In August 2019, Google announced an initiative called “Privacy Sandbox,” with the aim of developing a set of open standards for fundamentally enhancing privacy on the World Wide Web.

“Our goal for this open-source initiative is to make the World Wide Web more private and secure for everyone while also supporting the publishers.”
– Justin Schuh, Director of Chrome Engineering

Fast-forward a few months, in January 2020 they shared an update on their plans and announced the third-party phase-out.

“After an initial dialogue with the online community, we are confident that with continued feedback and iteration, open-standard and privacy-preserving mechanisms like Privacy Sandbox can sustain an ad-supported, healthy web in such a way that’ll render the third-party cookies obsolete,” Google in their January 2020 post. “Once these approaches have addressed the needs of the publishers, users, advertisers, and after we have developed the tools for mitigating workarounds, we’ll be phasing out third-party cookies in Chrome. Expect it to happen within the next two years.”

This means that by 2022, Google plans to phase out the third-party cookies. In another update shared last month, Google claimed“we won’t build any alternate identifiers for tracking individuals across the web, nor will we be using them in our products.”

Adding, “We do realize that this means any other provider may start offering a level of user identity for web tracking across the Internet that we won’t. However, we don’t believe that such solutions will meet the ever-rising consumer expectations on the subject of privacy. Nor will they be able to stand up against the quickly evolving regulatory restrictions. So, our web products will be heavily powered by the privacy-preserving APIs, as they prevent individual tracking while also delivering results for publishers and advertisers.”

Safari started blocking cookies by default in 2020. Firefox did the same in 2019. But because Chrome makes up over 56% of the web browser market and handles more than half of the global web traffic, this third-party cookie phaseout will be huge.

So, what does this mean for marketers?

Should they give up on digital marketing and start pursuing their wildlife photography or painting passion?

You can put down your camera or paintbrush for now.

While a gigantic change is soon about to come, marketing will survive without third-party cookies.

And to convince you, I’ve created this list of six major things marketers should know about Google’s Third-Party Cookie Phaseout.

6 Major Things Marketers Should Know on the Subject of Google’s Third-Party Phaseout

  • Shift Towards First-Party Data
  • Cookies Were a Humongous-Sized Mess Anyway
  • Most Marketers Already Saw the Third-Party Cookie Phaseout Coming
  • Contextual Advertising & Content is the New Cookies
  • Google Isn’t About to Stop Tracking People Completely
  • Marketers’ Only Concern Isn’t Just Data

Let’s look at each of these points one by one.

Shift Towards First-Party Data

Let’s starting by defining the difference between first-party cookies and third-party cookies.

  • First-Party Cookies: Tracking code placed on your visitor’s computer when they hop onto your website.
  • ThirdParty Cookies: Tracking codes placed on a visitor’s computer generated by another website other than the one they are currently on. For example, the Facebook Like button on your website.

Let’s say a user visits www.tech.com. First-party cookies are placed on this domain by the www.tech.com team themselves. Whereas a cookie placed on www.tech.com by another site, like a social media site or an advertiser, is a “third-party cookie.”

Note: Google is phasing out third-party cookies, not the first-party ones.

So, if you are worried that you won’t be able to track your website visitors’ preferences, behaviors, and basic demographics, then relax!

You may not be impacted by this change.

However, if you rely on pop-up ads, robust data for online advertising, and pinpointed audience-targeting strategy, it’s important to keep an eye on this news.

You also need to start considering different first-party strategies soon to avoid any major impact.

Cookies Were a Humongous-Sized Mess Anyway

You heard me say it – Cookies sucked anyway.

The majority of tracking cookies are being rejected by browsers.

In a recent report, an ad agency analyzed 20 advertisers and over 5 billion impressions. They discovered that 64% of cookies were deleted or blocked by web browsers.

The rejection rate of smartphone devices was even higher — 75% rejection rate compared to 41% on desktops.

This means advertisers have been throwing away a huge chunk of their marketing budget on missed opportunities. They were reaching out to people who weren’t going to purchase their products/services.

Most Marketers Already Saw the Third-Party Cookie Phaseout Coming from a Mile Away

For some, this news is shocking. Others saw this coming from a mile away.

Authorities worldwide have been focusing heavily on data privacy issues. In October 2019, Europe’s highest court passed the order that users across Europe should be able to actively consent to all cookies when logging on to a website.

If they don’t, the website won’t be subject to the user’s cookie data.

Between the GDPR rulings and Privacy Sandbox’s initial announcement in 2019, marketers already knew that the third-party cookie phaseout was imminent.

That’s the reason some third-party publishers and software firms started considering alternate solutions way before Google officially revealed the phaseout.

For these firms, the focus is on leveraging first-party cookies and making them future-ready.

Contextual Advertising is the New Cookies

Finally, contextual advertising is back!

That means ads will be relevant to other content visible on the screen. Like seeing beer ads in a bar.

For consumers, contextual ads are more relevant than cookie-based behavioral targeting. Consumers on a cooking site, for example, will be more open to ads about food or cooking utensils. It’s far less creepy, and don’t make users think they’re being followed everywhere on the web.

Google Isn’t About to Stop Tracking People Completely

Google revealed it wouldn’t invest in technology that will track people at an individual level. But they’ll still invest in alternatives like Federated Learning of Cohorts (FLoC), a technology that tracks groups of people rather than individuals.

According to their recent announcement, “Our latest FLoC test results showcase a way of effectively taking third-party cookies out of the equation and hiding individuals within a group of people sharing a common interest(s).”

Marketers’ Only Concern Isn’t Just Data.

Once the third-party cookies have been phased out, the Chrome experience will be good for some, but bad for others.

You’ll still be able to leverage and target Google Ads, as they’ll be powered by Chrome’s Privacy Sandbox Tools and first-party cookies. But ad platforms, and software requiring third-party data, may disappear.

Most ad platforms use third-party cookies to generate revenue. So this privacy-driven initiative will likely put those whose entire business model depended on third-party cookies out of business.

Conclusion

Should you panic?

Not really.

Advertisers, marketers, and data engineers have already started hunting for active solutions to tackle this problem.

Right now, I’d recommend keeping yourself updated with the latest news and trends and taking action accordingly.

Maybe this phase-out will impact your business; maybe it won’t. But, if your business relies heavily on third-party data, I’d advise you to start looking for alternatives.

And to keep your brand safe from different government policies in the near future, consider building strategies without including cookies, mass amounts of data, and hyper-targeted ads.

As always, it’s important to partner with a company who can help guide you through these changes. Red 5 is just such a partner, so don’t hesitate to reach out to us if you’d like to learn more and optimize your digital marketing spend.