After repeatedly delaying its plans, including a scheduled elimination in 2025, Google has now abandoned its efforts to phase out third-party cookies. Instead, they’ll introduce a system where users have more control over their online tracking.
This unexpected shift marks a significant turning point in the ongoing battle between privacy and personalization. While the industry grapples with the implications of this decision, one thing is clear: the era of third-party cookies is far from over, and the landscape of digital advertising is about to undergo another transformation.
Here, we examine Google’s decision to keep third-party cookies, its impact on marketing strategy, and what the future holds for digital advertising.
Why did Google decide to keep third-party cookies?
In Google’s announcement, there was a subtle but significant detail that many people might have missed while focusing on the headlines:
“Instead of deprecating third-party cookies, we would introduce a new experience in Chrome that lets people make an informed choice that applies across their web browsing, and they’d be able to adjust that choice at any time. We’re discussing this new path with regulators, and will engage with the industry as we roll this out.”
Essentially, Google hinted it was planning to give people more control and required their consent.
Google created the Privacy Sandbox in 2019 for users to effectively play in, with some rules and tools provided. However, users began to complain:
- Publishers said the Privacy Sandbox didn’t generate the same revenue as cookies.
- Agencies struggled to find their target audiences and complained about inadequate attribution solutions.
- Ad tech companies accused Google of creating a monopolistic environment that favored its own interests. (Which has some merit.)
As frustrations grew, everyone became increasingly dissatisfied with the third-party cookie solution. Google, taking hit after hit, decided they were done playing lifeguard. They chose to step back and let users decide for themselves.
Consent-based marketing and first-party data strategies remain paramount
Regardless of the fate of third-party cookie use, obtaining user consent for data collection and first-party marketing practices is essential.
In recent years, brands have been advised to prioritize their first-party data strategies, a recommendation driven by the impending demise of third-party cookies and increasing privacy regulations. This shift has pushed companies to build stronger, more direct relationships with their audiences through consent-based marketing. Despite the challenges and significant investments in new technologies and processes, this transition has been largely beneficial. It has forced the industry to adopt better practices and build robust infrastructures for data management and user engagement.
The lessons learned and the offerings developed during this period of urgency have proven invaluable. Although there has been a substantial financial outlay in developing these capabilities, the benefits are clear. First-party data allows brands to gain a deeper understanding of their audiences, which is crucial as the industry faces ongoing signal loss issues. These issues are not limited to cookies but extend to other identifiers like IP addresses and mobile app identifiers.
Therefore, maintaining strong first-party data ties is essential for effective audience targeting and engagement in a privacy-conscious world.
The industry’s shift away from third-party cookies highlights the need for clarity and direction in data management practices. The evolving landscape is pushing for greater transparency and accountability in how user data is tracked and utilized across the web.
Brands must continue to invest in understanding their users and leveraging tools like data onboarding and clean rooms to translate first-party data into actionable digital identities. This approach ensures they can effectively reach and engage with their target audiences while adhering to stricter privacy regulations.
Third-party cookie alternatives still offer solutions to audience insights
Now that Google is keeping third-party cookies, what does that mean for cookie alternatives?
No single solution can fully replace third-party cookies across various applications like attribution, targeting, and planning. However, hashed emails as alternative identifiers offer a promising approach, allowing for a digital identity system that maintains user privacy while enabling targeted advertising and accurate attribution.
Google’s Privacy Sandbox is still an initiative that is important for marketers, but it faces challenges from the buy and supply side as testing resulted in an imperfect replacement for modern advertising methods.
AI is also becoming a bigger part of a marketer’s arsenal. According to December 2023 data from Ascend2, marketing professionals worldwide see improved targeting as the second greatest benefit of AI in marketing, right after increased efficiency.
Generative AI stands out as a game-changer, especially for advertisers with limited first-party data. These powerful tools require minimal input to drive sophisticated probabilistic models, allowing smaller brands and agencies to scale their addressability without relying on traditional identifiers.
There is plenty of upside for third-party cookie alternatives, even with third-party cookies still in the mix.
The future of third-party cookies
In the announcement, Google didn’t specify a tracking method that would allow users to opt-out, but its decision to give users control over tracking opens up possibilities.
It would not be surprising to see Google replicate the Apple iOS landscape after the implementation of AppTrackingTransparency (ATT). While advertisers can still use Apple’s IDFA, its effectiveness is significantly reduced because far fewer users are opting into tracking due to ATT’s permission prompt.
This is notable because most consumers don’t share their data when they receive a prompt. According to an Adjust report, iOS apps across categories had a worldwide opt-in rate of 29% as of Q1 2023.
And plenty more questions remain.
Will user consent lead to a decline in trackable data? If users opt-out of tracking, how will marketers measure campaign effectiveness?
Is this a win for Google? Could Google benefit by directing ad dollars towards search and YouTube, areas where they have more control over user data? It’s important to note that this Privacy Sandbox is built into Chrome, which holds about 50% of the market share.
The market is accelerating towards increased privacy controls and signal loss, independent of Google’s actions. This trend is expected to continue. The industry has already adapted to an omnichannel landscape where key channels like CTV, mobile, and social are inherently cookieless.
While Google’s retention of third-party cookies provides a reprieve to those who haven’t prepared a plan B, marketers should not become complacent. Continuing to prioritize consent-based marketing, investing in first-party data strategies, and staying informed about alternative identifiers will be essential.