Last week, Google announced they will replace the third-party cookies with a solution to replace it by 2022. This announcement came in response to increased rejection of third-party cookies by competitors(Firefox, Safari) and finding a way to empower user privacy. Before we can delve into how this affects the advertising landscape, it’s important to know the distinctions between first-party and third-party cookies. First-party cookies are created from the domain that you are currently on (yourwebsite.com) while the third-party cookies are created by a different domain/platform (Criteo, Trade Desk, Rubicon Project).
Third-party cookies have been used mainly for audience retargeting and cross-site tracking. Since third-party cookies are being sunset by Google, other signals and data points will be needed for targeting, reach, and frequency. Google is working towards a probabilistic solution using machine learning to address this but it will only cause further confusion in the data as platforms become increasingly automated with no insight into their inner workings.
Google will do its best to balance personalization and internet privacy without affecting its biggest revenue stream in Google Ads. Ultimately, the advertisers will adapt to whatever solution that Google develops. Advertising platforms that rely heavily on third-party cookies such as Criteo will see the biggest fall in both stock and advertising value. In the long term, Google will benefit the most as advertisers start to migrate towards first-party cookies collected by their own domains and Google properties.
In order to adequately prepare for the future, we recommend collecting first-party data on your domains and within platforms most resilient to tracking limitations such as Facebook and Google. Advertisers will eventually move on as new technology is developed that will find a middle ground between profit and privacy.
James Aiken – Digital Media Planner, Paid Search Manager