How To Track Customers After Third-Party Cookies Go Away
Putting off getting an alternative to third-party cookies in 2023 is like delaying getting flood insurance if you live in a flood zone. You need it, you know you need it, and this is only going to get worse the longer you wait. As of 2023, third-party cookies will no longer be supported by major web browsers such as Google Chrome, Apple's Safari, and Mozilla Firefox due to growing concerns about privacy and data collection practices. Third-party cookies are also blocked on mobile devices with the rollout of iOS 16.4.
What does this mean for companies that rely on customer tracking for marketing and online advertising purposes? In short, the removal of third-party cookies will force companies to find new ways to collect data on their customers. Here’s what you need to know about the impact of third-party cookies going away and what companies can do to adapt to the new reality.
Why Are Third-Party Cookies Going Away?
Third-party cookies are small data files that are stored on a user's browser by a website other than the one being visited. They are commonly used for advertising and marketing purposes to track users' online behavior and serve them targeted ads. If you're a marketer, you know that this means third-party cookies allow (or allowed, since they're going away) you to show a user who visited your website an ad for an item or brand they liked on your site while visiting other websites later.
You're probably also no stranger to the controversy that has long-plagued third-party cookies. It may have started with your mom or dad asking you why they're seeing ads for something following them around the internet, but the concern quickly grew. Third-party cookies have faced increasing criticism over the years due to privacy concerns.
Since third-party cookies have historically enabled companies to collect and track user data without their explicit consent or knowledge, consumers and regulators have raised questions about data privacy and user control. Third-party cookies can be used to track users across different websites (sometimes called cross-site tracking), potentially resulting in a user's personal information being shared across multiple companies and entities.
In response to these concerns, major web browsers like Google Chrome and Safari have started phasing out support for third-party cookies. This means that companies will need to find new ways to collect data on their customers and serve them targeted ads or risk sky-rocking customer acquisition costs (CAC) and plummeting return on ad spend (ROAS).
So, What's Happening Exactly?
This was more of a slow phase-out of third-party cookies—but that was before many marketers were paying attention. We get it. You're juggling multiple channels and campaigns, trying to hit your KPIs and, in many cases, trying to do more with a tighter marketing budget. Changes on the horizon just don't make today's to-do list.
Concern within marketing started building with the rollout of 2016's General Data Protection Regulation (GDPR) in the EU and the California Consumer Privacy Act (CCPA) in 2018, but blocking third-party cookies isn't new. Your customers may already be using services that block third-party cookies across their browser or in their email. Some website visitors use private or incognito mode, others disable cookies when given the option or find apps that block cookies by default. More recently, some people have even started using a virtual private network (VPN), which encrypts all of a user's online activity so no information is stored or used about their browsing sessions.
It's clear the problem is now here. Third-party cookies are leaving, and the change is going to come fast.
How the End Will Affect Advertisers
The end of third-party cookies is expected to have a significant impact on advertisers and the digital advertising industry as a whole. Without third-party cookies, advertisers will lose the ability to track users across different websites and gather data about their browsing behavior.
This is no longer a matter of individual users blocking cookies. We're all facing a future of absolutely no third-party cookies and data collected to help with identifying users online. All that adds up to a harder time serving targeted ads to users based on their previous online activities, ultimately leading to lowered ROAS and higher CAC.
However, there are alternative methods that advertisers can use to collect data and serve targeted ads. For example, first-party cookies, which are created and stored by the website being visited, will still be supported by web browsers. This means that websites can still collect data on their users and use that data to serve targeted ads. In addition, there are other technologies being developed that can help advertisers target users without relying on third-party cookies, such as contextual advertising and device fingerprinting (but IP address-based fingerprinting is also being fought with VPNs and Apple Relay).
Overall, the end of third-party cookies is likely to lead to a shift in the digital advertising landscape, as advertisers and publishers adapt to new privacy regulations and technologies. While the change may initially be challenging for some advertisers, it presents an opportunity for the industry to evolve and find new ways to connect with users in a more privacy-conscious manner.
Preparing for the End of Third-Party Cookies
There are some alternatives to consider as marketing managers figure out how to move their brands beyond third-party cookies. Some of the alternatives include first-party cookies, contextual advertising, people-first targeting, media mix modeling, and incrementality.
First-Party Cookies
First-party cookies are created and stored by the website being visited. They are still supported by web browsers and can be used by websites to track user behavior and deliver targeted ads. The advantage of first-party cookies is that they are more privacy-friendly than third-party cookies because users are more likely to trust the websites they visit. However, first-party cookies can only track user behavior on a single website, so they are not as effective for cross-site tracking.
First-party cookies aren't without controversy, though. Facebook used a combination of first-party cookies and pixels in 2019 to bypass third-party cookie restrictions in the EU. And while technically implementing a first-party cookie is a legal alternative when users or governments block third-party cookies, this is the perfect example of that choice making headlines as a type of continued surveillance.
