After years of back-and-forth on the idea, Google is abandoning its efforts to remove third-party cookies from Chrome. In an announcement on July 22nd 2024, the search giant stated that it will maintain third-party cookie functionality for users who choose not to disable them. To ensure user privacy while maintaining the efficacy of digital advertising, Google is set to implement a new one-time prompt, giving users the power to configure privacy settings that will be consistent across Google’s browsing platforms.
This development is not a huge shock to close observers of Google. In Forrester’s Marketing Survey, 2024 (undertaken before Google’s announcement) over 60% of marketers said that they did not believe Google would deprecate the third-party cookie. Put simply, Google is too dependent on this form of tracking to remove it without a reliable alternative in place.
Nonetheless, marketers should not expect the industry to revert to “business as usual”. Although Google is stopping short of removing third-party cookies altogether, the industry is still headed for a future of significantly reduced dependence on this form of tracking. This announcement buys marketers more time to assess alternatives, but brands are still unsure of what will replace third-party cookies in the long run.
Google had announced in 2020 that it would join Apple and Mozilla in phasing out third-party cookies in its web browser by 2022. Between them, Google Chrome (65%), Apple Safari (18%), and Mozilla Firefox (3%) take up 86% of the global browser market. In August 2024, a US judge ruled that Google’s monopoly in the search engine market is “illegal”, and Chrome’s dominant position helps to maintain Google as the number one destination for search. Google also pays Apple and Mozilla “billions of dollars annually” to be the default search engine on their respective browsers.
Apple and Mozilla have already implemented their cookie clampdown, but Google has given itself more time to make the gradual transition. This creates uncertainty for marketers, who will need to adjust their data strategies to prepare for a future of less dependence on third-party tracking.
To put Google’s new approach to cookies into context, we will analyze the following:
- What are cookies anyway?
- What is changing with cookies, and why?
- What comes next for cookies?
- How should marketers prepare?
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What are cookies anyway?
Cookies help businesses perform a wide variety of handy functions online. These small packets of data were first used in the 1990s as a way for sites to ‘remember’ which items a user had added to their shopping cart. Soon, their use expanded to include authentication of login status, tracking users across different websites, and storing a user’s browsing history.
In short, cookies are a reliable means of passing on information about the online behaviors of individuals. And somewhere along the way, the balance has tipped away from their reliability and towards the invasion of privacy that cookies can enable.
There are many different types of cookie. The two most important types are first-party and third-party cookies.
- First-party cookies are stored by websites.They enable these websites to remember a user’s settings and they can significantly improve the user experience. These cookies are not targeted by the recent and upcoming changes.
- Third-party cookies are created and stored by external sites, and not by the site the user is visiting. They can track the user as they move across domains and retarget them with personalized messaging.
Facebook estimates that personalization creates 50% of its advertising revenues, and the social network is clear in its belief that the ongoing changes will limit its ability to personalize ads effectively. For all of their privacy limitations, third-party cookies do deliver results.
What is changing with cookies – and why?
Lawmakers in the European Union and the United States have third-party tracking cookies firmly in their sights. This needs to be placed in its wider context, however. Online data privacy is a political issue and new regulations such as the GDPR and DSA have a much wider scope than just cookie-based tracking.
Cookies are a symptom, not the disease itself. And while Facebook may tout the success of its personalized ads as proof that consumers want this kind of advertising, there is also evidence to the contrary. eMarketer estimates that in 2023, 31% of internet users had an ad blocker enabled on at least one device. These ad blockers prevent a piece of JavaScript code running on the page, so cookies cannot be created.
There is a broader shift towards greater transparency online today and third-party cookies often operate in a shadow economy. The trouble with such an economy is that its participants are rarely aware of its inner workings. For example, many of us are tracked online without giving permission for ad tech companies to gather and trade our data. We can go further still: Many brands do not know how their ad tech suppliers capture and process customer data.
In the fight for transparency, third-party cookies are an easy target.
From a regulator’s perspective, this is certainly true. But why would Google pursue such a self-defeating venture? After all, Google makes the lion’s share of its gargantuan advertising revenues from tools that use cookie-based tracking.
In short, Google is embracing an inevitable change, all the better to shape what comes next. There is little point in resisting this, especially when they have so much to lose if a rival creates the new standard by which all other platforms must operate.
