Even though Firefox and Safari phased out third-party cookies back in 2013, there’s a tipping point on the horizon: Chrome’s phasing out of third-party cookies that’s slated for 2023 [*]. And considering Chrome holds 63.58% of the global browser market [*], they are the only whale in the ocean.
Google’s announcement has left publishers, advertisers, ad tech companies, and marketers in a scramble. In a somewhat open-sourced fashion, Google has invited developers around the world to contribute to its box of APIs designed to replace cookies, known as the Privacy Sandbox, and this is just one example of initiatives aimed at creating the next era of advertising around the world.
Today, we’re going to briefly cover what third-party cookies are and why it’s a good thing they are being phased out, and then we will outline 5 possible alternatives marketers can use from here.
What Are Third-Party Cookies?
Cookies are individualized tags placed in a user’s browser each time they perform an action on a site. They generally improve browsing speeds, make user experiences more seamless, and allow advertisers to reach back out to relevant users.
Third-party cookies are a specific type of cookie that track user behavior across separate websites, meaning a website can continue to monitor a user’s behavior even after they leave that particular site. Third-party cookies are separate from first-party cookies, which are cookies that only track users on your unique site. So even though third-party cookies are leaving, advertisers will still be able to track and retarget users that go to their sites.
Third-party cookies are set by “third-party” networks or ad tech companies and are found on countless sites around the web. These cookies aggregate your data into a type of “data profile” that is sold for use in targeted advertising. A single web page can share user data with dozens of other companies. Ad tech companies also combine browser data with other data sets that track mobile phone behavior, TV habits, and more.
While this personalization can increase revenue per customer and improve the ad experience, the security and privacy implications of third-party cookies outweigh the benefits. With frequent data breaches, cookie-matching rates of 40-60% (meaning advertisers can pay for the wrong impressions and fail to reach certain customers), and the fact that users aren’t compensated beyond service or often aware of when or how their data is being sold, the current system isn’t ideal for users or advertisers.
Why Are Third-Party Cookies Being Phased Out?
The internet, if it adjusts accordingly, will be better off without third-party cookies. They are a poorly-fit component of an already problematic advertising ecosystem. Due to their involvement with breaches, opaque nature, and widespread use, they are at the core of digital advertising distrust and a substantial part of why laws like GDPR & CCPA were passed.
Collecting browser data isn’t inherently bad, but users should at least have transparency and a say on who and when someone uses it. If users want to earn from their data, get more personalized ads, have faster and more catered experiences on websites, and the like, then they should be able to sell or give their data away to make that happen, but the current internet ecosystem doesn’t adequately provide that choice.
Google, Apple, and other internet giants recognized the rising distrust and anger against third-party cookies and are reacting accordingly, although their efforts to move beyond third-party cookies aren’t definitively in the right direction, as we will discuss in the FLoC section below.
What Is the Advertising Industry Doing About It?
Prominent companies have launched a series of projects and proposals aimed at creating a new advertising ecosystem. Essentially all of the current proposals perpetuate the existing tension between users and advertisers instead of opting for a solution that is better for both.
Instead of asking: “what does an advertising world that honors user privacy — one that lets users opt-in to specific experiences & earn from their data while delivering better ROI for advertisers look like,” — these companies are asking: “how can we maintain or improve the ability to track users between sites and keep the status quo as close to where we are as possible.”
A Misguided Solution: The Issues With Google’s FLoC
Google’s Federated Learning of Cohorts (dubbed FLoC) is a great example. On the surface, it gives Google the ability to argue that they are in step with the trend of user privacy by proactively eliminating cookies, but they are repeating the same mistakes the third-party cookie infrastructure created, and in some aspects, may be making it worse.
Google’s proposal, in essence, is to use algorithms to create anonymous digital cohorts of people based on similar behavior. If a user frequently visits sports sites, they’ll be placed into a sports cohort.
The issue is, by design, these cohorts aren’t cleanly separated by interests and behaviors. When someone arrives at a site, that website will receive the cohort ID and all the data about that cohort — not just the data points that are relevant to it. Plus, because FLoC cohorts are refreshed weekly, websites may be able to tell how user behavior is changing overtime.
So if someone were shopping for a new mattress, the mattress company may also have access to the fact that they’ve been visiting diet pages for months. This opens up a host of ethical and abusive ways this data could be used, such as estimating demographic characteristics like weight, race, or credit scores and using those to write abusive messaging or shilling snake-oil products to vulnerable populations [*].
FLoC could also exacerbate the problem of fingerprinting, which is when predatory hackers match enough anonymous data to identify users. Because these cohorts don’t have high population floors (the language has been “in the thousands”), fingerprints could narrow down their initial search to just a few thousand users with a lot of data and potentially discover personal identifiers even faster [*].
