital marketing realm.
Considering these advancements, it is pertinent to incorporate this input into discussions surrounding the impact of Universal IDs and Unified ID 2.0.
Universal ID Definition: According to Forbes, a Universal ID is a single identifier that recognizes the user in the digital marketing ecosystem and allows the information associated with the user to be passed onto approved partners in the supply chain. Unlike third-party cookies, Universal IDs open up the ability to create and share an ID with first-party information for the needs of the entire digital advertising ecosystem while respecting privacy.
Universal IDs were introduced as a standardized solution, providing a single identifier within the digital marketing ecosystem. This identifier is assigned to each user, streamlining the transmission of user-related information to approved partners in the supply chain. Unlike third-party cookies, Universal IDs eliminate the dependence on third-party software for syncing, resulting in a more efficient and privacy-conscious system.
LiveRamp introduced the first universal ID in 2016 as an alternative to traditional third-party tracking. Following suit, The Trade Desk launched Unified ID (UID) in 2018, serving as a universal cookie aggregation tool.
To make ad campaigns more resilient in the future, Unified ID underwent modifications and is now known as Unified ID 2.0 (UID2). This updated framework prioritizes transparency, requiring consumers to consent to advertisers’ use of their personal information. With many publishers, advertisers, demand-side platforms, and data providers adopting the framework, the momentum for UID2 continues to grow.
3. Retail Media Networks: Retail Media Networks, one of the fastest-growing channels in the industry, introduces an intriguing model for certain advertisers. These networks have strategically aligned themselves with DSPs that boast substantial size while offering a more effective closed-loop system.
Retail Media Networks offer a lifeline by capitalizing on first-party data, steering clear of the challenges posed by the demise of cookies. The ascendance of retail media, projected to reach a valuation of $100 billion by 2026, is spearheaded by industry behemoths such as Amazon, Tesco, and Walmart. Collaborating with retailers provides brands with access to valuable first-party data, facilitating targeted messaging through the utilization of loyalty schemes and dynamic content optimization.
These platforms empower advertisers to glean insights into shopping behaviors, construct privacy-conscious audiences, and fine-tune advertising formats to boost sales. The evolving landscape witnesses Retail Media Networks extending their reach beyond onsite monetization, integrating various media assets like in-store screens and email databases into comprehensive marketing programs. Investing in offline campaigns emerges as a strategic move for retail media networks, affording them a competitive edge and long-term advantages in the face of privacy concerns and legal interventions.
Success in this dynamic retail media environment hinges on making data-driven decisions and seamlessly integrating retail data analytics into the decision-making process. While the digital advertising realm adapts to a post-cookie era, Retail Media Networks stand out as resilient and data-rich solutions for marketers.
4. Contextual Advertising: Contextual advertising, an evolving approach, involves placing ads based on the content of a website or webpage, a departure from the traditional reliance on user behavior. For instance, a sports equipment brand might showcase ads on a sports news website, ensuring alignment between the ad content and the site’s context. This approach respects user privacy while still facilitating effective targeted advertising. While contextual advertising is a dynamic and evolving approach, it’s crucial to recognize that it constitutes a single tactic rather than a comprehensive advertising strategy.
5; First-Party Data Aggregation: Companies are increasingly recognizing the value of first-party data collected directly from customers with explicit consent. Consider a subscription-based streaming service like Netflix, which utilizes user viewing habits to recommend personalized content. This data-driven approach enhances marketing strategies, providing tailored recommendations and ultimately improving the overall customer experience.
6. Seller-Defined Audiences: The concept of seller-defined audiences revolutionizes how publishers leverage first-party data. Imagine an online fashion retailer collecting data on user preferences, enabling the creation of unique audience segments. These segments, such as “avid sneaker enthusiasts” or “casual wear enthusiasts,” are then offered directly to advertisers, allowing publishers to play a pivotal role in crafting nuanced and effective advertising approaches.
7. Privacy-Enhancing Technologies (PETs): Privacy-enhancing technologies like data clean rooms are gaining prominence for secure data usage. Suppose multiple companies in the healthcare industry collaborate through a data clean room to analyze patient data for research purposes. In this scenario, individual privacy is safeguarded as companies derive insights without directly accessing each other’s sensitive information, ensuring compliance with privacy regulations.
8. CTV—A Bright Spot Among Third-Party Cookie Depreciation: While the demise of third-party cookies poses challenges for digital advertising, the consensus among many media outlets is that Connected TV (CTV) stands to gain significantly from this shift.
Despite the growth in CTV viewership compared to traditional linear TV, advertising in the CTV space has not kept pace. Nielsen reports that 38.7% of TV viewing is through streaming, but only 29% of all TV ad spending in 2023 was allocated to CTV, as per Insider Intelligence.
The unique advantage of CTV lies in its advertising ecosystem, which doesn’t rely on third-party cookies like traditional digital media. This distinction is expected to lead to an influx of first-time CTV brands or a surge in spending for some existing brands in the coming year. With that said, the true opportunity for CTV advertising lies in forming partnerships with direct supply sources, facilitated through collaborations with partners possessing well-established and compliant data strategies.
What’s Choozle’s Stance on Advertising in a Post-Cookie World?
