Why Are Cookies Going Away in the Future?

Published on 03 Oct 2022

Cookies, Future

Marketers had grown more anxious about the cookieless future when Google announced the deletion of third-party cookies. Apple revealed changes that make Identifiers for Advertisers (IDFAs) substantially less lucrative.

Customers still desire customization, despite increased consumer privacy standards, which means marketers must verify the data they utilize is clean and correct. One approach to maintain this fragile balance is to employ cookies that retain information and give consent choices, but third-party cookies are slated to become obsolete in two years

So, why are third-party cookies being phased out if they have traditionally worked so well for users and marketers? What should a marketer do if they depend on third-party cookies to give tailored insights as they navigate the web?

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What Will The Cookie-Free Future Look Like?

The cookieless future is a transition in the digital world due to Google's announcement in January 2020 that it will phase out third-party cookies in its Chrome browser (now postponed to 2023).

With so much digital marketing activity reliant on third-party cookie data, the vast majority of the ad tech industry - as well as publishers, advertisers, and marketers - is in a dash to discover viable alternatives.

Alternative IDs based on non-cookie identifiers, such as email addresses, will be a critical component of non-Google technologies. However, the quality and amount of a company's first-party data will almost certainly influence the effectiveness of some cookie alternatives, such as alternative ID technologies. As a result, many firms adjust their strategy to acquire massive amounts of reliable and accurate client data.

What Exactly Does "Cookieless" Mean?

Cookieless marketing refers to a style of marketing in which marketers depend less on third-party cookies, which are little pieces of data shared between advertisers that include personal identifiers when customers surf the web. This significantly affects websites that use third-party cookies to identify customers and target them with appropriate advertising or marketing.

Cookies, in general, save information about your computer to identify you as a unique visitor by storing unique identifiers such as registration numbers or session IDs. When cookies are removed, other identifiers (such as your IP address) will uniquely identify your machine to learn more about who you are online.

Cookieless websites retain your data using alternative techniques such as IP addresses or device IDs as identifiers rather than cookies. These new tactics will now follow you online. Google said in March 2021 that it would no longer gather personally identifiable information (PII) graphs from alternative identifiers such as users' email addresses.

While the loss of third-party cookies may still have a significant impact on marketers who rely on analytics data (such as session IDs) to target ads, Google has opted out of PII collection methods in favour of what appears to be a more secure alternative: Federated Learning of Cohorts (FLoC), also known as the Privacy Sandbox.

FLoC, according to Google, is a "privacy-first" and "interest-based" advertising system (AdTech). Instead of third-party cookies monitoring a user's online surfing activities, Google's web browser, Chrome, will do so. Users will be assigned to an audience or "cohort" based on their behaviours. Advertisers can subsequently target their adverts to anonymous groups rather than individuals.

Why Is Google Removing Cookies?

According to Justin Schuh, Google's Director of Chrome Engineering, the justification for phasing out third-party cookies is that customers "expect greater privacy, including transparency, choice, and control over how their data is used." He claimed that Google was "changing" to provide "the online ecosystem required to fulfil these escalating demands."

None of this is false. 86% of consumers reported increased worries about personal data privacy. Another 78% were concerned about the quantity of data gathered.

However, another reason for Google's decision to remove third-party cookies from the web may be the Irish Data Protection Commission's (DPC) inquiry into Google's online advertising business. Similar high-profile investigations and escalating customer anxieties have produced the ideal storm that Google is being compelled to react to.

The Association of National Advertisers commented when Google originally revealed its plan to phase out third-party cookies in January 2020. They voiced "great dissatisfaction" with Google's move and raised concerns that it would "substantially" upset the advertising sector. What does this indicate for the rest of us?

It even accused Google of "cutting off the economic oxygen that startups and growing businesses need to exist." A three-year extension has yet to persuade Google's colleagues and rivals.

But what about the future? It is innovation.

While GetApp's poll indicated that about 23% of marketers want to reinvest in email marketing software in 2022, data management platforms (DMPs) and customer data platforms (CDPs) have already devised strategies to prepare for such a shift.

Indeed, customer data platforms are expected to witness a massive increase in use in 2021, with the CDP sector producing an anticipated $1.6 billion in sales. Marketers are gradually shifting away from data management solutions to customer data platforms.

This is most likely due to increased investment in first-party data by marketers. DMPs mostly rely on third-party data, maintain data for shorter periods, and cannot identify people to generate the most precise audiences possible, but CDPs can.

The Consequences Of A Cookie-Free Future

A world without cookies will immediately affect the size of most third-party audiences (audiences whose data is collected solely through third-party cookies). Audience sizes will shrink because they are no longer scalable for media purchasing activities, resulting in poor conversion rates and meaningless targeting.

This implies that marketers must develop new audience research methodologies and depend on other marketing methods, such as email marketing. Meanwhile, organizations that process and sell advertising data must create new means for securely collecting and aggregating audience data that do not depend on third-party cookies. This is where the DMP innovation's first-party approaches come in handy.

And it is these first-party data approaches that will enable organizations and marketers to take the following stages.

Following the elimination of third-party cookies, companies and marketers must rely on first-party data as much as feasible. First-party data will not be removed; only third-party cookies will be phased out.

First-party data methods may be essential for effectively personalizing experiences throughout the consumer journey while maintaining data protection and relevant, targeted advertising possibilities.

According to data specialists, having a system that can update customer profiles in real-time is a must for a future-proof and up-to-date data strategy in the cookieless future.

When a customer opts out of one channel, a real-time system can verify that their permission is followed. It keeps data actionable, enabling organizations to act on it proactively (e.g., opt-in to another engagement on an adjacent channel). These real-time events activate customer profiles at scale, enabling end-to-end tailored experiences.

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On the other hand, if businesses and marketers do nothing, they risk adopting last-minute short-term remedies and workarounds that might lead to data silos, irrelevant and undesirable targeted advertising, and even subject them to penalties or a poor return on investment (ROI).


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