Already since the start of 2020, Google has mentioned the depreciation of third-party cookie tracking technology in order to combat privacy concerns amongst in the eyes of Google’s peers. Third-party cookies come with several concerns amongst such as “cookie logging”, “cookie hijacking” or placing malicious cookies through WordPress plugins.
However, the main concern just seems to be the idea that a user can be tracked all over the web across websites and across devices. How interest profiles and in-market audiences are formed and how this abundance of data can be linked with other data such as the search queries made in Google’s search engine. Cookies contain personal data and are as such, governed under the GDPR (General Data Protection Regulation). Amongst the requirements, users need to give consent to Google before it can activate any tracking cookies that contain personal data. However, where current regulation does provide large annoying pop-ups to give cookie consent, there was no essential shift in how internet behavior has changed. Users typically accept the cookies without really being aware of what they signed up for and marketing platforms continued their usage of cookies.
In this article, we will explore the impact of the depreciation of third-party cookies for advertisers.
What exactly are third-party cookies again?
Third-party cookies are essentially little pieces of code, which transmit signals from a website to other websites. They are not necessarily bad in themselves, as they can improve the user experience both in the way they navigate the website and by serving relevant ads.
Third party cookies are an essential component of the success formula with which Google is able to serve it’s highly popular advertising products.
Third party cookies are installed by domains that are not the ones you are visiting. They can be set by a third party server, such as an ad tech server.
Google claims that by using FLoCs (which is the newly proposed alternative to third-party cookies), they are able to achieve at least 95% of the conversions per dollar spent when compared to cookie-based advertising, which sounds quite unbelievable. It raises the following questions:
- What is FLoC?
- How is Google able to achieve such good results without cookie tracking technology?
- How come Google is willing to sacrifice a technology on which its data tracking is based?
FLoC stands for “Federated Learning of Cohorts”, which method affects the collection of user data without third-party cookies and the matching of advertisements to interest groups rather than to individuals, based on the collected data. More information on FLoC can be found here.
The second question hits the crux in the question and offers a lot of clarity once understood. Instead of using third-party cookies, Google is able to rely on the usage of first-party cookies. First-party cookies, unlike third party cookies, are not blocked by browsers or cookie blockers and Google has a TON of first-party data, which is unprecedented in the industry.
- Chrome itself uses first-party cookies, which is why it can recommend customized content in the search bar.
- The Google Analytics tag drops first-party cookies, Google Analytics is used in over 70% of the top most popular publishers.
- Android devices collect a ton of data and Android is the market leader in Smartphone operating systems.
- Other Google services such as Gmail, Youtube, Maps and more collect a ton of first party data
- Also offline, Google collects data through services as Google Home, which is used among others to operate electronic vacuum cleaners.
With all this data that Google is able to collect using first-party data, they become much less dependant on third-party tracking. While Google is gaining a lot of information through third-party cookies, they still have access to huge amounts of personal data, which can be used to serve targeted ads.
In addition, while data collection is still standing strong, ad serving is also little affected. While FLoC’s are using interest groups rather than individual users, a user can belong into several layered interest groups and move between groups instantly based on dynamic algorithmic matching. In essence, the ad is thus still personalized to a very specific profile, similar to serving ads to an individual user.
Still, the question remains as, why Google is willing to sacrifice third-party cookies, as they still contribute to Google with a lot of data points. One part of the answer is the pressure created by society to increase the protection of privacy. Another may be that Google can’t stay behind. Competitors Safari and Firefox have already blocked third-party cookies.
Critics suggest that Google may support the move to block third-party cookies as a move to enforce its dominant position in the market. Other advertising platforms such as Facebook and Microsoft and especially smaller platforms, will be relatively more affected as they are no longer able to collect information as well without the ability to collect information through third party cookies on Chrome.
While the decision to block third-party cookies will reduce the amount of data sent to advertising platforms, Google Ads performance is relatively little affected. Google’s claim that FLoC tracking will yield at least 95% of the conversions per dollar spent seems like it may be legit. On the other hand, smaller advertising platforms will likely struggle with this change and their understanding of users may be reduced as they are lacking abilities to track users off-platform. For this reason, it is important to keep a close eye on non-Google advertising platforms when the changes get pushed through.
Smaller platforms such as TikTok, will be more affected by the changes than Google. For that reason, it is important to optimize campaigns well and use additional software to gain insights on competitors and adjust creatives and targeting accordingly.