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Last Updated: December 27, 2023

Navigating the Era of Change: The Demise of Third-Party Cookies

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Introduction

In the evolving landscape of digital technology and online privacy, few elements have played a more integral role than third-party cookies. These inconspicuous bits of code have quietly tracked our digital footprints across the internet, shaping how we experience the online world.

However, as we find ourselves amid a profound era of change, it’s becoming increasingly evident that the reign of third-party cookies is ending. In this article, we aim to shed light on the factors leading to the decline of third-party cookies, exploring the intricate web of privacy regulations, changing consumer expectations, and the quest for a more transparent and secure digital ecosystem.

What Are Third-Party Cookies?

A third-party cookie is a small piece of data that websites, advertisers, and data brokers embed within your web browser when you visit a webpage. Unlike first-party cookies, which are set by the website you directly interact with, third-party cookies originate from domains other than the one you initially visit. These external domains are often associated with advertising networks, analytics services, or other tracking mechanisms.

A graph displaying how retargeting is related to third party cookies.

Third-party cookies play a pivotal role in web tracking because they allow entities other than the website you interact with to monitor your online behavior and gather data about your digital journey. This tracking extends beyond a single website and enables advertisers and data brokers to create detailed user profiles, target specific audiences with tailored ads, and measure the effectiveness of their marketing campaigns. But what’s the difference between first and third-party cookies? Let’s get into it.

Third-party cookies vs. First-party cookies

First-Party Cookies: When you arrive at the retailer’s website, it may place first-party cookies in your browser. These cookies serve various functions, such as remembering items in your shopping cart, enabling you to log in, or customizing your browsing experience on that website. First-party cookies are set by the website you are actively engaging with—in this case, the online retailer.

Third-Party Cookies: While browsing the retailer’s website, you might notice ads for the shoes you were considering appear on other unrelated websites you subsequently visit. Third-party cookies often power these ads. In this context, the third-party cookies are set by advertising networks or data analytics companies, not the online retailer. They track your online behavior across different websites, collecting data on your interests, preferences, and activities.

History of Third-Party Cookies

Third-party cookies emerged in the early days of the web, with Netscape introducing cookies in 1994 to store data on users’ computers. However, the development of third-party cookies transformed online tracking and advertising.

These cookies allowed advertisers and ad networks to track users across multiple websites, creating comprehensive user profiles that included interests, browsing habits, and demographics. This data-driven approach revolutionized online advertising by enabling highly targeted and effective ad campaigns. It also facilitated the measurement of ad effectiveness, further fueling the growth of the digital advertising industry. This symbiotic relationship fueled the growth of digital advertising revenue. However, privacy concerns and regulatory changes prompted a decline.

An infographic displaying the different between first and third-party cookies.

The Decline

So, why did third-party cookies come to an end? This shift toward privacy-centric practices reshaped the online advertising landscape, emphasizing the need for businesses and users to adapt. Growing privacy concerns and browser phase-outs of third-party cookies marked their decline. Consequently, major web browsers, such as Chrome, Safari, and Firefox, announced plans to phase out support for third-party cookies. This industry-wide shift prompted a reevaluation of online advertising and tracking practices, pushing stakeholders toward more privacy-centric approaches.

What and How They Were Used in Marketing

Let’s check out some of the primary purposes behind third-party cookies:

  • Cross-Site Tracking for Personalized Advertising: Third-party cookies track user behavior across websites, creating detailed profiles for personalized ads, enhancing engagement and conversion rates.
  • Retargeting and Ad Frequency Capping: These cookies enable retargeting by showing users products they previously viewed. Ad frequency capping ensures users aren’t overwhelmed with the same ad, improving the user experience.
  • Attribution Modeling for Ad Performance: Third-party cookies help assess ad performance by tracking a user’s journey from ad interaction to conversion. This data aids in optimizing marketing budgets and strategies based on ROI insights.

The Rise of Privacy Concerns

In recent years, growing concerns about user privacy have become a central issue in the digital landscape. Internet users have become increasingly aware of the vast amounts of personal data being collected, processed, and often exploited without their full understanding or consent. Key concerns include:

  • Data Collection and Profiling: Extensive tracking of online activities and the creation of detailed user profiles without clear consent.
  • Targeted Advertising: The invasive nature of hyper-targeted ads often makes users uncomfortable.
  • Data Security and Breaches: High-profile data breaches have raised fears about the safety of personal information.
  • Lack of Transparency and Control: Users feel they have insufficient control and understanding of how their data is used.

Misuse of Third-Party Cookies and Increased Scrutiny

The misuse of third-party cookies has been a key driver of the heightened scrutiny and regulatory actions surrounding user privacy:

  • Excessive Tracking: Third-party cookies enabled cross-site tracking without clear user consent, contributing to privacy invasion.
  • User Profiling for Targeted Ads: Hyper-targeted ads, while effective, were seen as invasive.
  • Data Sharing and Monetization: Third-party cookies facilitated data sharing and monetization without user consent, eroding trust.
  • Privacy Regulations: In response, regulations like GDPR and CCPA aimed to give users more control and set strict data protection standards.

