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Digital Marketing

The Cookie Conundrum: Sustaining in a Cookieless Digital World

Jun 07, 2021

3 minutes read

For years, online businesses have been tracking user data to reach potential customers, and much of this has been through the use of third-party cookies.

Third-party cookies make retargeting easy for businesses by helping them with useful data about visitors such as demographics, browsing behavior, and interests.

This retargeting contributes to a 43% increase in conversion rates of businesses.

Third-party cookies also play an instrumental role in programmatic advertising that generated a whopping revenue of $14.2 billion in 2020 alone.

But Google’s recent announcement of eliminating support for third-party cookies on Chrome browser by 2022 has brought a dramatic tension in the digital world.

Why the Phase Out?

“Privacy is paramount to us, in everything we do.” This is what Justin Schuh, Director, Chrome Engineering stated during his announcement of an alternative to third-party cookies for enhancing user privacy in August 2019.

The privacy issue has been a slow burn over the years as users are becoming more aware of their personal data and its vulnerabilities online.

High profile data breach cases have further led to the rise of privacy concerns, resulting in various organizations taking concrete steps to provide greater transparency over user data.

In 2011, Firefox implemented the Do Not Track feature that allowed users to opt out of website tracking.

In 2016, Brave Software Inc. launched an open-source web browser with website trackers and ad-blocking features.Brave also offers a revenue-sharing program that allows users to earn by viewing privacy-respecting ads.

online privacy

In 2017, Apple Safari released Intelligent Tracking Prevention (ITP) to restrict user data tracking across the web. In 2018, Firefox launched Enhanced Tracking Protection (ETP) that lets users block third-party cookies and storage access from third-party trackers.

Following the chain of events, Google Chrome, which contributes about two-third of the digital market share across all devices, announced, in 2020, that they will phase out their support of third-party cookies over the next two years.

Impactions of the Phase Out

From Interest-Based Advertising to Demand Side Platforms, Server Side Platforms, and Ad Exchange—the removal of third-party cookies is going to impact numerous areas in the digital advertising sphere.

Without third-party cookies, it will get difficult to set up audience targeting and frequency capping for 99% of users.

Personalization could hamper, and users might see irrelevant ads that will decrease the ROAS (Return on Ad-Spend).

But this third-party cookie killing is not all that bad. The move has different implications for different sets of users.

For Internet Users: Enhanced clarity and trust while browsing on the internet. Users will have a say in who they are giving their data to and how it will be processed.

For Advertisers: Reduced access to key data to improve ad performance. Advertisers will have to rethink their ad strategy and identify new ways to do programmatic advertising.

For Publishers: Audience size may reduce drastically leading to a huge loss in revenue. Publishers will need to develop new ways to generate revenue.

What’s Next?

With the buzz of the impending end of third-party cookies, marketers are left wondering what to do now.

Here are some new initiatives running across the digital world for a cookieless future.

Privacy Sandbox: Privacy Sandbox is a project by Chrome that focuses on delivering the right ad to the right user while respecting their privacy. With Google’s Federated Learning of Cohorts (FLoC), Chrome will replace the individual identifiers with groups of people with common interests called cohorts for ad targeting.

Project Rearc: Project Rearc is an initiative by IAB Tech Labs that aims to ‘Re Architect’ the digital ad industry. The concept revolves around an identifier that will standardize the consumer privacy choices that companies will need to adhere to for accessing personal data.

Alternatives to Third-Party Cookies

To target customers online, advertisers now have to re-evaluate their data collection strategy and look for possible alternatives that could replace third-party cookies. Here are some options:

First-Party Data

Your website, CRM, and mobile in-app data are the main source of your first-party data which isn’t going anywhere. This data can be used to define your audience and tailor the content to offer the best possible digital experiences to users.

Contextual Targeting

Contextual targeting is another promising solution that allows ads placing for a specific topic without binding user data. It involves the segmentation of ads based on website content and keywords. For instance, a website with various categories can target an interested user segment without user identifiers.

Final Notes

For users, the cookieless future looks safe and user-friendly with increased control over data privacy. For advertisers, this shift brings new opportunities to target customers in a privacy-compliant and controlled manner. In the long run, the cookieless digital world is likely to turn out mutually beneficial.

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