Last week Google confirmed it will phase out support for third party cookies, saying the tracking tool was no longer compatible with a private internet. The decision effectively means the eventual end of third party cookies and has repercussions for most of the online advertising industry.

Google’s Chrome browser dominates the market and most of its major rivals have already blocked third party cookies, often using their absence as a selling point. But Google had held out, arguing removing cookies abruptly would be too damaging to publishers, advertisers, and the myriad of middlemen in between.

Cookies are small pieces of code that are downloaded when an internet user visits a site, helping websites identify the user in future, often saving preferences or log in details for example. Third party cookies, however, provide information on the user to other parties. When linked across multiple sites cookies allow companies to track individuals as they move across the internet, hoovering up data that is usually monetised through advertising.

The capability has become the bedrock for targeted and personal online advertising, with many adtechs developing entire business models on the basis of third party cookies and an ability to identify and retarget consumers, delivering personalised ads and attributing their actions to specific campaigns.

Google’s continued support for third party cookies also helped keep its own revenue flow healthy – the tech giant generates most of its money through online advertising services. 

Cookies crumble

But now with its own trove of first party data Google says it is time to end third party cookies. The search giant says it will work with the industry on an alternative to third party cookies in its “privacy sandbox” over the next two years.

Gai Le Roy, CEO of industry body IAB Australia, says the industry has historically had an over reliance on third party cookies but the tool has now “run its course”.

“While the third-party cookie changes will provide challenges for many current attribution models, hopefully over time it will improve the way we look at overall digital advertising activity (and actually all ad activity) so that it becomes less focussed on cookie history from one device and shifts to a more holistic view of the impact of the overall marketer’s media spend,” Le Roy told Which-50.

Gai Le Roy - CEO of IAB Australia
Gai Le Roy, CEO of IAB Australia.

She anticipates smaller performance-based companies will be able to adapt and continue to be able to track immediate sales. Large advertisers will be able to adjust too, and continue to “develop marketing effectiveness models that can assess their spend across channels”.

But for those in the middle, mid-market companies which have used third party cookies in brand building campaigns, may need to develop new tactics but may not be able to afford things like brand studies or sophisticated market mix models, according to Le Roy.

Publishers should be wary too, Le Roy says, and ensure their technology vendors are in control of user data and have acquired appropriate consent.

“It will be critical that publishers have a persistent single-user ID with a consumers’ data-privacy preferences affixed and good consumer experience in terms of controls and tools.”

GroupM CTO Cameron King says the agency will work with its clients to adapt to the new ecosystem. 

“Prioritising consumer privacy and giving consumers a better online experience are to be supported,” King says. 

“This is a significant but expected development in the deprecation of third party cookies, and fortunately, provides a long lead time to assess and mitigate potential impacts across planning, ad targeting, analytics, and attribution. We’ll be working with our global network on supporting our clients through this change, through collaboration with industry and Google.”

Google’s cookie cull could spell the most trouble for adtechs – the companies in the middle of publishers and advertisers effectively matching consumers with available inventory.

The stock price of Criteo, a French adtech giant which relies heavily on cookie data for its retargeting services, crashed 15 per cent the day Google made its announcement.

Some technology providers have been preparing for a world without third party cookies.

“We support the steps Google is taking to bring greater transparency and control to users,” said Natalya Pollard, LiveRamp Country Manager Australia and New Zealand.

“LiveRamp has championed the movement towards an open and scaled identity solution and has launched multiple, complementary efforts that greatly reduce reliance on third-party cookies. LiveRamp’s open and neutral Authenticated Traffic Solution (ATS) allows brands, agencies, and publishers to operate in a post-cookie world, as the solution enables them to buy inventory without the need for third-party cookies. We see this decision as an opportunity for the ecosystem to upgrade beyond the cookie, and accelerate the global adoption of cookieless solutions.”

What replaces third party cookies?

Google, along with the industry, is now working to agree on an alternative to third party cookies. Something which can deliver relevant ads to consumers, helping to support online publishers, while still protecting privacy.

The IAB’s Le Roy argues “single-user IDs” are the future. The tool unifies a user’s ID across multiple sites and devices across a publisher’s products and should give consumers more control over consent. Eventually, the IDs will be expanded to work across different publishers too, ultimately replacing third party cookies Le Roy said.

“These single-user IDs will enable greater quality and consensual inventory to be made available to buyers. This new approach will also mean users will also have a consistent personalised experience as they won’t have to continuously reaffirm data privacy settings when logged-in and across various devices.

“We’re hopeful these changes will usher-in a new era where the quality, accuracy and permissibility of data is greatly improved enabling a better experience for consumers and more meaningful premium audience data segments for advertisers. Ultimately how we replace the functionalities of third-party cookies will be something that we’ll all collaboratively have to resolve as an innovative community, which is exactly the approach that we’ve been trying to take as an industry body since our inception.”

Le Roy says Google’s two year phase out goal is a “sensible amount of time” and stakeholders should be able to balance their interests to agree on alternatives that are more effective and efficient, secure and privacy compliant.

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