For digital advertisers, cookies are more than a sweet snack. Cookies of the third-party variety do provide some sweet information about website visitors and what they do online. 

However, by next year, Google is set to slap digital advertisers’ hands away from the third-party cookie jar. The company announced last year that it would phase out third-party cookies on its Chrome web browser by 2022.

That sounds like the end of third-party cookies as we know them. But what does this development mean for digital advertising?

 

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We explore that subject in this post, so keep reading. 

Looking for help tackling a cookie-less digital advertising future? Reach out to Playwire for help.

What Is This Death of Third-Party Cookies Everyone’s Talking About?

Truth be told, the phase out of third-party cookies isn’t something that came out of nowhere. Google announced in February of 2020 that it would be phasing out the use of third-party cookies.

Google Chrome makes up more than half of web traffic in the world. And with Google’s additional announcement that they won’t be rolling out "alternate identifiers to track individuals as they browse across the web, nor will Google use them in our products," the discussion around this has picked up steam recently.

What is a Cookie?

A cookie is a tracking code a website places on a visitor’s computer. A third-party cookie originates on one site but tracks the user’s behavior all over the internet.

Essentially, third-party cookies allow for data collection of a visitor’s overall online behavior, not just their behavior on a single website. For those of us in the digital ad community, they have proven to be highly beneficial. But for the visitors being tracked, they have raised concerns about privacy.

A Pew Research Center survey found that 72% of Americans report feeling that all, almost all or most of what they do online or while using their cellphone is being tracked by advertisers, technology firms or other companies. 81% say that the potential risks of behavioral data collection outweighs the benefits. With so much of the population concerned with digital privacy—as well as government regulation of privacy issues such as the European Union’s General Data Protection Regulation (GDPR) ruling—this phase-out isn’t all that surprising.

What Does the End of Third-Party Cookies Mean for Digital Advertising?

The phase-out of third-party cookies is coming, but what does it mean in the digital advertising world? Although Google’s decision to phase out third-party cookies has been in the works for a while now, many in the advertising space are struggling to see a future in which they thrive without access to third-party user data via Chrome.

That’s certainly a concern. Without third-party cookie data, many ad platforms will no longer be able to rely on their favorite way to deliver targeted ads to the right audiences. That could seriously hurt revenue for both digital advertisers and publishers. In addition, advertisers rely on third-party cookies to place frequency caps on ads as well.

The end of third-party cookies doesn’t have to spell doom. For plucky publishers and determined advertisers, this is an opportunity to pivot and thrive.

A Digital Advertising Future without Third-Party Cookies

What does a successful pivot look like as third-party cookies crumble? A few options are already shaping up, and more are sure to come.

First-Party Cookies

The first thing you need to understand is that there is a major distinction between third-party cookies and first-party cookies. 

First-party cookies aren’t going anywhere. These are the cookies that store user information and preferences for a single site. Google isn’t touching them.

For publishers, this is a good thing. You can still gather data about the people who engage with your content and use it to improve the user experience and serve better content and more targeted ads. 

For advertisers who have strong relationships with publishers, ads based on first-party cookie data are still deliverable. You just can’t continue to track users as they leave publishers’ sites and visit other corners of the web.

The Privacy Sandbox

Although Google’s decision to kill third-party cookies upset many players in the digital ad industry, the internet giant did extend what some see as an olive branch: the Privacy Sandbox.

In acknowledgement that phasing out third-party cookies is a threat to the revenue models of advertisers and publishers, Google said in a blog post that it intends the Sandbox to be an intermediate solution — one that boosts user privacy but still allows publishers and advertisers to create great content and generate revenue.

The Privacy Sandbox isn’t live yet, but one of its core ideas is to store user data anonymously within the Chrome web browser. Digital advertising can still be profitable under this model, but it also could consolidate even more digital ad spend in Google’s growing sphere of influence. That’s why many trailblazing ad tech firms have spent the last few years dreaming up alternatives to third-party cookies, such as platforms that rely heavily on first-party cookies.

Hashed Emails

Anticipating this shift, some publishers are already turning away from models that rely on third-party cookies and looking to hashed email systems as an alternative. 

In digital advertising, a hashed email system asks a website’s users to log in via an email address. The email address itself is not the information publishers want, but the act of logging in provides a user identity and on-site behavior that publishers can share with ad vendors who then target ads based on that information.

Hashed emails are perhaps not a viable solution for all publishers and ad tech vendors, but this represents just one of the many alternatives to third-party cookies that are developing in response to Google’s phase-out.

Additionally, there are other identity pooling solutions that don’t necessarily rely on hashed emails, instead making reasonable inferences about whether a user has been seen before based upon things like shared IP addresses (but that’s a topic for another article entirely). 

How to Dominate Digital Advertising Today

The digital advertising world changes all the time. Those who think they hold the keys to success routinely find that more powerful forces — like Google — have changed the locks.

That’s why it is more important than ever to partner with an ad tech platform that sees these changes coming and adapts fast. That way, you’re never caught off guard, and your revenue is safe and sound. 

To learn more about your cookie-less ad revenue amplification options, reach out to the experts at Playwire. Call our team at 1-561-206-4621 or contact us online.