A cookieless future is coming, but not yet

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The cookieless future has been a long time coming. Back in 2017, Apple started limiting the kinds of trackers that the iPhone would tolerate. Cookies were first in their line of fire. Apple created a program called Intelligent Tracking Prevention, which limited third-party cookies in the Safari web browser. Other browsers such as Firefox followed suit. At first, the advertising industry pushed back. They were worried that Apple’s plans would disrupt the digital ecosystem and all the content and services that it funds. However, five years later, the future looks to be inevitably cookieless – at some point.

Google has delayed the third-party cookie’s demise… again

Google first announced in January 2020 that it would be phasing out the third-party cookie in Chrome. It initially said that the phase-out would happen within two years, and confirmed this in March last year. However, in June 2021, it had pushed back the deadline to 2023. The reason they gave was a need for more time across the digital ecosystem to get the shift right.

At the end of July this year, Google announced that it was again delaying the replacement of third-party cookies. In a blog post, Anthony Chavez, Google’s VP of Privacy Sandbox, said that they had received consistent feedback that there is a ‘need for more time to evaluate and test the new Privacy Sandbox technologies before deprecating cookies in Chrome’. Privacy Sandbox is Google’s program which develops new ways of targeting and measuring ads on Chrome without the use of personally identifiable information.

This further delay has come as ad and e-commerce companies are affected by Apple’s App Tracking Transparency feature. This prevents advertisers can access an iPhone user identifier, thereby dramatically reducing targeting capabilities on iPhones. Meta announced in February that this initiative would cost it $10 billion.

Why does Google keep delaying the cookieless future?

To be fair to Google, killing off the third-party cookie is a huge, unwieldy task. Google’s dominance of the online media landscape means that any changes it makes will affect the entire ad ecosystem. Regulators therefore scrutinise Google’s every move to ensure that any changes won’t unfairly benefit Google or harm publishers and ad tech vendors. The UK’s competition regulator, the Competition and Markets Authority (CMA), for example, recently launched a fresh investigation into Google. It is assessing whether Google’s role in the ad tech industry could be having a negative impact on competition.

Those who sympathize with Google’s decision to delay phasing out the third-party cookie say that the ad industry isn’t ready for drastic changes to the marketing landscape, particularly as much of the world faces economic uncertainty. Indeed, as we collectively brace ourselves for a downturn, many companies – including Google – will be prioritizing generating and preserving revenue. It’s probable that Google has redeployed resources that might otherwise have been focused on the Privacy Sandbox.

On the other hand, cynics claim that Google is ‘finding a way to balance how they maximize revenue while minimizing privacy implications’. What’s more, can you really claim that something is a priority if, four years in, there are still no solutions?  You could also argue that any confusion around timeframes and outcomes is to Google’s benefit. After all, while there is no solution, Google continues to practically monopolize the digital advertising industry. Why would it want to change a digital ad industry of which it has unrivalled hegemony?

Will marketing be worse without third-party cookies?

There is justifiable concern around the demise of the third-party cookie and what it means for the future of advertising. Millions of advertisers around the world, from start-ups to international conglomerates, rely on third-party cookies to target ads online. A future without that ability is worrying, especially if a viable alternative is not yet clear.

The cookie isn’t perfect

However, few advertisers would disagree that digital advertising is far from perfect. In fact, the ability of the cookie to target consumers is not always as efficient as is often assumed – for example, when cookies target a customer who has already purchased the item in question, or when uncontrolled frequency far exceeds optimal levels.

Consumers complain of ads following them around the internet, targeting them with products they’ve already bought, or decided against, or simply have no interest in. And that’s if it even works at all. Third-party cookies are unfortunately a key enabling factor in ad fraud. There have been great efforts across the industry for years to address the quality of online exposure and potential tools and solutions for issues such as fraud. But the problems persist because the cookie is so easily exploitable by nefarious parties.

A more human era in digital advertising

But it doesn’t have to be like that. The demise of the cookie could – and should – usher in a better, more transparent and more human era in digital advertising. First-party data will be king and many brands, especially larger ones, have already started investing in their own consumer databases. Major advertisers such as Procter & Gamble, Unilever and L’Oréal have rich consumer databases which will grow in value as they are used to target and model ad buys. Retailers who have their own treasure trove of first-party transaction data and direct consumer relationships will become very appealing to other brand marketers.

A spotlight is shining on contextual advertising as an alternative to personalised targeting in a cookieless future. It’s not a new technology – indeed, it’s as old as advertising itself. But this privacy-first option, where ads are placed in contextually relevant environments, has been proven to be as effective as audience targeting. Furthermore, the ability for brands to understand the content that the user was consuming at the time of seeing the ad will become a new and highly effective identifier for a target audience and their preferences.

Solutions such as a greater reliance on first-party data and contextual advertising also have another key benefit – they will reduce the prevalence of ad fraud, which is largely driven by third-party cookies. A Forrester study found that 69% of brands spending $1 million per month reported losing at least 20% of their budgets to digital ad fraud. Recouping the majority of that lost budget will help assuage the pain from the demise of the cookie.

Reaching new audiences

An interesting side note is that, while Chrome is of course the world’s dominant browser, there is a significant audience that is currently harder to reach for advertisers who focus on the cookie: those people who use Apple’s products, particularly Safari and apps. These consumers often have a higher spending power on average than those who don’t use Apple products at all – an attractive prospect for advertisers. Re-orientating digital marketing strategies so they incorporate privacy-first tools will help advertisers to reach this lucrative audience.

So – how can marketers get ready for a cookieless future?

To quote Gillette CEO Gary Coombe, ‘If it’s inevitable, get enthusiastic’. In our privacy-conscious world, the demise of the third-party cookie is a certainty. You might as well embrace it and prepare, so that you aren’t caught unawares. As Coombe suggests, enthusiasm is key. Advertisers should view this as an opportunity to move on to something better and build better relationships with their consumers. Most people find personalised targeted ads at best annoying, and creepy at worst. This is a chance for the digital ad industry to focus on what matters – what the consumer wants.

A good place to start is understanding the facts. If possible, assign a team member to keep abreast of developments, educate the rest of the team and help you navigate the uncertainty. There is no doubt that your strategy will change, so this is a worthwhile investment. It will also be important to audit your technology so that you understand what will change, and how your technology partners will work without cookies.

As we’ve touched on already, first-party data is the future. Advertisers will need to get to grips with their consumer relationships and start building up smart databases. Make sure that any platforms you work with allow you to own your own first-party data. To create an effective first-party database you need to build trust, so that consumers and prospects are willing to share their data with you. First impressions are key, as are innovative experiences. Consider the value you can offer, whether that’s discounts, content, loyalty schemes or personalization.

A hard but worthwhile journey

There’s no doubting that the journey to a cookieless future will be hard, but there’s also no doubting that it will be worthwhile. Digital advertising has become murky, complex and difficult. The death of the third-party cookie will likely create a landscape that is more straightforward, transparent and, critically, more human. And who doesn’t want that?

Image: Natali Zakharova on Shutterstock

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