Internet or digital advertising has always come with measurability and targeting. Marketers have relied on multiple data sets including third-party cookies to offer targeted ads to customers. Remember checking something out on Amazon and then seeing the same product on Facebook ads and other websites you visit. This was possible by the use for third-party cookies mainly.
However, with the growing privacy concerns things have been changing. The 1st such change happened when European Parliament introduced GDPR(General Data Protection Regulation ) followed by subsequent announcements by Apple, Google, and FireFox. The companies that offer the top three browsers and mobile operating systems.
Key events leading to the end of third-party cookies:
- 2016: GDPR is adopted by the European Union requiring websites to get explicit user consent before tracking them with cookies(any kind).
- 2017: Apple announces intelligent tracking prevention (ITP) to block third-party cookies in Safari.
- 2019: Firefox launches enhanced tracking protection (ETP) and then goes ahead with blocking all third-party cookies by default.
- 2019: Apple launches ITP v2.1 in Safari to block all third-party cookies by default.
- 2020: Google plans to make third-party cookies obsolete by 2022.
- 2021: Google restricts use of Android IDs towards the end of 2021.
- 2023: Google revises end-of-year deadline to phase out third-party cookies in Chrome.
So what next? Does it mean the end of targeted ads? Does it mean you can now only do mass ads and do what is commonly known as “spray and pray”?
©Statista 2024
Well, the short answer is no. The end of third-party cookies has been coming for some time now and it seems that marketers will have to evolve the way they target users. Trust me that this does not affect marketers that much as an estimated 78.3%(year 2023) of digital ad spending is on the global walled gardens which is expected to rise to 83.4% in 2027. (source: Statista). In other words, your dependency on the open internet powered by third-party cookies is only 22%.
The over-dependency on the walled gardens of Meta, Google, Microsoft, Twitter, Apple, and others means that advertising costs are rising, according to a 2022 report published on BusinessInsider.
- Meta’s CPM has increased 61% YOY, averaging at USD 17.60/CPM
- TikTok’s CPM has increased 185% YOY, averaging at USD 9.40/CPM
- Google’s programmatic display CPM has increased 75% YOY, while search CPC increased 14% YOY
- Instagram’s CPM (cost per thousand) has increased 23% YOY
The alternate was the open internet including DMPs which rely on third-party cookies mainly. Now what? While third-party cookies are dying and hence targeted advertising on the open internet will be a struggle what should brands really do? So the need to evolve is not really due to the end of the third-party cookies but mainly due to the over-dependence on the walled gardens and increasing costs.
Marketers need to look at long-term investment in captive audience generation which means 1st party cookies, user email, notification engine, mobile numbers, etc. This will help you remarket to your existing users effectively. You can come up with engaging referral models to get those new users.
All these can help you bring down dependency on the walled gardens. The open-internet marketing will also converge to id providers, device fingerprinting and contextual targeting helping marketers to keep on advertising on new data from the open market which is a lot cheaper than the walled gardens in most cases.
Hence to conclude the end of third-party cookies will not affect marketers in the long term as you rely more on the walled gardens which use only 1st party data. However, this would mean higher costs and hence marketers should invest in their 1st party data for targeted advertising.