Short answer is yes, it impacts everyone.
The phasing out of third-party cookies is a pivotal moment for the Internet, prompting significant changes in advertising practices and a potential shift towards a more privacy-conscious online environment.
A net gain for consumers: User privacy and transparency in data handling finally have their digital moment.
A short-term jolt for businesses: Without third-party cookies, targeted advertising will not be as easy and as cheap.
A big-win for well, big tech? The jury is out on that. But think of it this way. If there's no third-party data, who has the maximum amount of first-party data?
Wait, that's not it.
You are here for more than just a simplistic answer. You also want to know the why, and the what next?
At MainCross, we aim to help the community make sense of the digital landscape and the changes therein so you can craft informed long-term digital strategies and succeed, while respecting consumer privacy.
So let's start with the basics.
What are third-party cookies?
Third-party cookies are small files placed on your device by a website you are not currently visiting. These cookies come from other websites that have content (like ads or images) embedded on the page you are visiting.
Companies like Google and Facebook use third-party cookies extensively through their ad networks (e.g., Google AdSense, Facebook Ads) to track users and serve targeted ads.
How are cookies collected?
- Visiting a website: You go to a website, like a news site. As the webpage loads, it makes requests to third-party servers to fetch content. These requests include an opportunity for the third-party server to set cookies on the user's device.
- Embedded content loads: When a user visits a website that contains embedded content (like ads, social media buttons, or videos) from another domain, these third-party elements can place cookies in the user's browser.
- Cookies are set: These other websites (the advertisers) place cookies on your device through the browser. These could be tags that websites include as JavaScript code from third-party services that runs in the user's browser. This code can set cookies directly or make additional requests to third-party servers, which then set cookies.
How are cookies used?
- Tracking user behaviour: Third-party cookies are primarily used to track users across multiple websites. This tracking allows for the collection of data on browsing habits, preferences, and behavior.
- Personalized ads: Advertisers use this information to build detailed user profiles and show you ads that match your interests.
- Retargeting: Third-party cookies also enable retargeting, where ads are shown to users based on their previous interactions with certain websites or products.
- Analytics: Companies analyze this data to understand user behavior and improve their services and ad targeting. Analzying cookies provides insights into the effectiveness of ad campaigns and user engagement.
Here's an example
Imagine you visit a travel blog. The blog has ads from a travel agency. Even though you are on the blog, the travel agency places a cookie on your browser.
Now, when you visit other sites, the travel agency can show you ads based on the fact that you visited the travel blog.
Does MainCross use cookies?
The MainCross stack does not use any invasive third-party tracking, metrics, user interaction collection software.
MainCross uses only plain Google Analytics for anonymous aggregated visitor analysis. Read how we ensure privacy by design.
Great, because third-party cookies sound bad
Yes, privacy experts have been calling third-party cookies unacceptably intrusive for a long time.
Tim Berners-Lee, the inventor of the World Wide Web, had once said, "The pervasive use of third-party cookies for tracking and profiling has distorted the web's original purpose of free and open access to information.
There have always been privacy concerns since these cookies track users across many sites and can build a detailed profile of their online activity.
Ari Ezra Waldman, Professor of Law and Computer Science at Northeastern University, was reported to have said, "Third-party cookies facilitate a surveillance infrastructure that undermines user autonomy and exposes them to risks of data misuse and breaches." Others have called it a breach of trust.
The primary concerns with third-party cookies have revolved around:
- Intrusiveness: Experts highlight that third-party cookies track users without explicit consent, leading to privacy invasions.
- Transparency: There is a lack of transparency in how data collected via third-party cookies is used and shared.
- Surveillance: The pervasive tracking facilitated by these cookies creates a surveillance-like system that users are generally unaware of.
- Data security: The extensive sharing of personal data increases the risk of data breaches and misuse.
It's largely due to these concerns that major browsers like Google Chrome are planning to stop supporting third-party cookies. And they have been blocked by default since sometime in Apple Safari and Mozilla Firefox.
So as they are phased out, what happens?
That's the short answer we started this article with. While it's win for user privacy and transparency in data handling, it also means significant changes for digital advertising.
What kind of changes for digital ads?
- Targeting consequences: The removal of third-party cookies will significantly impact ad revenue, especially for startups and smaller businesses that rely heavily on targeted advertising to reach their audience.
- Economic consequences: Digital ads will likely become more expensive to run for the same kind of results that businesses have gotten accustomed to.
- Market concentration: The change may consolidate power among major tech companies like Google and Facebook, as they possess extensive first-party data, potentially reducing competition and diversity in the advertising market.
Oh! So how do we better digital ads?
As the digital advertising industry faces a short-term jolt with the phasing our of third-party cookies, there'll likely be a lot of experimentation and use of new tools. Marketers are astute and quick to adapt, so trust them to navigate their way forward in the potentially third-party cookie-less world.
Alternative advertising methods have always been explored and businesses will likely double down on that.
- First-party data: Leveraging and gathering data directly from users with their consent will become key.
- Contextual advertising: Displaying ads based on the content being consumed rather than user behavior.
- AI-powered Tools: Using artificial intelligence for contextual targeting and data clean rooms to ensure privacy compliance while maintaining ad effectiveness will also emerge as a key strategy.
And that may shape our Internet all over again
Here's a prediction for the Future of the Internet:
- Innovation and adaptation: The digital advertising landscape is expected to innovate much much more.
- Shift to quality content: There may be a resurgence in contextual advertising, where ads are placed based on the content's context, and thus a greater emphasis on quality over quantity in digital ad placements.
- Increased user privacy: No going back on this one. Enhanced privacy measures and transparency in data usage will likely become standard, aligning with growing regulatory demands and user expectations.
- Market realignment: Smaller ad-tech companies may struggle, while larger firms with robust first-party data collection capabilities may dominate.
No better time to build direct channels
As the intrusive reign of third-party cookies comes to and end, it'll likely open up many new routes going forward.
An easy option for digital advertisers may be to stick to the advertising features that Big Tech companies like Google and Facebook introduce given their ginormous first-party data bank.
Though that always carries the same risk - you never own your channels are always dependent on third-party platforms for visibility, advertising and distribution.
The road less travelled will also be open to businesses, organizations and digital advertisers - of building your own platforms and mar-com channels for to open direct communication lines with your consumers, while building on ethical advertising practices on a likely network of networks that emerges.
"It’s time to rebuild privacy into the web," Tim Berners-Lee had once announced. There may perhaps be no better moment than now, and everyone can have a role to play in it.
