What Marketers Need to Know About the Impact of Removing Third-Party Cookies

What Marketers Need to Know About the Impact of Removing Third-Party Cookies

Trapica Content Team

Industry News
5 min read
April 28, 2021

In an ever-changing battle to balance privacy and personalization, Google made the big announcement last year to remove third-party cookies by 2022. Instead, the global technology giant will use browser-based tools currently under development as part of the Privacy Sandbox project.What does this actually mean? How will it affect marketers and businesses?

As members of the marketing world, you’re accustomed to change when it comes to Google, but the removal of third-party cookies has the potential to shake up the entire industry…and then some.

In Search of Balance

For those keeping up to date with this news, you know that Google has been talking about moving away from traditional third-party cookie data since August 2019. Known as the Privacy Sandbox initiative, there are two reasons why this change is necessary for the company:

  • Browsers are starting to deploy cookie-blocking technology
  • The industry has come under enormous pressure to manage privacy

Historically, as more and more data became available to companies on the internet, it was natural that this information would be used for advertising and personalization. However, the balance between privacy and personalization has always been shifting and under debate. Google believes that there is room for ‘a secure environment’ where users get the privacy they deserve while also enjoying a level of personalization. At the same time, Google also notes that the industry requires a fresh approach rather than constantly trying to rework the existing system.

In an ideal world, users see relevant ads when browsing the internet. We all know that personalization is a positive tool for users, but how we achieve this personalization is the biggest challenge. Google believes in anonymously aggregating sensitive information to allow for tailoring without jeopardizing privacy. What’s more, it further suggests that the future of personalization is in keeping sensitive information on-device.

In addition to the pressure to provide all users with privacy,  another problem is cookie-blocking technology and tools such as those found on  both Safari and Firefox. By blocking cookies, ads aren’t optimized for the individual and Google loses revenue. Targeting is difficult, advertisers struggle, and ad revenue gradually declines.

Introducing the Privacy Sandbox Initiative

Google believes that it has the magical solution to all of these problems, and it lies in the Privacy Sandbox project. One phrase that Google has used that has stuck is ‘privacy-preserving APIs’ - by using these, conversion measurement and targeting occur but without being detrimental to privacy. Many users are concerned that data moves between browsers and devices because it suggests an inability to control/restrict the flow of information. For Google, the aim of the initiative is clear - to deliver relevant ads to groups of people while ensuring that the data doesn’t leave the individual browser.

Two technologies that would accommodate this environment are Federated Learning and Differential Privacy:

  • Federated Learning - Rather than storing data in the cloud, Federated Learning shares a prediction model between devices while ensuring that training data never leaves the device/browser.
  • Differential Privacy - With this system, it’s possible to share information publicly through patterns and trends rather than giving away sensitive information.

With Federated Learning, individual information is kept secure even as companies use interest-based targeting. Even if they do so on a large-scale, it manages to find the balance between personalization and privacy – the holy grail of advertising.

Everything Marketers Need to Know

How will this change affect marketers? Well, nobody will know the full answer to this question until after we’re into the implementation phase; however, Google believes that advertisers and marketers won’t notice much of a difference after moving away from using third-party cookies. The technology is named FLoC (Federated Learning of Cohorts) and Google says that 95% of conversions per dollar will remain even after the cookie-based advertising era ends.

Things will differ for marketers, and this includes the whole process of conversion measurement. With Apple and Google both working on solutions, it seems advertisers wanting to learn conversion data would access through an API as it’s tracked inside the browser. As we’ve already seen, the key benefits are that no individual user is identified, and no sensitive information is given.

From the outside, it’s easy to feel good about the changes. With 95% of the conversions per dollar still accessible without third-party cookies, the only change is how we access conversion data. The problem with this number is that nobody knows how Google derived it. For something that completely overhauls the way that marketers work, some experts are nervous and question how Google got to the 95% figure.

FLoC - We know some people are interested in the intricacies of the new system, so we’ll provide a little background.  FLoC uses modern technology to ensure privacy. Essentially, break the technology down, and the machine learning contributes to what you’ll recognize as a lookalike audience. Data providers currently aggregate numerous data sources using third-party cookies to inform users. With this new system, the FLoC technology does this instead.

If you search online for opinions regarding FLoC and a cookie-less world, you’ll see a number of differing opinions. While some believe that marketers will struggle, others think that FLoC is an effective way of reaching prospective customers in large groups. At all times, we should remember that this change is as much for users as it is for marketers.

As marketers, a significant portion of your job comes down to looking at metrics, analytics, measurement, and statistics. For the longest time, data has paved the way for marketers to improve the strategies and approaches of their clients. This will change, but Google has already stated its intention to offer click-through attribution solutions which will provide privacy while allowing marketers access to measurement. Unfortunately, the next problem is that this won’t tell the whole story for advertisers. By solely assessing ad click-through, it’s impossible to get an idea of the success of multi-channel campaigns or even the success of banner, video, or social ads.

We’re still in the early days of this new system, and an introduction is expected in 2022. For marketers, it’s hoped that Google will team up with W3C (World Wide Web Consortium) working groups to ascertain the needs of marketers. Providing privacy to users is essential, but the equation is two-sided, and the success of advertising relies on both parties enjoying a positive experience.

We mentioned the 2022 deadline; this was originally set by Google towards the beginning of 2020. With so many problems still to be explored, not to mention the global pandemic, Google won’t make changes before the system is ready. The company has already stated that only a reliable and fully working system will replace cookies. If the system isn’t ready, there’s a chance that marketers will be left waiting for the change to finally come.

A Changing Environment

Much of the focus is on Google right now, which is natural given the sheer size and importance of the company in terms of internet activity. That being said, Google isn’t the only one changing the privacy landscape for marketers and advertisers. Recently, the IDFA (Identifier for Advertisers) from Apple went under the microscope. Of course, we’re also welcoming more regulation changes. The EU’s GDPR (General Data Protection Regulation) is perhaps the most well-known, but this was followed up in the United States by Prop 24 and the new Consumer Privacy Act in California.

In our opinion, online solutions and tools need an approach that considers several solutions. DSPs and other services may need to expand beyond their current reach and specialize in various areas if they want to escape the third-party cookie cut without harm.

How do you prepare for such a huge change as a marketer? First and foremost, you take positive steps by reading informed and detailed guides like this one. The more you know, the better prepared you are - not only for your own service but for your clients too. If you run a marketing agency, clear and honest communication is the best way forward. Clients understand that certain changes are out of your hands, and this is a prime example. As long as you’re honest with clients, they’ll understand.

When more news becomes available, make sure you prepare for the changes. Advertising could change on Google, and you may soon be forced to access analytics and conversion measures differently. Google believes that the majority of conversions per dollar will remain, but only time will tell the accuracy of this prediction.

Also, only read from reliable sources (like this one). Rather than listening to rumors on social media, choose to inform yourself from reliable articles and information from Google directly. FLoC technology could offer the balance we all seek between privacy and personalization, and this means a dramatic shift in the way businesses/marketers operate.

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Industry News
5 min read
April 28, 2021