Cookies are crumbling: How the advertising sector is adapting to life after third-party cookies

Google has announced it is delaying phasing out third-party cookies on Chrome until 2024. But how can ad tech wean itself off such prolific technology?

By Emma Sheppard


March 2023

There’s an old saying in the technology industry that if you’re not paying for the product, you are the product. And that’s certainly been true when it comes to consumers and their data. 

For the past 25 years, cookies have tracked users’ behaviour across the web, and brands have used that  information to target them with advertising. It’s a sector that’s grown to be worth more than $600bn, propelled by the promise of scientific accuracy and tracking that the advertising sector had only previously dreamed of. Before cookies were invented in 1992, the success of advertising campaigns running across media such as newspapers, magazines, TV, and billboards could hardly be measured at all. 

But in 2024, Google will become the latest technology provider to phase out third-party cookies in its web browser, Chrome. It’s a step Apple and Mozilla have already taken with Safari and Firefox. But because Chrome controls access to more than half the world’s web traffic, it represents a significant sea change for the advertising sector. In short, the industry’s relationship with personal data is about to undergo a monumental upheaval. 

Putting privacy first

The tech privacy wars have been hotting up in recent years. Apple launched its privacy-first iPhone campaign in 2019, giving users the right to choose whether or not they were tracked by apps. It’s already affected Facebook’s bottom line to the tune of $10bn. But Apple believes privacy is the right platform to stand on, and has turned it into a business advantage

What’s happening is the general public has become wise to the fact they’re being tracked. And they don’t like it. First-party cookies are used by the website an individual has chosen to interact with and might track metrics like products purchased in order to make other recommendations. In contrast, third-party cookies are set by an unknown body that tracks browser history across websites, collecting users’ personal information for unknown purposes (but will often determine which display ads you’re shown). 

And they have become prolific. Firefox, for example, is said to be blocking 10 billion trackers per day after imposing its own ban. The popularity of search engine DuckDuckGo, which doesn’t track users, has surged – from 2020 to 2021, its average daily search volume grew by 73%. And others – more than one in four users according to Statista – are taking their own steps to disable third-party cookies in their browsers, or changing their privacy settings in their phones. 

Indeed Google itself has pointed to privacy as the driving force behind this change. David Temkin, Google’s director of product management for ads privacy and trust has said when third-party cookies are phased out, alternative indicators will not track individuals across the web. “We don’t believe these solutions will meet rising consumer expectations for privacy, nor will they stand up to rapidly evolving regulatory restrictions and therefore aren’t a sustainable long term investment.” 

As David Temkin mentioned, “rapidly evolving regulatory restrictions” are a key driver in Google’s cookie epiphany. The EU’s ePrivacy Directive requires user consent before non-essential cookies are set on devices. Not only that, but the consent given must meet the GDPR’s strict standard for valid consent

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Preparing for rough seas ahead

Third-party cookies aren’t perfect. Given that most people use multiple devices interchangeably, they’ve become increasingly ineffective when it comes to accurately targeting prospective customers. But the advertising sector is still heavily reliant on the technology and preparations need to be made. Google has already delayed its move twice, reportedly after feedback from the advertising and marketing industry.  

In a recent survey, 41% of marketers said their biggest challenge would be their inability to track the right data, 44% predict they’ll have to increase their spending to reach the same goals previously achieved. And in another poll, around 80% of advertisers say they rely on third-party cookies, and 69% think the shift will have an even bigger impact than the introduction of the GDPR and CCPA. Only 46% say they’re prepared for the change. 

It’s expected there will be alternatives. Google, for example, is continuing to develop its Privacy Sandbox that Chetna Bindra, who heads Google’s team on trust and privacy, seems to feel positive about: “If we do it right, this will be the way to proactively shape the next couple of decades for a free and open web,” he’s said. The sandbox uses a Topics API, which groups users’ browsing history and classifies them within a set of high-level interest groups such as sport, travel or fashion. That information is held for three weeks before being deleted, and the model aims to track users anonymously while still giving advertisers enough data for interest-based ads. 

But there has been criticism too. Critics claim phasing out third-party cookies will harm the internet economy and smaller businesses and startups. And it could give a lot of control to one company (Google) and its algorithms, which limits accountability. The UK’s Competition and Markets Authority (CMA) has therefore been involved with the development of the Privacy Sandbox to assess the impact of the tech giant’s proposals. Google has pledged to give the watchdog oversight of the rollout and will wait 60 days before setting any changes live.  

Industry critics argue the shift will mean advertisers are more reliant on so-called ‘walled gardens’ such as Google and social networks with their own first-party data to drive audience targeting. “And they’re far more likely to misuse the data and harm people in the process,” Paul Bannister, co-founder of ad management firm CafeMedia tells Wired. “The problem is that blocking third-party cookies widens the gap between walled gardens and what [advertisers] can do versus the open web.” Already, Meta’s attempts to overhaul its advertising technology in the wake of Apple’s privacy changes have led marketers to complain they’re relinquishing too much control to the platform. 

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Is a future utopia a possibility?  

This is an opportunity for the ad tech sector to redefine the way it uses data. It’s likely that instead of casting a wide net to target prospective customers, targeting will become much more contextual. People online might be shown an ad for running shoes while they’re reading an article about exercise, for example. This would be very much a return to the old school world of Google Adsense, but now powered by AI. It’s expected more brands will invest in first-party (which comes from customer web activity on a particular website) and zero-party (extracted from customer surveys and polls) data collection.

Whatever the future business model looks like, it seems certain that the death of third-party cookies means we’re heading for a world where people have more control over their data, who it’s shared with and for what purpose. And that can only be a good thing.

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