Google will only remove third-party tracking when it is sure it can replace it with something equally effective and lucrative. This helps explain why Google is now back-tracking on its plan to deprecate third-party cookies altogether, opting instead for a phased approach that puts the consumer in control.
What comes next for cookies?
Apple’s CEO Tim Cook struck an optimistic tone at a 2019 conference: “Technology does not need vast troves of personal data stitched together across dozens of websites and apps in order to succeed. Advertising existed and thrived for decades without it.”
Apple, of course, does not rely on advertising revenues – and one can sense that they are enjoying their new role as privacy protectors.
In reality, advertisers now know that personal data fuels highly effective marketing campaigns. They are unlikely to go back to the old methods if they have a choice in the matter.
The big question for Google, along with other ad tech companies like Criteo, is: Can they provide cookie-like tracking capabilities, while preserving the privacy of individual users?
This seems like an insoluble paradox. Especially since any short-term workarounds that do not preserve privacy will be shut down by regulators. The UK’s data protection authority, the Information Commissioner’s Office (ICO), has responded to Google’s latest plans by stating, “We are disappointed that Google has changed its plans and no longer intends to deprecate third party cookies from the Chrome browser.” It remains to be seen if they will take further action and they will want Google to continue to take steps to reduce invasive tracking.
As part of their July statement, Google announced a ‘Privacy Sandbox’, which uses federated learning to aggregate and anonymize data from individual devices. The private data will remain on the device, but the algorithm will still be able to learn from patterns across different cohorts.
Under this proposal, advertisers would not be able to target individual users, as they can today through remarketing. Instead, they would target groups that exhibit behaviors that imply an interest in their product or service.
In early tests, Google reports that advertisers could expect to see “at least 95% of the conversion per dollar spent when compared to cookie-based advertising”. We should note that Google tested this method against cookies only in relation to in-market and affinity audiences in this experiment. But as an initial step, this should be encouraging for advertisers. Although some form of third-party tracking will be available for the short-term future, advertisers should expect to see further experimentation in this field and new solutions to arrive on the market.
Facebook, which retains an enviable trove of first-party user data, is also testing new ways to replace its retargeting methodology. The early front-runner is built on “aggregated event measurement”, a similar principle to Google’s cohort-based federated learning. We should also expect to see retailers like Amazon and Walmart make gains, as they can build advertising products within their ‘walled gardens’ of first-party data. Significantly, this first-party data reveals what people buy, as well as what they search for.
It is uncertain how exactly these proposals will play out in the finer detail, but the trend is clear. The major platforms and ad tech companies are all working to provide cookie-style performance without cookie-style tracking.
This could allow advertisers to find similar performance levels – if they are willing to adapt to the new reality. Nonetheless, advertisers cannot expect the same level of transparency in their reporting, even if the bottom-line performance looks similar.
That will have a knock-on effect for digital marketing strategy.
How should marketers prepare?
Whether Google ultimately removes third-party cookies altogether or retains this form of tracking, the direction of travel for the industry is clear.
The most obvious strategic shift is a move away from individual user tracking and towards more contextual advertising. This means getting close to the patterns of the customer journey, rather than following each customer’s journey.
For example, in the automotive sector brands would target the behaviors that customers exhibit on their path to purchase and create sequential content to match that journey. That could mean placing ads alongside articles that review certain models of car, or YouTube videos of a latest TV ad campaign.
Advertisers will need to layer greater understanding of their customers on top of this approach. This can come in the form of first-party data, which companies can gather by getting closer to their customers. It is essential to demonstrate that data will be handled responsibly, but also that customers can expect a better service in return for sharing their sensitive information. To help with this, marketers should aim for ‘data privacy by design’ on their websites and apps as standard.
There is no need for marketers to panic about these ongoing changes. All of the above stems from a customer-centric view of how the online world should operate. If marketers keep this in mind and focus on maintaining customer privacy, future regulations will offer little concern. That shift in emphasis will not remove the pressure to deliver results, of course. But as an industry, we all need to move on from an economic model that requires invasive tracking to deliver those results.
With the collective might of Google, Facebook, and a sizable ad tech industry working on new alternatives to invasive tracking technologies, there is cause for optimism. No matter where their experimental new methods lead, it is abundantly clear that marketers will need to think differently about data to take advantage. That work starts today, by building closer relationships with customers.