What Does the Death of Third-Party Cookies Mean for Online Advertising?
Google’s recent delay to phase out third-party cookies has reignited commentary surrounding the future of the ad tech industry.
Although the death of third-party cookies was long decided – thanks to mounting privacy concerns and its associated tracking challenges – Google has been a little slow to take action on this front.
Internet Explorer 2 which was released back in October 1995 was the first-ever browser to support cookie technology. In the intervening years, third-party cookies have dominated the billion-dollar advertising industry.
Browsers such as Safari and Firefox had already blocked third-party cookies. Even though the search giant has been postponing its own plan for the deprecation of third-party cookies, this decision has caused quite a stir in the advertising industry, given that more than 60% of global users use Google as their preferred browser.
Now, the question is with third-party cookies given another short lifeline, should advertisers stick to it until it is fully gone or should they feel safe in their continued use?
The Different Types of Third-Party Cookies
There are generally two types of cookies – first-party and third-party. And both of them collect personal data. So, why only block third-party cookies? Well, the difference lies in their use and how they are created.
What are First-party cookies?
A first-party cookie is generated by the website that a user is currently visiting. It collects personal data for use within that website.
First-party cookies are used to help websites to track user visits and activity, which actually isn’t a bad thing. This data is then further used and shared internally, not with other sites. Moreover, unlike third-party cookies, first-party cookies will not be phased out.
There are many eCommerce stores that use third-party cookies to keep track of your login details, like what’s in your shopping cart, or what’s your preferred store language. This helps the advertiser to improve user experience and make your internet browsing more seamless.
What are Third-party cookies?
Third-party cookies are created by websites other than the one the user is visiting. The cookies are mainly used for tracking and advertising. They are generated and placed on the user’s device by a different website.
Why Are Third-Party Cookies Bad?
Third-party cookies allow brands and vendors to create user profiles on the basis of their online behavior and activities, including cookies set by companies the user hasn’t even heard of or ever interacted with.
Other than the users’ concern around privacy, third-party cookies have increasingly become more inefficient and ineffective for advertisers to target users and track performance.
Users today are multitaskers and multi-screeners. They are spread across multiple connected devices and used interchangeably. Third-party cookies fail to bridge the gap between devices and apps, thus it becomes hard to track the full consumer journey.
In a privacy-oriented world, it’s high time that the online advertising industry must seek out a new alternative to third-party cookies.
Alternatives for Third-Party Cookie: Retargeting Without Third-Party Cookies
There are various other ways to serve ads, which is good news for both publishers and advertisers. Let’s see each of the most widely used cookie alternatives.
Device fingerprinting is a technique used by marketers to follow potential customers around the Internet.
If you ever signed into Gmail or your Apple account from a new device, you might have come in contact with this. It is used to identify a device right down to the individual and is effective in deanonymizing us and monitoring our actions online.
Device fingerprinting may look at the device that you use and several other related data points such as your location, time zone settings, plugins, apps, and operating system version. All these pointers allows marketers to track users in a very similar way as when using third-party cookies.
However, Google in a recent announcement shared its intention to phase out device fingerprinting alongside third-party cookies as part of their Privacy Sandbox initiative. Thus, considering this, it might be best to look for a different alternative.
Another best alternative is Universal IDs which are created by merging multiple sources of a user’s identification. For example – email addresses, phone numbers, or even third-party cookies are merged into a single user identifier. That identifier is then assigned to users which allows for cross-device tracking.
This results in better user data availability and higher ad prices without risking the anonymity of individual users. In addition to this, Universal IDs also allow for websites to skip cookie syncing process, speeding the user experience and preventing bugs.
There are various types of universal IDs that are being tested in the market, which includes some that still use third-party cookies as part of their ID.
However, universal IDs such as LiveRamp’s RampID are primarily driven by first-party data for their ID. So when cookies are dropped from Google in 2024, universal IDs like RampID will be safe to use.