Have you noticed how after browsing for a new pair of shoes online, suddenly you start seeing ads for those shoes everywhere on the internet? Those ads were possibly the doing of third-party cookies, to track your online movement and activity.

We know that cookies were used for years to track website visitor behavior. But we are looking at a future where cookies may be discontinued. Major web browsers are now working towards phasing out support for these cookies, amidst privacy concerns citing their invasive nature. This move will have a tremendous effect on the future of personalised content and the digital advertising landscape.

The slow death of the cookie

Safari and Firefox have been actively working towards blocking third-party cookies for quite some time now. From 2019, Firefox started blocking all tracking cookies, and in 2021, Firefox brought in total cookie protection. Joining their cohorts in this move, Google has also formally announced that they will start phasing out third-party cookies in the near future. Essentially, these developments have forced companies to plan a tomorrow where they will be unable to track users using third-party cookies.

It is noteworthy that when these web browsers talk about cookies being blocked, they are strictly referring to third-party cookies - placed by parties other than the website owner to collect data for that third party. The first-party cookies, which are created by the website you are visiting to remember your preferences and login information, will not be affected. This means the website owner has to rely completely on first-party data to provide personalised services to the website visitors. This development has positively addressed user concerns regarding data privacy and consent.

How the departure of cookies affects the web world

From the perspective of consumers, they will have greater control over the data they share with businesses. However, this control comes at a cost of generic advertising and irrelevant ads, as advertisers will not be able to personalise ad targeting.

The second perspective is that of advertisers, ad tech companies, and agencies. Ad tech players will have to modify their regular tactics of collecting user data and targeting personalised ads. Currently, these techniques depend on the usage of third-party cookies. This will lead to an inability to target individuals. While Google and Facebook have huge first-party data, now the demand side platforms (DSPs) need to rethink their positioning as providers of differentiated third-party data for targeting.

In the case of advertisers and agencies, this will lead to fewer personalised ads. Ad retargeting will also be highly impacted. In addition, the loss of cross-platform frequency capping could result in oversaturation and a decline in user experience. You can also see a decrease in third-party audience sizes due to cookie expiry. This will have a massive effect on the online advertising ecosystem.

How can businesses step up to this challenge?

Companies need to roll up their sleeves and actively include the below pointers in their marketing and advertising strategies to tackle this upcoming change.

1. Businesses must aim to improve the extent of first-party data collection. The mechanisms to capture as much data as possible from customers, within the regulatory and data privacy limits, is important. Since this can be a time-consuming initiative, corporations must start on it immediately.

2. If organisations do not already have a cookie consent management system; it is high time they create one and enforce it. This ensures that first-party data is fully compliant and future-proof.

3. Thirdly, businesses should leverage the second-party data available from technology giants like Facebook and Google. Additionally, there lies an untapped potential of abundant data from publishers who have aggregated a lot of first-party data over time.

4. Moreover, marketing technology partners/vendors might be able to provide ownership of the already collected data. Taking advantage of this will promote a good understanding of how mar-tech partners are preparing for the cookie-less world.

5. Lastly, an organisation’s advertising performance measurement will be greatly affected by the removal of third-party cookies. So, they will need to rethink their web analytics and measurement setup. To combat this, businesses should partner with the right analytics solutions providers and even build some custom solutions for accurate audience measurements.

The removal of third-party cookies is not just an abstract concept that affects big corporations. It is a real issue, one that needs to be precluded by embracing alternative methods of audience targeting without compromising user privacy. It will be interesting to see how these new pieces come together to form the new digital marketing landscape in the coming years.

(This article is authored by Shyam Rao)

Third-Party cookies

Shifting away from cookies to a data-healthy tomorrow