With Google’s latest announcement of removing their former plan of deprecating the third party cookies and instead coming up with an alternative that has already been existing in the Google interface, just less highlighted, the company has clearly managed to put the world of martech to a standstill. “ After four years, they have shut down the project which leads to huge revenue wastage of all those companies that have invested in building customer data platforms and martech stacks. We also need to know that Google stopping the deprecation of cookies does not mean that privacy regulations are met. We are just back to square one which means scope for new sets of innovations.” M S Gowthaman, founding CEO, Aqilliz, told BrandWagon Online.
Where did it all begin?
In February 2020, Google announced its decision to deprecate all third party cookies in a phase wise manner. The work to this began early this year in January, when Chrome restricted third-party cookies by default for one percent of Chrome users to facilitate testing. As per Google, then, it was supposed to ramp up to 100% of users from Q3, 2024. And now to cut to the present time and Google has adopted a privacy role similar to that of Safari and Firefox. This move has quickly raised alarms among advertisers concerned about losing access to user data for personalised advertising and becoming overly dependent on Google’s own data. “The potential demise of third-party cookies would have reduced the richness of data that went into these platforms. But would not have mandated fundamental changes to the underlying systems themselves. They would have just operated on lesser data.” Raahul Seshadri, director, engineering, WebEngage, commented.
Furthermore, the UK’s Competition and Markets Authority (CMA) also voiced concerns that the move could stifle competition. In response to these concerns, Google has collaborated with the CMA, website publishers, and data privacy advocates to devise a revised strategy that addresses the challenges while maintaining a competitive and user-friendly advertising environment.
First party cookies vs. third party cookies
Advertising relies on two main types of data: first-party and third-party. Third-party cookies, which have been a staple for large advertising networks like Google, allow these networks to track users across various websites. This tracking enables advertisers to target audiences more precisely, which is crucial for optimising return-on-ad-spend (RoAS) and, consequently, for maximising revenue for online businesses. When advertisers cannot use third-party cookies, their ability to target effectively diminishes, potentially reducing both their RoAS and the cost-per-impression or cost-per-click that online businesses earn. Third-party cookies are particularly effective because they allow advertisers to track users’ browsing histories and retarget them with relevant ads, even if they visit a new website. This level of tracking has raised concerns among regulators and privacy advocates, prompting a push for alternatives like social logins, which can track user identities across sites with high accuracy.
On the other hand, first-party cookies originate on the site a user visits to track engagement, like visits, clicks, pages viewed, personal data voluntarily submitted in site forms or items in a shopping cart. A domain or company separate from the domain the user is visiting generates third-party cookies. Businesses use first-party data to improve their website’s functionality, offer personalised recommendations, and enhance the overall user experience. “While the removal of third-party cookies posed a threat to user acquisition strategies—since marketers would lack information about new visitors—businesses that rely on first-party data were less affected.” Seshadri added. With third-party cookies remaining in use, advertisers can still access valuable information about new users, allowing them to tailor offers and personalise the sales experience. In essence, while user acquisition strategies are most impacted by changes to cookie policies, first-party tracking remains unaffected and continues to support personalised interactions. “One thing is certain: brands must seize control of their first-party data. The paradigm shift towards increased (personal) data privacy isn’t going anywhere. As such, to deliver personalised and impactful customer engagement, it is vital to build deep and direct relationships with the consumers.” Raviteja Dodda, CEO and co-founder, MoEngage, commented.
All the money, down the drain?
Since the past four years, multiple martech organisations have been busy finding an alternative for a world without third party cookies. Many businesses had invested heavily in developing CDP, DMP, and other elements key to the martech stacks designed to adapt to a cookie-less future. These investments were aimed at maintaining competitive edge and ensuring continuity in customer data tracking and personalization. With Google’s decision to keep third-party cookies in play, these companies now face substantial financial losses from their investments, as their efforts to build alternative solutions are rendered less critical. This unexpected shift not only impacts their financial planning but also disrupts strategic directions that were aligned with the anticipated cookie phase-out.
However, in the case of advertisers, it is a whole different ball game. While the fear of the demise of third party cookies was in play, advertisers were incentivized to strengthen their direct relationships with consumers and collect data through their own channels. “This shift empowers brands to build trust and deliver personalised experiences based on explicit consent, while reducing reliance on third-party tracking.” Gopa Menon, former digital head, South Asia , Mindshare, said. In the case of Google pulling back their plan, advertisers can stick to their current approaches without any immediate adjustments. While the decision alleviates some immediate concerns, advertisers must still navigate evolving privacy regulations and consumer expectations regarding data use. “For advertisers, it’s essential to adapt by focusing on first-party data, contextual targeting, and privacy-enhancing technologies to stay aligned with evolving privacy standards and continue effective marketing,” Manas Gulati, co founder and CEO, #ARM Worldwide, commented.
Is the world warming up for the Privacy Sandbox?
The Privacy Sandbox is an initiative rolled out by Google as a replacement for third party cookies. It aims at enhancing user privacy while still enabling effective digital advertising by sharing a subset of user’s private information without utilising third party cookies. It has several features that are already available on Google’s competitors. Despite the advancements made in the Privacy Sandbox, the UK’s Competition and Markets Authority rejected it citing concerns that it might stifle competition and consolidate Google’s dominance in the advertising space. This rejection underscores ongoing tensions between privacy improvements and market competition, complicating Google’s efforts to balance user protection with maintaining a robust advertising ecosystem.
While the stop on the deprecation of third party cookies does lead us back to square one, the future for martech companies and advertisers is ending with a question mark. As Google promotes their ‘new’ feature of giving customers the option to opt out of letting their information go to advertisers, the martech companies will have to reevaluate their strategies and strike a balance. “To conclude, all the efforts that have been made till now are wasted and in a way this is relieving as the drama is over finally.” Gowthaman added.
Will Google bring out another innovation or will they again roll out a weapon to kill third party cookies, only time will tell…