Flynnsights // April 9, 2021

Life After Third-Party Cookies

Preparing for the Next Era in Digital Advertising

Zach Frost

Zach Frost

Associate Director of Digital Media at Flynn

It’s happened to all of us: we visit a website and then suddenly begin seeing ads related to that visit. That’s “third-party cookies” at work. This kind of hyper-targeting can be disconcerting for some users, and highly useful for advertisers. With some browsers already restricting the use of third-party cookies, and Google saying they’ll block their use in 2022, digital advertisers and their agencies are trying to determine what comes next.

So, what are cookies?

Cookies are small text files or pieces of script that store information and are generated as you navigate websites online.

Unlike “first-party” cookies that are generated by the website owner to improve user experience, “third-party” cookies require “tags” or “pixels” generated by an outside service. These third-party cookies allow for cross-site tracking and can collect browsing data from users’ site visits or browser sessions. Details that can be tracked include age, gender, and page content, among others.

Due to the data third-party cookies collect, they are commonly leveraged for targeting in digital advertising campaigns. This includes behavioral targeting, other types of retargeting (e.g., retargeting based on search history), and ad serving that decides which ad to show where, and at what time.

Why are third-party cookies going away and why does it matter?

Cookies have created an advertising environment where digital ads can be hyper-targeted and personalized. This type of hyper-targeting has led to apprehension among some internet users and, in some cases, a lack of trust in the brands that use this level of targeting.

Third-party cookies have been blocked by the Firefox browser since September 2019, and by Safari since March 2020. Google has announced that they will also move away from third-party cookies starting in 2022. Since Google Chrome accounts for 62% of all US browser sessions, this change will have a much larger impact on both consumers and advertisers than the restrictions imposed by other browsers.

How did we get here?

This type of restrictive sentiment regarding cookies is nothing new. The General Data Protection Regulation (GDPR) was put into effect in 2018 by the EU and regulates how companies can collect consumer data. In the US, the California Consumer Privacy Act (CCPA) took effect in June 2018, giving consumers more control over the information businesses collect about them.

Is something going to replace third-party cookies?

Until Google’s updates go into effect, there are a few different initiatives prepping for the change. Google itself has tested Federated Learning of Cohorts (FLoC), which is a privacy-focused alternative to third-party cookies. This approach groups people into large clusters based on their online interests. User information is still used to understand the content people view, but it is stored on a user’s device rather than distributed across the internet. That information is also anonymized before being added to the cluster.

In addition to FLoC, Google has also introduced a retargeting solution called TURTLEDOVE. It uses information stored on browsers about advertisers that users have expressed prior interest in, then sends two requests for ads: one to retrieve an ad based on an advertiser-defined interest, and another to retrieve an ad based on contextual data.

Google’s FLoC method still uses some level of information about the user, though it does limit personalization by creating large interest groups. However, other vendors have gone even further.

For example, media buying platform The Trade Desk has an approach that creates a unique ID using an anonymized version of a user’s email address when they log into a website or app. The user will also get a prompt that shows ad preferences and allows them to opt in or out.
Many publishers have backed the unified ID approach, including Index Exchange, Magnite, OpenX, and Neustar. Some ad tech companies think that Google isn’t playing by its own rules and believe both solutions will play a role in advertising’s cookie-less future. Where everyone can agree, however, is that first-party data will be of critical importance.

What can brands do to prepare?

  1. Collect and segment first-party data. Identify your strengths and weaknesses.
  2. Test and learn with third-party data while you still can. Understand which segments perform best for your brand and identify important details such as device usage, dayparts, and geography.
  3. Continue utilizing UTM codes. These codes can be used as events to construct first-party data segments and elevate retargeting efforts.

Flynn’s position

As Google tests new targeting methodology, our use of Google Marketing Platform to manage our campaigns makes us well-positioned and allows us to create different test and learn scenarios. We’re also keeping up to date with new partners and their approaches. We’re confident that we’ll be ready for whatever the cookie-less future may hold.

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