Contextual Advertising
Contextual advertising is a method of targeting ads based on the content of the website being visited, rather than the user's browsing history. For example, if a user is reading an article about travel, they may be shown ads for hotels or airlines. The advantage of contextual advertising is that it does not rely on tracking user behavior, so it is more privacy-friendly.
There's a lingering question of efficacy for this alternative to third-party cookies, though. While one study found that contextual ads can be memorable, they're, by definition, less targeted. They leverage user visits to inform some of the content, but they're always going to be less effective at targeting because they're not collecting user data about specific interests or behaviors.
People-First Targeting
People-first targeting is a new approach to targeting that puts the user's privacy and preferences at the center. This method allows users to opt-in to targeted advertising and control the data that is collected about them. People-first targeting is still in the early stages of development, but it has the potential to provide a more transparent and user-friendly approach to targeted advertising.
The downside of this third-party cookie alternative is pretty obvious: you're still going to lose information about customers and leads who chose to disable third-party cookies. And, yes, more people might opt into this than third-party cookies and how they traditionally functioned, but they'll be given options to opt out of sharing information by default. So some website visitors who weren't blocking third party cookies will likely choose more restricted sharing options than they had used before.
Media Mix Marketing (MMM)
Media mix modeling is a statistical method used to measure the effectiveness of different advertising channels. It involves analyzing historical data to determine the impact of different marketing efforts on sales or other business outcomes. By analyzing data from multiple sources, including first-party data, media mix modeling can provide insights into the most effective channels for reaching and engaging customers.
One advantage of media mix modeling is that it does not rely on tracking individual users or their behavior, making it more privacy-friendly than third-party cookies. However, media mix modeling requires a significant amount of data and expertise to implement effectively making it difficult for companies to implement internally. Using an external service like Prescient that leverages an MMM can be a more cost-effective way to use this technology.
Incrementality
Incrementality in marketing involves measuring the impact of advertising on consumer behavior by comparing the behavior of two groups: a test group that is exposed to an advertising campaign and a control group that is not. By comparing the two groups, advertisers can determine the incremental impact of the advertising campaign.
The advantage of incrementality is that it provides a more accurate measure of the effectiveness of advertising than other methods, as it takes into account factors such as seasonality and natural fluctuations in consumer behavior. However, incrementality requires a significant amount of data and expertise to implement, and it can be difficult to isolate the impact of individual advertising channels or campaigns.
Incrementality can also only truly be done with what’s called holdout testing—you have a control and a test group that experience practically the same thing except for the campaign, and you’re able to collect information on both of them. The end of third-party cookies will mean the end of true holdout testing, though brands will still be able to A/B test features like what would happen if you changed your already red button to blue.
Where Prescient Comes In
The need for a new way to collect user information is very real. Google will completely remove all third-party cookies by the end of 2024. Google announced back in 2020 that they were launching their Privacy Sandbox to develop user privacy measures and, though the full phase-out of the third-party cookie has been delayed, it's still very much the intent of the company.
Prescient has been preparing for the end of third-party cookies since we started because we believed the writing was on the wall and understood that the industry sentiment was shifting to prevent cross-site tracking. And we felt there were very real pitfalls to first-party cookies and tools that didn’t use campaign performance data from multiple sources, so we built an MMM.
But even within that sector, we wanted to be extremely strategic. Privacy regulations are and will continue to impact certain types of MMMs, like those that use first-click attribution. We built ours to show you which campaign is statistically the most likely to have triggered a purchase instead of using approaches like first- or last-click that treat all campaigns the same.
There's more good news: Prescient can work alongside site data you're getting from third-party cookies until the moment they're extinct, then continue on without them. And because we developed the MMM, you don't have to worry about sourcing talent or paying data scientist salaries—but we offer an API for brands that already have built-out data teams.
If you're curious what our dashboard could do, we'd love to walk you through it. And we offer a 14-day free trial using your own historical data so you can test the value of our insights right from the start.
FAQs
What is a third-party cookie?
A third-party cookie is a small data file that's generally used for online advertising and is placed on a website using a script or tag. Websites using this technology place third party cookies on your device when you visit them. Third-party cookies work by collecting information about you, like your internet browsing habits, and sending that information back to the original website if you revisit it. Third-party cookies created while searching the internet can be manually cleared from your browser.
How do third-party cookies work?
Third-party cookies track habits and collect user data to allow advertisers to provide those users with a more personalized experience. Tracking cookies aren't inherently bad. Some consumers may prefer a customized experience that shows them targeted ads for items shaped by their personal taste. Others may be concerned about user privacy and choose to use services that disable third-party cookies. Since browsers store cookies, you can manually delete them by going into your settings.
Is allowing third-party cookies safe?
There's little risk to third-party cookies, and most consumers don't have to worry about them any more since browsers are getting rid of them. Cookies that track user visits may lead to some people feeling like the online advertising they're seeing is more helpful since it's tailored to their browsing habits. But others may worry about cross-site tracking and block cookies because of it. No matter your opinion, you should be aware that third-party cookies can pass your information to other websites when you move to a different domain.
