How will the end of third-party cookies affect advertisers?

How will the end of third-party cookies affect advertisers?

Third-party cookies are small amounts of texts that are stored in the user browsers for different purposes. These purposes include reminding a page visited or a product added to the cart. To make it more concrete, let's say you visit the website of an online boutique for a bag you like.  Right after, you are browsing a news website. And... What is that? While reading the news, you realize that the bag you want is waiting for you to wear! Between ads, it charmingly winks at you from the corner of the website. These flirty baby steps are through third-party cookies, codes that function as "reminders". Of course, the only goal isn't that. Third-party cookies, of great importance mainly for digital marketing and digital advertising, are used to track the user's previous search on various websites. They use third-party cookies to send relevant ads to their target audience. What if we told you that third-party cookies would no longer be with us soon? Let's together see what the cookie-free digital marketing and ads world will be like.

Google update on third-party cookies

The Google announcement dated January 14, 2020, on the third-party cookies phase-out in Chrome by 2023 dropped a bombshell to the online ads ecosystem.

The end of third-party cookies in Chrome will undoubtedly affect many people, and companies in digital marketing enable companies to exchange data to determine the target audience of automated ads. Announced in January 2020, the decision directly affects the market of ads technologies, advertisers & publishers since it will reduce the strength of data exchange on the online user behavior. Justin Schuh, the Engineering Director on Google Chrome, states: "Users are demanding greater privacy, including transparency, choice, and control over how their data is used. It's clear the web ecosystem needs to evolve to meet these increasing demands." He points out that Google eliminates third-party cookies to protect user privacy. Web browsers such as Safari and Firefox have already implemented some blocking against third-party cookies. The most significant reason for Google to take relatively late action is said to be the income from the third-party cookie ads. So, what does all this mean?

Third-party cookies and digital advertising

The decision made by Google has only an effect on third-party cookies. So, the good news is: First-party cookies are not affected. First-party cookies are described as cookies sent to a web browser by the website that the user is directly visiting. Their goal is to help advertisers and publishers understand customers so that they can optimize their on-site experience. You can read our blog post titled "What is First-Party Data and how to use it in digital marketing?" if you want to learn more.

It's now time to go back to third-party cookies. Though not designed for this in the first place, third-party cookies are now a significant resource often applied in advertising. Learning the user's former behavior on various websites, advertisers and publishers know their potential customers and decide what they can offer better through their account information such as habits, preferences, demographics, and location. The implementation and use of third-party cookies are predominantly the main drivers behind digital marketing and advertising growth in the past ten years.

Will the end of third-party cookies cause the digital ads world to take a blow?

According to StatCounter data, more than 65% of Internet users worldwide and nearly 80% of users in Turkey currently prefer Chrome.

It is hard to say that the whole industry will come to a full stop because of Google's decision, although the digital advertising industry has taken a big jump through third-party cookies. The current challenge is finding alternatives that advertisers can use to determine user behavior and value in a cookie-free environment.

The industry has already started the cookie-free plans for scaling up audience resources to overcome this challenge. The focus of one solution is to target alternatives beyond the user profile. Contextual targeting can be given as an example for this solution, which allows advertisers to target users based on the content they read. Of course, Google has already made a move for its own solutions in the meantime. Google again develops the most outstanding alternative to the end of cookies. Abbreviated as FLoC, Federated Learning of Cohorts aims to group internet users with similar interests and behaviors anonymously. Thinking that this will be a good alternative that respects user privacy, Google has already tested the Privacy Sandbox initiative, which was launched in early 2021. Google describes the Privacy Sandbox initiative, an alternative pathway for privacy protection to eliminate third-party cookies, as a way to "Create a thriving web ecosystem that is respectful of users and private by default."