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The end of third-party cookies and how to adapt

The end of third-party cookies

EVERYONE talks about cookies, but do you really know why they are so important? Are you aware of the chaos their phase-out is causing for online business?

In a digital age where every click, view and device activity is tracked, cookies play a pivotal role in crafting the personalized online experience we’ve come to expect. Yet, amidst their ubiquity, a significant shift appears on the horizon—a shift that promises to reshape the landscape of digital advertising and personal privacy in the digital environment.

Table of Contents

For context

In January 2020, an announcement by Google shocked the digital world: Chrome, the browser dominating the market with its vast user base, would phase out support for third-party cookies by the end of 2024. What does this mean for businesses? In the following sections, we’ll delve deeper into the importance of cookies, the consequences of Google’s decision, and the solutions and alternatives emerging in response.

The importance of cookies explained

In the digital world, cookies are key tools that shape both user experiences and business strategies on the internet. To fully understand the significant changes coming with the phase-out of third-party cookies, it’s important to first know what cookies are and how they impact our everyday online activities.

Cookies are small data files stored by websites you visit on your device or browser. They’re like digital ID cards, with each website assigning you a unique identifier. This ID accompanies you as you navigate the site, enabling it to remember your actions, preferences, and sometimes track your journey across the web.

While often discussed in a single breath, cookies fall into two main categories: first-party and third-party.

  • First-party cookies: These are created and stored by the website you’re visiting directly. They’re the backbone of a seamless web experience, allowing sites to remember your login details, language preferences, and items in your shopping cart. First-party cookies are essential for basic website functionality, making them largely uncontroversial and widely accepted by privacy standards.
  • Third-party cookies: In contrast, third-party cookies are created by domains other than the one you’re visiting. These cookies are primarily used for tracking and online-advertising purposes, allowing advertisers to deliver targeted ads by tracking your browsing activity across multiple sites. For example, Facebook or TikTok pixel cookies. It is these cookies that are at the center of the ongoing privacy debate and the subject of Google’s forthcoming phase-out.

Cookies, particularly third-party ones, are the backbone of targeted advertising. By tracking users’ online behaviours, preferences, and interests, advertisers can deliver highly personalized ads, significantly improving the efficiency and effectiveness of digital advertising campaigns.

This level of personalization not only enhances user experience by showing relevant ads but also increases conversion rates and ROI for advertisers.

The reason is that they are used to detect in which phase of your conversion funnel a potential customer is, which is very useful to optimize e-commerce conversions.

Furthermore, it allows for accurate attribution of sales to digital marketing efforts – key for reporting and decision making.

Beyond advertising, cookies contribute to a more personalized and convenient browsing experience. They enable websites to keep you logged in, remember your site preferences, and provide content relevant to your interests. Without cookies, the web would feel much less personalized and more vague to navigate.

As we edge closer to a third-party cookieless world, the challenge lies in finding a balance. How do we maintain the personalization and efficiency that cookies provide to the digital economy while safeguarding user privacy? The industry’s response, including Google’s Privacy Sandbox, seeks to address this question, marking the beginning of a new era in online privacy and digital advertising.

The consequences of eliminating third-party cookies

The upcoming end of third-party cookies in Chrome marks a significant shift in the digital landscape, affecting advertisers, publishers, and users alike. Understanding these impacts is essential for effectively navigating the transition and capitalizing on new opportunities that emerge.

Huge impact on targeted advertising

The most immediate and significant impact of phasing out third-party cookies will be on targeted advertising. Third-party cookies have been fundamental to digital advertising strategies, allowing advertisers to track user behaviour across multiple sites and deliver personalized ads. Their removal disrupts this model, forcing advertisers to find new ways to effectively reach their audiences.

With the loss of detailed tracking provided by third-party cookies, advertisers may experience less precision in their targeting efforts. This could result in less relevant ads for users, potentially leading to lower engagement and conversion rates for advertisers. The change needs a re-evaluation of digital advertising strategies, emphasizing context, content, and the use of first-party data.

A push towards first-party data and privacy-compliant alternatives

On the flip side, the elimination of third-party cookies will spur innovation, pushing the industry towards more privacy-compliant and user-friendly advertising technologies. Businesses are now incentivized to invest in building relationships with their audience, enhancing their first-party data collection strategies, and exploring alternatives like contextual advertising. This approach targets ads based on the content of the website or the current webpage, rather than on user behaviour.

