The End of Third-Party Cookies: How the Digital Ad Platform Will Take a Hit

The End of Third-Party Cookies: How the Digital Ad Platform Will Take a Hit

Digital Ad Platform

Introduction

In 2019, Google fired a warning shot at digital ad businesses, calling it an announcement of its Privacy Sandbox initiative. The statement confirmed that the world’s most popular search engine was about to initiate a digital advertising shift of epic proportions.

This monumental change would end up with the demise of the ubiquitous cookie by 2022 as per its January 2020 follow up announcement. The third-party cookie is the industry’s default tracking and targeting tool.

Consequently, Google’s death sentence on ad personalization and targeting has been met with a high level of criticism in some advertising circles. Nevertheless, many internet users have embraced the move as the beginning of a better and healthier internet.

What Are Cookies?

Originally, use of cookies online was as elementary as HTML or Wi-Fi use. Their job was to recognize different computers as they made their digital journey across web pages. Their first use was in easing multiple log-in processes or purchasing items from e-commerce stores.

Some advertisers, over time, began to realize the potential of the cookie. The original intent of the feature was soon appropriated to build a billion-dollar ad industry. These bits of code managed and stored in your browsers can identify or track your online preferences. They allow servers to remember your activity. Advertisers use the data to create personalized user experiences for internet users.

Over time, internet users became wary of a secret agent like code that was used to build scary genuine profiles of their lifestyles, habits, interests, and spending. It is not just the annoying but harmless ads that got the third-party cookie in trouble. It is also the fear that the continuous collection of personal data could eventually be misused or put to population segmentation practices.

The Criticism of Google’s Third-Party Cookie Ban

google third party

Source: Business2community.com

It has been argued that websites only remember the information that users willingly give them. The danger of the misuse of cookie data pales in comparison to Snowden’s revelations of government surveillance.

Unfortunately, the presence of the innocuous but irritating ads and the weak data handing behavior of major digital platforms made the cookie the enemy. Data technologists say that over 95% of all websites depend on cookies for everyday operations like increasing website response time or visitor counting.

The data cookies hold elementary information compared to the massive amount of in-depth personal data that larger platforms like Facebook, Google, or Amazon hold in their servers. The data on Google can be correctly used to identify a person’s medical problem, their political affiliations, or sexual orientation.

Nevertheless, in the wake of GDPR and CCPA legislations that give online users more control on data transparency, the cookie-free movement has gained traction. Apple’s Safari and Firefox integrated cookie-based restrictions.

Now it is Google’s turn to appease the privacy and transparency demands of internet users. The search engine is set to block third party or cross-site cookies from functioning across domains. Google’s decision to phase out third-party cookies gradually over two years makes the decision anti competitive.

They have also declared that they are working in tandem with the “ecosystem” to find the best practices for the next phase of internet advertising. Unfortunately, some digital advertising businesses are heavily reliant on third-party cookie use.

They identify pages their potential customers are on, and tracking codes display relevant ads. Third-party cookie data can be retrieved directly from a website server via a third-party tag. The difference between third-party and first-party cookies is that the former is placed by third parties such as advertising networks.

How The Digital Ad Platform Will Take A Hit

  1. Websites can only read the cookies that they place. This means that targeted and personalized ad placement will fail without the use of third-party cookies. These tiny bits of data are, therefore, highly beneficial to the overall customer experience marketing strategy.
  2. Market research shows that the elimination of third-party cookies means a 52% less revenue generation for advertisers. The study shows that the presence of cookies can double an advertiser’s revenue. The inability for advertisers to target behavioral aspects of their customers causes a loss per ad amount of $8.58 in the US.
  3. Website users will begin to see an increment of registration requests as publishers find the best way to serve relevant ads via first-party cookies. Websites with sporadic traffic will have a massive problem in their hands, unlike those with loyal audiences. This feature could also channel more ads to Google.
  4. Digital advertisers that make a living over ad tech’s worst third-party cookie use practices might also embrace more intrusive tracking and data generation tools. There is a fear that customers will begin to suffer under measures employed through mobile apps or digital fingerprinting. Google is, however, a proficient sheriff, and gunslingers that go against the rules will quickly find themselves in the search engine’s line of fire.
  5. The single sign-in function will go away with the loss of the third-party cookie function. Customers making purchases will need to make multiple sign-ins, which will lead to frustrating and sub par user experience.
  6. Data analytics will be limited, making insights on the number of visits to a website or ad less reliable. The practice of spotting purchase behavior on finance or retail sites will cease. Bidding higher for valuable audiences based on browsing behaviors is also going to become outdated.

How the Digital Ad Platform Can Keep Winning?

1. Building Better Relationships

Advertisers and brands will begin to collaborate with consumers in a bid to create a human yet personalized online experience. Such a move will bring in more respect for abused privacy, control, and transparency.

Brands should, therefore, begin to enhance their relationships with their customers. Consumers are receptive to relatable and coherent brand experience from advertisers that practice emotion-driven engagement. Both advertisers and the brands that they work for will need to analyze and master their existing first-party data and leverage their walled garden platforms for data-driven insights.

2. Leveraging First Cookie Data

Digital advertisers will also need to invest and use acceptable consent management features to get more insight from first-party data. This means that both brands and advertisers need to build customer trust to comply with Google’s call for user control over the use of personal data.

Google states that the rampant use ad blocker due to abuse of third-party cookie-dependent ads is one of the reasons why they are phasing the internet use feature. They believe a lack of trust between advertisers and internet users is adversely affecting the whole web ecosystem. Businesses now need to foster genuine and healthy connections with consumers across every touch point.

3. By Protecting Valuable Data

Business owners are also going to receive a new lease of life and will have less worry about ad fraud. GDPR has forced many businesses to take charge of data in their hands, meaning that advertisers will now use compliant business and customer handling processes.

Businesses can then begin to protect their valuable data assets from misuse. The days when publishers made revenue from premium content, brand safety, and context could be back. Eventually, this move could lead to the creation of diverse walled gardens beyond Amazon, Google, and Facebook.

How Will the Third-Party Cookie Ban Affect Google?

google

Source

One major criticism of Google’s move was that in their search to enhance online privacy, they are also improving their bottom line. The search engine’s business model is heavily reliant on consumer data collection.

Its robust algorithms continually track your activity, such as shopping, videos watched, reading, and other surfing activities. Google has a search market share of  87.96%, and unlike other search engines generates most of its revenue through advertising. Google’s ad revenue in 2019 was over $134.81 billion through its Google Ads platform.

With search terms as it’s the most useful tool for targeting relevant ads, Google could drown its competition. Digital ad businesses need to find a way to benefit from existing or natively grown walled gardens. A walled garden is a term used to define massive search, social media, 360 media, and e-commerce networks.

The walled gardens have since their inception embraced consumer consent over marketing data tracking and use. These platforms also have robust machine learning technology that can leverage their data to enhance digital advertising. Since Google’s pronouncement of the fate of the third party cookie, shares of adtech businesses like Criteo SA slumped by as much as 14%.

The Final Word

Advertisers and publishers are waking up to the fact that they are too reliant on Google for their bread and butter. As the problem of the third-party cookie goes under the microscope, its cure could be a lessening of reliance on one search engine and company.

Advertisers will, therefore, need to band together to stretch the value of their experience, data, and audience. This way, they can bring about changes in standards that make the digital ad revenue generation and sharing more equitable.

About Author

Shawn Hadden is a digital marketing strategist. He provides innovative and results-driven internet marketing solutions so that business owners become even more successful in their chosen fields of endeavor.

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