While the IAB raises concerns about Google’s progress, many advertisers are waiting to see what happens. Fortunately, if you need guidance amid this major shift, Choozle is here to help. We view this challenge as a significant opportunity for the industry to collaborate for success for a strong open web.
Addressing the core challenge involves solving for five key actions:
1. Implementing Privacy-First Frameworks like UID 2.0: Once publishers achieve critical mass with opted-in emails, the industry needs them to provide this signal at scale in ad placements. Privacy-first frameworks like UID 2.0 facilitate secure interactions without third-party cookie matching.
2. Geospatial Data Drives Better Insights: Leveraging advanced technologies such as Geocoding, the conversion of addresses into geographic coordinates, brings a transformative edge to digital maps for retailers. This process revolutionizes the understanding of customer behavior and demographics. The resulting data not only supports precise geotargeting but also aligns with privacy requirements and legislative frameworks. This alignment ensures that the precision achieved serves both advertisers and the broader regulatory landscape. As a result, retailers can craft highly tailored marketing campaigns, reaping benefits that span from increased foot traffic to personalized messaging.
3. Enhancing First-Party Engagement for Advertisers: Advertisers, especially outside e-commerce, must improve strategies to authentically collect first-party engagement. Creating strategies to expand consumer interactions is challenging in non-e-commerce spaces like CPG, where retailers often intervene.
4. Ensuring Compliance and Security for Third-Party Data Providers: Third-party data providers must ensure compliance and security in collecting identity data.
5. Collecting Opted-In First-Party Data from Publishers: Many publishers and streaming content providers with logged-in experiences and scaled data are adopting paywalls and daily caps to incentivize email collection.
Amid this considerable shift, we recognize the magnitude of altering entrenched behaviors across tens of thousands of organizations. Choozle stands out by collaborating with both The Trade Desk and Amazon, leading companies with viable DSP solutions for a cookieless future.
Exploring Choozle’s unique position within the advertising ecosystem is valuable for those worried about the future of targeted ads and measurement capabilities. If you haven’t partnered with Choozle yet, ask your DSP about their plans to navigate third-party cookie depreciation. Keep in mind that apart from Google, only The Trade Desk and Amazon are the only players with the scale required to get major publishers and advertisers to the table to align support behind a cookieless solution that relies on user log-in data.
10 Questions You Should Ask Your DSP About Cookie Depreciation if You’re Not Working With Amazon or The Trade Desk
In the evolving digital advertising landscape of third-party cookie depreciation, it’s crucial to ask your DSP the right questions. Explore ten key inquiries, from assessing the impact on your current strategies to understanding innovative roadmaps designed to tackle the challenges of cookie depreciation. Your DSP’s stance on these topics and their ability to answer in a clear manner will reveal their readiness to help you successfully navigate this new era of advertising.
3. First-Party Data Integration: How does the DSP support the integration and utilization of first-party data in advertising campaigns?
4. Retail Media Network Integration: Can the DSP integrate with retail media networks to leverage retail-specific audience data and insights?
5. Privacy and Compliance: How does the DSP ensure compliance with privacy regulations while still providing effective targeting options?
6. Measurement and Attribution: What changes can I expect in terms of measuring campaign performance and attribution in the absence of third-party cookies?
7. Cross-Device Targeting: How does the DSP handle cross-device targeting without relying heavily on third-party cookies?
8. Ad Fraud Prevention: What measures does the DSP have in place to prevent ad fraud, especially in a scenario where traditional tracking methods are limited?
9. Education and Resources: Does the DSP provide educational resources or support to help advertisers adapt to the changing landscape of digital advertising?
10. Roadmap for Innovation: What innovations or features is the DSP planning to implement to address the challenges posed by cookie depreciation in the future?
The Bottom Line
As we wrap up our exploration of the evolution and impact of cookies, it’s evident that the digital landscape is undergoing a significant transformation. From the inception of Lou Montulli’s invention at Netscape to the widespread adoption of third-party cookies and their subsequent scrutiny, we’ve observed the delicate balance between user experience, personalization, and privacy.
The imminent depreciation of third-party cookies brings forth both challenges and opportunities. Lingering concerns about the limited viability of digital advertising use cases are being addressed through the industry’s response, marked by innovation and collaboration.
Choozle, uniquely positioned in collaboration with industry leaders like The Trade Desk, Amazon, and other prominent retail media networks, stands as a guiding force in the evolving advertising landscape. As we navigate this uncharted territory, Choozle remains at the forefront, ready to assist advertisers and marketers in comprehending the complexities and seizing the opportunities of a post-cookie world. If you haven’t joined us on this journey, we encourage you to reach out for a discussion.
Martin Smith
Martin Smith is the Senior Vice President of Sales at Choozle. He has over 30 years at the leading edge of innovation in media, data and data technology on both the agency and client-side. He is a veteran of businesses in their growth phases including Apple, Audible, MatchLogic and the Lowe Group. Martin has led revenue teams and been a key driver in effectively supporting business transformations enabled by technology and the effective application of data. He’s passionate about supporting advertisers and their agencies to maximize their investments in acquiring and developing their customer relationships.
