Recently, there's been a buzz in the marketing industry about Google's announcement that it will be looking to retire the use of third-party cookies over the next two years for its Chrome browser. To offer more accurate data, user privacy, and security for online shoppers, Google is making some major changes in how shopper information can be used to target consumers with relevant ads, by tracking user activity.
What exactly is a third-party cookie?
To understand what third-party cookies are, it is helpful to first understand what cookies are. Cookies are small bits of data that are added to your browser every time you visit a website. These cookies change the way your browser interacts with certain web pages. The overall idea is to offer a more seamless experience for shoppers and cookies can be used to:
- Record user activity
- Store data, such as items you've browsed or added to your shopping cart on an e-commerce site
- Retain data entered into forms used to conveniently populate online forms
- Save user preferences
- Activate retargeting ads
This data is stored in your browser for a set amount of time by the website or until you delete it. The difference between first-party and third-party cookies is what all the hoopla is all about.
The browser functionality that allows companies to track your activity on their own website is known as "first-party cookies." This allows the site owner to track certain information, such as:
- What pages on your site do consumers visit?
- What products do they look at?
- How much time do they spend on your website?
- Do they purchase your products or leave your site, abandoning their shopping carts?
When the cost of RAM and storage dropped significantly in the 20-teens, companies began to practice big data techniques to collect more data about customers beyond their own websites. This is where it got tricky. Third-party cookies are created when a website you visit uses components that are hosted by other companies. Third-party cookies, commonly used for cross-site tracking, retargeting, and ad-serving, customize your searches to show ads for products you show a preference for. Cross-site cookie tracking is a way of following users around on the Internet and collecting data. Once enough activity data across different websites is gathered, one could make educated guesses about consumer habits and preferences. While these activities help target relevant ads to consumers' tastes, tracking user activity makes user information more vulnerable to being stored on third-party servers' sites, presenting data privacy issues that large tech companies, such as Google, are trying to shore up. Safari and Firefox already ask permission to use third-party cookies when users click on websites. An uptick in ad blockers is also helping to decide the fate of third-party cookies. What does all of this mean for your marketing campaigns?
Google's Privacy Sandbox
While Google is not the first to phase out third-party cookies, Chrome is the largest browser to do so, with "more than 56% of the web browser market" and accounting for "more than half of all global web traffic," according to marketing software developer, HubSpot.com. To address privacy concerns and keep advertisers happy, Google has developed its Privacy Sandbox to make this change without disrupting the advertising strategies for many businesses.
FLoC shares data from a group perspective
"The Privacy Sandbox, according to Google, uses, Federated Learning of Cohorts (FLoC) which effectively ‘hides individuals in the crowd' and uses on-device processing to keep a person's web history private on the browser." When will these changes take place? On April 5, 2021, an AIthority.com article revealed that "Google was found to be testing the Federated Learning of Cohorts (FLoC) algorithm on Chrome." The tech article went on to say, "Changing expectations from advertising has influenced the entire value chain of AdTech developers, website marketers, and publishers to look for safer and trustworthy solutions to keep the web ecosystem free of issues, including the ones related to malvertising and bot audience."
FLoC introduces a set of new web standards
FLoC, designed to give advertisers the ability to target and measure ad campaigns while preserving user privacy, introduces a set of new web standards, i.e., web browser Application Programming Interfaces (API). APIs allow applications to talk to one another. Designed to perform interactive functions, when you use Facebook, send instant messages, or check the weather on your phone, you're using an API. Google's Privacy Sandbox represents a new way of sharing data, where advertisers must call an API to get a certain group or "cohort" of users, instead of targeting individual users.
When browsers started blocking third-party cookies, to the surprise of no one, user-tracking technology went underground to subvert these activities. Some skeptics say that FLoC makes it easier for subverted "fingerprinting" workarounds to acquire user data, by collecting browser data in one place. Google says they're continuing to work to make current web technologies more secure and private. In February 2020, Chrome began limiting insecure cross-site tracking by treating cookies that don't include a SameSite label as first-party only and requiring cookies labeled for third-party use to be accessed over HTTPS. Not only will this make "third-party cookies more secure," it will provide "users more precise browser cookie controls." Google says they're also developing techniques to combat covert tracking and cookie workarounds by, "launching new anti-fingerprinting measures to discourage these kinds of deceptive and intrusive techniques."
In the meantime
You can get involved with Privacy Sandbox testing and have a voice in its development. As Google gets more feedback from users testing its Privacy Sandbox, they will continue refining it to function as the data collecting standard that respects user privacy. Additionally, to prepare for the third-party cookie departure, HubSpot.com recommends starting to consider alternatives now. HubSpot.com also suggests "to vet any software or solutions that can help you better transition away from third-party cookies."
The Party of the First-Party
Data analysts across the board are suggesting that online businesses start leveraging their first-party cookie data. For retargeting purposes, first-party data is the best to use because it's collected from your brand's audience. Because first-party data is first-hand data, it's reliable for making predictions and forecasting future behavioral trends. Comprised of data from your website, app, or product pages, first-party data can include info gathered from:
- Actions taken on your website, app, etc.
- Your CRM system
- Your social media profiles
- Your subscription order emails or products
- Customer feedback
While these changes may present some challenges, they pave the way for more transparent and open online advertising that communicates directly to users and eliminates obscure data collecting practices that infringe on consumer privacy. Marketers focusing on smarter content practices and contextual targeting techniques will ensure your ads find an ideal balance between effectiveness and user privacy. DAS Group can help optimize your ad strategies with Google's FLoC rollout, evaluate alternatives, and revisit contextual marketing techniques to keep your business on point and in step with this brave new third-party cookie-free world. Contact us today to get the conversation started!