Increased importance of consent and transparency

As the industry shifts away from third-party cookies, the importance of obtaining user consent and maintaining transparency about data collection practices becomes more critical. This shift aligns with broader regulatory trends that emphasize user privacy, such as the GDPR in Europe and the CCPA in California. Businesses must adapt to these changes by ensuring that their data collection practices are transparent and that they obtain explicit consent from users, thereby aligning marketing practices with consumer privacy expectations.

Potential for fragmentation and innovation

The transition away from third-party cookies also introduces potential fragmentation and complexity into the digital ecosystem. As different browsers and companies propose various solutions and standards for privacy-friendly tracking and advertising, this landscape can become increasingly challenging for advertisers and publishers. This fragmentation could lead to a period of adjustment as the industry converges on a new set of norms and technologies.

Solutions and alternatives

Solutions and alternatives for the end of third party cookies
As the digital advertising industry grapples with the impending end of third-party cookies, a variety of solutions and alternatives have emerged. These innovations aim to preserve user privacy while still enabling effective advertising and analytics. Here’s an overview of the key developments poised to reshape the digital landscape.

Google has been at the forefront of developing alternatives to third-party cookies through its Privacy Sandbox project. This suite of technologies is designed to provide advertisers with the tools they need for targeting, measurement, and fraud prevention, without compromising user privacy. Key components include:

  • Topics API: This API allows browsers to share a limited number of topics, based on the user’s browsing history, with advertisers. It provides a broad understanding of the user’s interests without delving into specific browsing behavior, thereby maintaining a higher level of privacy.
  • Protected audiences (FLEDGE): This approach enables advertisers to target ads based on audience segments directly within the browser. It uses on-device processing to keep user data private while still allowing for effective remarketing and audience targeting.
  • Private state tokens (Trust Tokens): Aimed at combating fraud, these tokens verify the legitimacy of user actions without revealing identity, helping advertisers trust the interactions they’re measuring.
  • Attribution reporting: This feature offers a way to measure ad effectiveness without cross-site tracking. It aggregates user interactions, providing advertisers with insights into which ads are leading to conversions while keeping individual user data anonymous.

Server-side tracking is another powerful solution gaining traction fast. By processing data on the server instead of the client side (the user’s browser), this method significantly enhances user privacy. It allows businesses to collect and send data directly from their servers to analytics or advertising platforms, reducing reliance on browser-based cookies and minimizing data leakage. Additionally, server-side tracking can be integrated with a company’s first-party data, offering a comprehensive view of customer interactions.

The shift away from third-party cookies highlights the value of first-party data — information collected directly from your audience through interactions with your brand’s website, apps, or other digital properties. Businesses are now focusing on strengthening their direct relationships with customers, using data collected with consent to personalize experiences and communications. This strategy not only complies with privacy regulations but also builds trust and loyalty with users.

Contextual advertising, which targets ads based on the content of the web page being viewed rather than the user’s past behavior, is coming back again. This method ensures ads are relevant to the user’s current interests and does not require personal data collection, making it a privacy-friendly alternative to behavioral targeting. Some advertising options are Google & Bing ads, and social media ads

PETs are emerging as innovative solutions to enable data analysis and sharing without compromising individual privacy. Techniques like differential privacy, which adds randomness to datasets to prevent identification of individuals, and secure multi-party computation, which allows data to be processed in encrypted form, are examples of PETs that could play a role in the future of privacy-centric digital advertising.

Picture of Myles Dalmain-Jones

Myles Dalmain-Jones

With more than 7 years of experience in Marketing, Online Sales & Digital Advertising, Myles provides sustainable online business growth by addressing the main fields of organic and paid growth. His experience comes from the following sectors: Retail, Ecommerce, B2C Tourism, Dentistry, Real Estate & Accommodation, B2B Pharmaceuticals, Solar energy installations, Recruiting and more.

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How can Neko Digital Agency help you?

If you count with expert technical knowledge, the end of third-party cookies does not signal the end of effective digital advertising but rather the beginning of a new, more privacy-conscious era. 

With Neko Digital Agency as your partner, this change will not mean a decrease in the effectiveness of your advertisements. While other agencies will have to adapt to this handicap, at Neko we have been proactively analyzing and testing all the alternative technologies, so that when the change comes, we will be prepared to keep delivering the same excellent results we have always been providing.

With expert knowledge on alternative analytic tools and communication strategies, you will not see your business affected by this issue. Contact us without commitment and we will discuss with you how exactly we can help your business.