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Part one: The end of third-party cookies and why it’s happening

The background

In January 2020, Google announced that it would phase out support for third-party cookies. Originally, this was due to happen by the end of 2022 but this has now been delayed until 2023, partly due to the recent scrapping of the replacement.

By next year all search engines will have blocked the use of third-party cookies. In 2017, Apple updated Safari to automatically block third-party cookies and limited the lifespan of first-party cookies to seven days. in 2019, Mozilla changed Firefox to block third-party cookies by default. Since then other browsers such as Opera and Edge have also chosen to take the same path. Finally, now the biggest hitter, Google plans to follow suit. This will have a momentous impact on digital advertising which relies on third-party cookie data for identifying relevant users to display ads to and to personalise the UX. Businesses now need to adapt, change, and look at new methods of reaching their target market audience.

Why the change?

People are concerned about how data is being shared for cross-site tracking, retargeting, and ad serving.

In recent weeks Google also announced it will be sunsetting Universal Analytics in favour of GA4. The Universal Analytics successor does not rely solely on cookies, so this move will help build back trust in data privacy regulation and how data is being handled by brands. GA4 doesn’t rely exclusively on cookies, uses an event-based data model for measurement & doesn’t store IP addresses.

How we gather different types of cookies

Using third-party data isn’t an exact science, you can’t be sure of the quality of data you’re working with. The attribution accuracy of third-party cookies typically falls between 40% – and 60%.  When using third-party data, you’ve little insight into how it was collected, who it was collected from, and why.

Without knowing where the data came from, or why it was collected it’s difficult to be sure if it’s a good fit for your brand’s specific needs. So, you might find yourself in a position where the data used has been of low quality, your budget is spent, and you have nothing to show for it.

As marketers, we can’t honestly say we’re entirely happy to see the back of third-party data. It enabled us to interact with individuals who seemed like a perfect fit for the product or service we were selling. However, with Cubed, we’re big believers in the benefits of first-party data, which is why our technology has never relied solely on third-party tracking.

First-party data is based on direct and intentional interaction between you and your audience. It’s not anonymous but is knowingly provided and collected for a specific purpose. It’s more useful, reliable and of greater relevance, because it’s the information that comes directly from those that engage with you.

What are the pros and cons of third-party cookies?

Third-party cookies have been an effective tool for marketers, so let’s consider how things will be impacted going forward.

The banning of third-party cookies gives the impression that third-party cookies are an invisible evil, condemned by Google, but there are some benefits that you might miss when browsing.

For users

Cookies enable advertisers to display ads based on information about the user’s interests, even if they have never interacted with the brand. This allows for hyper-personalised advertising experiences to suit each individual’s interests.

These hyper-personalised experiences made people feel like they were being spied on. A 2020 poll found that 84% of consumers will take their business elsewhere if they don’t trust how a company is handling their data. Most of us have probably had an experience where we’ve spoken about a product without actually searching for it and within a few days, it’s being advertised to you across your digital networks. Well, don’t feel paranoid it’s not Big Brother listening to you, there’s a simpler explanation. The sites you interact with know a great deal about you through third-party cookies. They may even be able to predict what you might be interested in buying. A poll in 2021 found that only around 6% of UK citizens are more comfortable with their online privacy compared to the previous year. Removing third-party cookies should result in a higher level of trust for consumers, which can only be a good thing for brands and their customers.

After the changes are made next year, you will find yourself being shown a broader selection of ads. Many are likely to be of no interest compared to those you have been seeing in recent years.  From the user perspective, that’s really where the benefits of third-party cookies end. Whilst they may prefer not to lose personalised advertising, research suggests that a majority of consumers would prefer to maintain a higher level of privacy whilst browsing, with 86% of respondents in one study suggesting they would like more control.  

For marketers

For the marketer, on the other hand, there is no immediate benefit from these changes. Visibility is decreased, it will become harder to reach target audiences, the process of identifying target demographics will become far more manual again and paid media will likely become less fruitful, at least initially until brands amend their tactics.

As a socially conscious marketer though you are of course looking past this and thinking of the privacy benefits to the users. Currently, third-party cookies allow companies to sell masses of data to advertisers. Data that, before GDPR, no one was aware of being collected.