A timeline of the decline of third party cookies.

Privacy Regulations and Legal Implications

Along with privacy concerns, regulations like the General Data Protection Regulation (GDPR) in the European Union and the California Consumer Privacy Act (CCPA) in California have had a significant impact on the use of third-party cookies, including:

  • User Consent Requirements: Privacy regulations mandate that websites obtain clear and informed consent from users before setting third-party cookies that track personal data. Users must be given the choice to opt in or out of such tracking.
  • Transparency and Disclosure: Websites must provide transparent information about the types of data collected, the purposes of data processing, and the entities with whom data is shared. Users have the right to know how their data is being used.
  • Data Portability and Deletion: Privacy regulations grant users the right to request access to their data and the ability to port it to other services. Users can also request the deletion of their data, including data collected by third-party cookies.
  • Increased Accountability: Organizations using third-party cookies are accountable for the data they collect and must implement measures to protect user data. This includes data security and risk assessment protocols.

Consequences for Non-Compliance

Non-compliance with privacy regulations regarding third-party cookies can result in significant legal and financial consequences. Your brand wants to avoid the following at all costs.

  • Fines and Penalties: Regulatory authorities can impose substantial fines for violations of privacy regulations. Under GDPR, for instance, fines can reach up to €20 million or 4% of a company’s global annual revenue, whichever is higher.
  • Reputation Damage: Non-compliance can damage a company’s reputation, as users and the public become more conscious of data privacy issues. This can impact customer trust and loyalty.
  • Legal Action: Individuals affected by non-compliance may pursue legal action against organizations that misuse their data or fail to comply with privacy regulations.
  • Operational Changes: Organizations may need to change their data collection and processing practices to comply with regulations. This can be resource-intensive, requiring significant adjustments to systems and procedures.
  • Global Reach of Regulations: Privacy regulations can have extraterritorial effects, meaning they can apply to organizations outside their jurisdiction if they process the data of residents in those regions.

How This Will Affect Advertising Platforms

The discontinuation of third-party cookies has sent ripples through major advertising platforms, most notably Google Ads and Facebook Ads. These platforms have long relied on third-party cookies for precise audience targeting and measurement of ad campaign performance.

Without these cookies, advertisers are grappling with the challenge of delivering highly personalized ads to their intended audiences. Additionally, the absence of third-party cookies disrupts the ability to accurately measure and attribute conversions, a vital aspect of ad campaign analysis.

​​In response to this shifting landscape, major advertising platforms are adapting to the new reality. They are emphasizing first-party data more, urging advertisers to build direct relationships with users and collect data through owned channels. Simultaneously, they are exploring alternative tracking methods, such as first-party cookies, browser APIs, and device-level identifiers, all while ensuring they align with evolving privacy standards.

iOS 14 Update

The iOS 14 update with ATT (App Tracking Transparency) introduces a feature that requires apps to obtain explicit user consent before tracking their activity across other apps and websites using Apple’s Identifier for Advertisers (IDFA). This feature empowers users to decide whether they want to allow app developers and advertisers to track their behavior for personalized advertising and analytics. While iOS 14’s App Tracking Transparency primarily affects mobile app tracking rather than browser-based third-party cookies, both initiatives are part of a broader trend toward user privacy and data protection in the digital realm.

A lock symbol over the USA, displaying the effect of privacy policies.

Impact on Marketers

The phasing out of third-party cookies presents marketers with significant challenges. These cookies have been pivotal for precise audience targeting, measurement, and attribution in advertising. With their removal, marketers face disruptions to their core strategies, including limitations in audience segmentation, complexities in attribution modeling, constraints in performance tracking, potential declines in retargeting effectiveness, and difficulties in cross-device tracking. The loss of third-party cookies disrupts the following for marketers:

  • Audience Segmentation: Marketers may struggle to segment audiences effectively, impacting the delivery of relevant content and personalized ads.
  • Attribution Modeling: Attribution models may become less accurate, making it challenging to determine which marketing channels contribute most to conversions.
  • Performance Tracking: Measuring the success of ad campaigns and optimizing them in real-time becomes more challenging without comprehensive tracking data.
  • Retargeting Strategies: Retargeting campaigns may be less effective, potentially resulting in lower conversion rates and ROI.
  • Data Integration: Marketers will need to integrate first-party data more effectively to fill the gaps left by third-party cookies, which may require significant adjustments to data management and analytics practices.

Navigating Marketing Without Them

Luckily, not all hope is lost. Marketers now have to pivot, but there are many options. Check out some useful tips for navigating a post-cookies world.

  1. Build and Leverage First-Party Data: Prioritize collecting and utilizing first-party data through user consent, enabling targeted marketing.
  2. Invest in Customer Relationship Management (CRM): Strengthen customer relationships using CRM systems for insights, audience segmentation, and personalized content delivery.
  3. Content Personalization: Use AI and machine learning to create personalized content and tailor user experiences based on behavior and preferences.
  4. Implement Contextual Advertising: Transition to contextual advertising, which matches ads with webpage content instead of user profiles, respecting privacy while maintaining relevance.
  5. Collaborate with Trusted Partners: Partner with publishers and platforms emphasizing user privacy and data protection to ensure effective ad campaigns.
  6. Explore Alternative Tracking Technologies: Experiment with alternative tracking methods, such as browser APIs and first-party cookies, to compensate for the limitations left by third-party cookies.

