The Death of the Third-Party Cookie and What It Means for Advertising

  • Categories:

    Industry Trends, Paid Media

  • Date:

    September 8, 2020

The Death of the Third-Party Cookie and What It Means for Advertising



Industry Trends Paid Media

Note: This post was updated on May 13, 2022. Please check back periodically for news on this evolving issue.

As you’ve likely heard, after several delays, Google will eliminate third-party cookies by late 2023. What does this mean for the advertising industry and your business?

First, here’s a quick refresher on cookies including the difference between third-party cookies and first-party cookies (codes stored by a website owner on their own site domain).

What are cookies?

  • A website cookie is a small data file that can be stored in a browser when a user visits a website. The cookie can store a wide range of data but is primarily used for personalization, shopping carts and website preferences.

  • A first-party cookie is created or updated when a user visits a website (let’s call it currentwebsite.com). In this case, the scripting on the site can only leverage the data in the cookie while the user is visiting currentwebsite.com.

  • A third-party cookie is a tracking code set on a website the user visited previously (e.g., previouswebsite.com). Typically, these codes are created by advertising networks to capture certain data points that can equip advertisers with the ability to target audiences they consider valuable. When a user visits currentwebsite.com, an advertising network script looks for cookies from previous websites that can help identify the advertiser’s desired audience and serve them relevant advertising.

How do advertisers commonly use third-party cookies?

1. Targeting

This data provides an understanding of consumer behavior including frequently visited websites, purchases and interests. It allows advertisers to target the right consumer and serve them the most relevant message. For example, if a consumer visits three different travel websites within seven days, an ad tech vendor can safely assume this consumer is planning a trip and deliver travel-related advertisements to them.

2. Measurement and Attribution

Third-party cookies also give advertisers the ability to enhance measurement for attribution capabilities, which allows for campaign optimization. For example, third-party cookies help track users across different platforms to create a holistic view of what goes into a conversion. As third-party cookies are phased out, these multi-touch attribution models will become less reliable until another identity solution is realized.

Why are third-party cookies going away?

Removal of third-party cookies is a response to elevated public scrutiny around the handling of user-level data. A growing number of consumers are uncomfortable with how their data is being shared. In turn, they are demanding transparency, choice and control over how their data is used.

Lawmakers and companies alike have responded to these concerns by taking more substantial action through litigation and company policy reform to protect user PII (personal identifiable information). Some companies have chosen to implement permission-based third-party cookies, while others have begun to completely phase them out in lieu of new, alternative solutions.

When will third-party cookies be completely gone?

Browsers have begun a phased removal of third-party cookies in the wake of increasing demand for user privacy and stricter data-sharing laws.

  • Apple Safari and Mozilla Firefox announced plans to begin a phaseout in 2013 and have since blocked all third-party cookies.

  • Google announced in January 2020 that they will no longer support the use of third-party cookies. After several delays, plans to completely phase out third-party cookies have been pushed to late 2023. Chrome currently holds around 63% of global browser market share, which explains the gravity of their future plans and their influence on the industry.

  • Publishers have also shifted to relying less on third-party cookies within their targeting suite. They’ve done so by sharpening the strength of their first-party data, built from site visitors and subscribers, and amplifying their ability to contextually target.

What will replace the third-party cookie?

The deprecation of third-party cookies is ultimately an issue of identity resolution, which is the process of matching identifiers across devices and touch points to a single profile. This process is fundamental to help advertisers target users and measure their value against advertising KPIs. Since third-party cookies have historically played a key role in helping improve advertisers’ ability to identify users, leading ad tech partners are working toward alternative replacements. However, this fragmented effort will challenge the industry to arrive at a universal solution.

Some solutions in development include:

Google’s The Privacy Sandbox

Google is working on a new solution called The Privacy Sandbox, which will be a privacy-preserving technology aimed at protecting consumers while still effectively generating ad revenue. The Privacy Sandbox is made up of three primary components and is currently in beta testing globally as of April 2022.

Components include:

  • Topics: In late January 2022, Google introduced the Topics API, which is an ad solution that replaces what was formerly called FLoC. Topics is an interest-based targeting solution determined by what sites a user visits within their Chrome browser. Google plans to roll out at least 300 Topics to start and will grow the list in the future.

  • FLEDGE: Along with Topics, FLEDGE is an additional ad targeting solution that will be used to replace remarketing capabilities by leveraging browser behavior without individual user-level tracking.

  • Attribution Reporting APIs: Currently in phase 2, this solution will help advertisers measure when a user’s action, such as an ad click or a view, leads to a conversion without using cross-site IDs.

LiveRamp’s Authenticated Traffic Solution

LiveRamp is launching an Authenticated Traffic Solution for advertisers. The ATS will gather real-time, consented user data without the use of cookies. ATS provides control and privacy for users through RampID, offering a single opt-out option for platforms and publishers. Advertisers can enhance their audience targeting and measurement capabilities through ATS — without the use of third-party cookies.

The Trade Desk’s Unified ID 2.0

The Trade Desk, one of the world’s leading programmatic DSPs (demand side platforms), is developing an open-source ID framework called Unified ID 2.0. The framework creates a randomized ID using hashed and encrypted email addresses that require users to consent and accept terms and conditions. This will give users significant control over the content and ads they want to see and engage with.

What’s next?

Third-party cookies have become a pillar for behavioral targeting, but it’s important to remember that they are just one targeting lever that brands can pull and leverage.

  • For example, at Wray Ward, we encourage clients to build customer relationships by growing their CRM database. This allows businesses to collect first-party and zero-party data about customers to target them directly.

  • Look-alike targeting is another great way to use first-party data. It allows advertisers to find users who either look like their customers or have previously engaged with their brand. While look-alike capabilities will be affected by the absence of third-party cookies, they will remain a viable targeting option. However, they will have to be modeled against alternative data frameworks.

  • Forming direct partnerships with publishers and retailers (e.g., Amazon) to access their first-party data (technically considered second-party data to the advertiser) is another effective form of targeting that is growing in strength, scale and precision.

  • Contextual targeting, which will likely see wider adoption in the near future, will still be able to reach consumers at key moments during the research and inspiration stages.

Need a partner to help navigate the post-third-party cookie world? Email us.

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