From our perspective as a company (and my own as an internet user), these changes are long overdue.

Part two: The cookieless world and preparing for the future

What will the cookieless world mean for marketers?

Removing targeted advertising will impact everyone, not just marketers, but also websites that publish ads and consumers.

According to data from HubSpot 41% of marketers believe that after third-party cookies are ruled out their biggest challenge will be their inability to track the right data. 44% of marketers predict a need to increase their spending by between 5-25% to meet the same goals as they achieved in 2021.

Removal of third-party cookies will cost the top 500 publishers worldwide 52% of programmatic ad revenue. That’s why you may have noticed an increase in media companies using paywalls online as they desperately try to improve other streams of revenue before the third-party cookies party is over.

Let’s be clear that the end of the third-party cookie is not the end of tracking. Whilst changes are being made that will see the third-party cookie no longer used, first-party cookies will of course, still be useable. Brands that have relied heavily on third-party cookies will now look to first-party data to meaningfully connect with their audience.

The main advantage of third-party cookies for marketing was that they enabled advertisers to track all users do on a specific browser, not just on the site on which these cookies had been installed. This gave full visibility of how we browse the internet, which was a marketer’s dream. Now brands will have a far less complete picture to work from.

How can marketers manage the change?

This change sounds daunting, but fear not, there are a number of steps marketers can take to make sure they are ready for the end of third-party cookies. Consider the following:

1. Invest in first-party data capture

To clarify, first-party cookies are the type that enables you to track users on your website and this will still be allowed as information is not going through a third-party platform, hence the term ‘first-party’. Analytics platforms will still be able to gather data on your audience and how users interact with your website.

These types of cookies are useful as it gives the website and browser enough information to be able to identify information about who is active on your website. This means that when the website is loaded in the future it can automatically have their preferred language selected, continue to use a shopping basket onsite, or remember their username for login purposes. This makes the UX more seamless.

How well are you currently getting to know your users through the automation and data-gathering processes on your brand website? Look at what data you currently capture and what you’d like to know. Take time to assess the best ways to gather the data you want and implement them across your website.

Consider other methods of data-gathering that might interest your users. First-party cookies are the best way to get to know your customers. Find out the attributes and dimensions that make someone most likely to complete a conversion. This can provide insights into the perfect time, location, and user demographic to target with your advertising. With robust first-party data, your marketing will resonate and influence more and in turn be far more effective.

2. Look at the targeting options you can still use within paid media platforms

If we can assume by this point you have an idea of your ideal website visitor, then you can use this to make informed decisions about how to target your paid advertising without using third-party data.

Gaining a deeper understanding of customer journeys that most often lead to sales allows you to advertise at the exact moment the user is ready to interact with your brand.

Use contextual advertising in partnership with your first-party data to think of ‘where’ instead of ‘who’. You will no longer have the data of individuals at your disposal. The better you understand who you are advertising to, the more information you can gather about where someone of interest might come across your brand online.

This is contextual advertising, using what you know to devise the most effective strategy rather than relying on data to find where to place ads for you.

3. SEO can be your best friend

While you might lose the opportunity to use paid media to appear to a specifically targeted audience, you won’t lose the ability to perfectly target your organic content with relevant keywords and rank highly for your most valuable search terms.

Use this opportunity to your advantage, double down on your SEO strategy, working to produce highly relevant content that you can commit time to optimize for the SERPs.

4. Consider new innovations and technologies

Processes such as machine learning are now available to marketers that can help us to maximise the ROI of our marketing budget without relying on third-party cookies.

Without invading user privacy, machine learning allows marketers to gather data about our audience in ways that are surprisingly accurate and user-friendly – a model for the future.

Be ready for a cookieless world

You can start these processes today so that when the time comes, you’re ready for the change.

At Cubed, we’ve been long anticipating this change and can’t wait for an environment where consumers feel like they can put more trust back into brands. The first step towards this is by moving toward protecting user data.

If you have any concerns about how your company will approach these changes, or if you need help to understand if your partner companies are relying on these processes, please get in touch. We’d love to walk you through this. Start today and you’ll have plenty of time to get yourself ready for the changes.

Co-authored and edited by Lewis Hughes.