Google has promised to develop technology to prevent fingerprinting, but they’re already testing FLoC (around 0.5% of Chrome users are already acting as tests) before those measures have been created [*].
So while FLoC does offer some reprieve to advertisers who are used to relying on third-party cookies (Google boasts that FLoC is 95% as effective as cookies), it opens up a host of privacy issues for users that run counter to the mission we should all be supporting — namely the pursuit of innovative ways to respect user privacy and data ownership while improving ROI for advertisers.
It’s Not Just Google
Ad tech company Criteo and others are also presenting their own plans and contributing to Google’s Privacy Sandbox, but many of these ideas still feel like advancing the status quo, instead of thinking more boldly about our advertising ecosystem and how we can make it stronger and better for all players.
For example, a group of independent surveillance advertisers is trying to use more personal identifiers like email addresses to track across devices instead of prioritizing new types of browser tech. Instead of a step forward in user privacy, this is a solution that would effectively be a step backwards [*].
5 Great Third-Party Cookie Alternatives
So if the era of third-party cookies is ending and the new solutions that still spur user privacy haven’t arrived, what solutions are there for advertisers and companies who genuinely care about user privacy but also recognize the value and need for effective advertising?
While that is the question of the hour, there are a few promising options your business can look into.
Note: we are only going to talk about the ones that we think are building a better internet. There are other options for improving ad effectiveness like using web caches and unified identifiers, but these go against the best interests of user privacy and could violate laws like the CCPA.
1. Start using Zero-Party Data
Zero-party data (ZPD) is the future of internet data. ZPD is consumer-owned data given voluntarily by the user to brands in return for a benefit, and we consider it the holy grail of consumer data.
By setting up systems that let users voluntarily signal when they are ready to buy, what their preferences are, and any other type of information your company can use to better your advertising and user experience, companies have an opportunity to create win-win scenarios where users feel good about how their data is being used and companies can increase their ROAS (return on ad spend).
Examples of zero-party data include opt-in value-exchange ads, cryptocurrency compensation, and mobile gaming incentives.
Read more: Zero Party Data: The Holy Grail of Consumer Data
2. Prioritize First-Party Data Collection
On a similar note, combining first-party data like email addresses, specific website page visits, and customer information collected in your CRM is still a powerful marketing mechanism.
Analyze your existing collection efforts and see how you can improve your site, ads, and funnels to collect and use more first-party data.
3. Use UUIDs Across Your Network of Sites
For publishers with multiple sites, you can implement tracking mechanisms known as UUIDs that share a unique user ID across your personal network. This will allow you to cross-market between different brands and better synthesize your own first-party data.
For more info on UUIDs, go here.
4. Take Advantage of Contextual Advertising
As third-party cookies are phased out, we are likely to see more solutions based on contextual advertising. Contextual advertising is a categorical approach to publishing ads.
For example, if you target snowboarding you will be placed on websites that operate in that industry. This is based on keywords and other signifiers that websites are tagged with.
The most popular platform is Google AdSense, but there are plenty of alternatives you can look at as well.
5. Opt for a Revolutionary Solution — Permission.io
We think it’s time to create a new internet model that runs on fundamentally different principles. This new internet, known as Web 3.0, gives users the universal ability to earn cryptocurrency from their data while giving businesses exponentially higher ROI.
How? By giving users the ability to raise their hands and opt-in to branded content in exchange for financial reward. In this model, when a user chooses to engage with your brand, it means they are more likely to pay attention, have a self-identified interest in what you’re selling, and trust the manner in which you’re selling it.
This new ecosystem is possible via opt-in value-exchange advertising and is significantly enhanced by blockchain tech that instantly compensates users with digital currency for engaging with advertisers, shopping online, and doing anything else that requires their data. Even better, this new ecosystem already exists… we’ve built it!
If you’re an advertiser or marketer, this is what Permission.io can do for you:
- Significantly increase your conversion rates by only charging for legitimate and voluntary engagement via opt-in ads
- Help you acquire first-party data en masse and store it within your CDP.
- Increase long-term brand loyalty by building real relationships with your customers and treating them as individuals with dignity.
To incorporate Permission’s opt-in value-exchange marketing tech into your campaigns and begin reaping the benefits listed above, go here.
The Bottom Line
The age of third-party cookies is coming to a close, and that’s great news, but the alternatives being presented by the major platforms and other ad tech companies fall short of the innovation we need.
Instead of waiting for the next iteration of advertising systems that take advantage of users and settle for low ROI, stay on top of your industry by prioritizing zero-party data and opting in early to incredible new solutions like Permission.io’s consent-based advertising ecosystem.