What is the deal with third-party cookies?
With the latest move from Google Chrome to join Safari, Firefox, and others in blocking third-party cookies, a change in how online advertising works is coming. But what are the reasons for the changes underfoot and how will they affect online advertising in the future?
WHAT ARE COOKIES?
Modern web works, among other things, on a technology called cookies. Cookies are little pieces of information that a website can leave in your browser to read later. By doing this, the website can keep track of your preferred language, whether you are logged in (or not), and even which items you have just put into your shopping basket.
That is at least what cookies were originally designed to do. But the use of the technology has since evolved, and cookies are now also widely used to track users around the web for advertising purposes. This is where we need to distinguish between first-party and third-party tracking cookies.
IS THERE A DIFFERENCE BETWEEN FIRST-PARTY AND THIRD-PARTY COOKIES?
First-party cookies are pieces of information that the website that you visit stores in your browser. However, this website can then also invite other websites (like Google or Facebook), and allow them to save a cookie of their own; a third-party cookie. Because these third parties are present on so many websites on the web (Google will set a third-party cookie on any page where they show advertising, and Facebook will do the same anywhere you see their ‘like’ button), they can then read all these cookies to paint a pretty good picture of your online behaviour. And once they know what you have been up to on the web, they have a much easier time serving you targeted ads, which is how those shoes you almost bought last week follow you on advertising banners around the web.
THE USE OF THIRD-PARTY COOKIES
Is it any wonder that third-party advertising cookies became a hot topic for privacy advocates. The usage of third-party cookies feels invasive, catching the attention of EU and Californian lawmakers who introduced legislation requiring opt-in consent. In the last decade, many major internet browsers have been announcing stricter measures protecting against the use of third-party advertising cookies, with Mozilla Firefox and Apple Safari now blocking them by default. Even Google sees the public’s dismay of current tracking practices. Their research shows that“81% [of people] say that the potential risks they face because of data collection outweigh the benefits”. A huge uptick in adblockers and other privacy tools is threatening Google’s core advertising business, and so Google has decided to start blocking third-party cookies in Chrome starting in 2022.
The online advertising industry now stands at a crossroads. With third-party cookies on their way out, advertisers stand to lose some of their targeting and segmentation abilities. But they also stand to gain more trust with customers if they do things right this time. Google thinks it found a privacy-conscious replacement for third-party cookies using a technology called FLoC. This technology aims to use browsers to group users in cohorts depending on their behaviour. This is supposed to be less invasive than third-party cookies, as advertisers will not get to see your browsing history, only the cohort id that your browser shares with them.
Many large internet players including some developers at WordPress (which reportedly powers over a third of the world’s websites) are not convinced the technology is as privacy-centric as Google claims.
It is not yet certain which view or technology will ultimately prevail. Google is the largest advertising company in the world, but it is not the only one. Other companies are developing other methods of identifying people online, which are often much more invasive than third-party cookies. New regulation and the changing attitudes of browser developers and internet users are likely to play a part before the dust settles.
Whichever way the dice rolls and the technology develops, a good bet for marketers is to focus on creating stronger direct relationships with their customers and taking a couple of notes from the pre-cookie era. Contextual targeting can be as effective as personal targeting without the privacy drawbacks, and first-party data transparently collected from customers who are interested in your product are already invaluable.
The demise of third-party cookies is an opportunity for the industry to improve its track record around privacy as well as to develop new and exciting ways of marketing your product sustainably.
Jan is Hotel Benchmark's lead developer and a data enthusiast who loves to automate the boring stuff and solve marketing problems using the latest technology. He currently focuses on Google Cloud and Marketing platforms to help hotels understand their marketing data.