Importance of Building First-Party Data and Fostering Customer Trust

Building first-party data and fostering customer trust is essential in the post-third-party cookie era. First-party data is a valuable and reliable source of information that can fuel personalized marketing efforts. Trust is equally crucial, as users who trust a brand are more likely to share their data voluntarily. Marketers should prioritize transparency, consent, and data security to build and maintain this trust.

A map showing the benefits of UTM parameters.

UTMs (Urchin Tracking Modules) in Circumventing Third-Party Cookies

UTMs are not a direct replacement for third-party cookies but can help marketers gather valuable data on user behavior. They are parameters appended to URLs, allowing marketers to track the source of web traffic and user interactions. While not as comprehensive as third-party cookies, UTMs can provide insights into where users come from, which campaigns are driving traffic, and which pages lead to conversions.

By using UTMs effectively, marketers can gain a clearer understanding of their audience and optimize their campaigns in the absence of third-party cookies. However, UTMs depend on user interactions and do not offer the same level of cross-site tracking as third-party cookies.

Alternative Technologies and Solutions

Marketers are exploring a range of emerging technologies and solutions to deliver personalized content to audiences while respecting user privacy and data protection regulations. By embracing the following advancements, marketers are adapting to a future where privacy and personalization coexist harmoniously in the world of advertising. Some alternatives may include:

  • First-Party Data: Marketers increasingly rely on data collected directly from customers through owned channels for personalized advertising.
  • Contextual Targeting: Placing ads based on webpage content rather than user profiles allows for contextually relevant advertising.
  • Machine Learning and AI: Algorithms analyze user behavior and content to make real-time ad placement decisions, improving targeting accuracy.
  • Unified ID Solutions: Collaborative efforts aim to provide a single user identifier across platforms while preserving privacy.
  • Zero-Party Data: Users proactively share preferences and data, offering valuable insights to brands.
  • Privacy-Compliant Data Sharing: Advertisers share aggregated, privacy-respecting data with publishers for audience targeting.
  • Device Fingerprinting: Unique device attributes are analyzed for user identification, though accuracy and privacy concerns persist.
  • Email Marketing and CRM Integration: Integrating email and CRM data enhances targeting based on known customer attributes.
  • Blockchain and Decentralized Solutions: Some blockchain technologies empower users to control their data sharing with advertisers.
  • Regulatory Compliance: Advertisers invest in tools and practices to adhere to privacy regulations like GDPR and CCPA, ensuring transparent data handling and user consent.

An infographic displaying the dashboard for Growify, an attribution software that helps marketers organize data.

Case Studies and Examples

The evolution of digital marketing in a post-third-party cookie era has spurred businesses to reassess their strategies. This section explores real-world case studies of companies that have successfully navigated the changing landscape by prioritizing user privacy, embracing alternative advertising techniques, and evolving their revenue models.

Apple’s Privacy-Centric Approach

  • Strategy: Apple has long prioritized user privacy, introducing features like Intelligent Tracking Prevention (ITP) to limit third-party cookie tracking in its Safari browser. IOS 14 introduced App Tracking Transparency, empowering users to control app tracking.
  • Outcome: Apple’s commitment to privacy has resonated with users, strengthening its brand image. While this approach limits data availability for advertisers, it enhances user trust and has led to the development of privacy-centric marketing practices.

Google’s Transition to Privacy Sandbox

  • Strategy: Google, recognizing the need for privacy-focused solutions, announced plans to phase out third-party cookies in Chrome and replace them with its Privacy Sandbox initiative. This involves new techniques like Federated Learning of Cohorts (FLoC) for interest-based ad targeting.
  • Outcome: Google’s initiative aims to balance privacy and advertising needs. By driving innovation in privacy-friendly alternatives, Google seeks to maintain its dominant position in digital advertising while adapting to evolving privacy standards.

The New York Times’ Subscription Model

  • Strategy: The New York Times shifted its revenue model from heavy reliance on third-party advertising by emphasizing subscription-based access to premium content. This reduces the need for extensive user tracking.
  • Outcome: The newspaper’s successful transition to a subscription model has increased revenue and reduced its dependence on third-party cookies. It demonstrates how businesses can pivot toward alternative revenue streams prioritizing user engagement over ad tracking.

Conclusion

The decline of third-party cookies marks a pivotal moment, ushering in an era where privacy, transparency, and user consent take center stage. While this transition presents challenges for marketers and advertisers, it also offers opportunities for innovation and ethical data practices.

To navigate this transformation successfully and unlock the full potential of your marketing efforts, consider leveraging Growify Attribution Software. With Growify, you can gain invaluable insights into campaign performance. You can optimize your marketing strategies and ensure compliance with evolving privacy regulations. Stay ahead in the changing world of digital marketing—explore the power of Growify today.

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