Third-party cookies are being replaced by Topics API

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What you need to know about the future of cookies

You know that almost magical way advertisements seem to follow you around the web for the same products on different websites? Then you’re already familiar with the effects of cookies.

But let’s take a deeper dive into what cookies are, how advertisers use third-party cookies, and why Google has planned to replace cookies with their own solution in their Chrome browser in 2023.

Ok, so what are cookies?

Cookies are small pieces of text stored in your web browser of choice on all computers, including desktop, tablet, and mobile devices.

Typically, these are used to store useful information about you to provide better online experiences such as remembering your choices on a website, or that you are logged in.

What about third-party cookies, then?

Third-Party cookies—and especially third-party tracking cookies—are an extension of this technology, most often used to record information about a specific users interests and habits, directing targeted advertising to the identified user and providing valuable information to advertisers.

Unlike first-party cookies, which store website preferences for the site you are currently visiting, third-party cookies are deployed by advertisers and often originate from multiple locations and domains across the internet.

These are employed when displaying content—such as advertisements—to track where the advert was displayed, what was shown, when it was seen, how it was interacted with, and more.

All in an effort to track your online habits, build a profile about you, and further optimise advertising efforts to sell products and services.

 

Good to know, but what is the reason for the change?

In January 2020, Google announced that it has plans to modify the cookie handling functions of its incredibly popular Chrome Browser and block all third-party cookies.

While this change was initially set by Google to occur sometime in 2022, increased pressure mounting from advertisers, ad tech companies, and other third-party cookie distributors has seen Google push the change back to 2023.

But this isn’t just a change only Google has sought to make.

Other large tech companies such as Apple, Mozilla, and Microsoft, who also provide the alternative browsers Safari, Firefox and Edge have already implemented various methods to outright block third-party cookies in their software.

These changes are all in the effort to increase safety when using the web and give more control back to the user about the kinds of personal information and individualised tracking that is collected by businesses online.

They’re also in alignment with other major global changes in data privacy and protection, such as the European Union’s introduction of the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), which both came into effect in 2018.

How has the online advertising industry reacted to this change?

Understandably, ad tech companies who rely on the metrics and data collected by third-party cookies aren’t too happy with the proposed changes Google has outlined.

Without accurate user data, it becomes incredibly challenging for digital advertising agencies to understand what customers are interested in and how to best leverage this data to influence their buying habits.

Many advertisers have expressed that they are disappointed with Google choosing to make such a sweeping change to the use of third-party cookies without further consultation or consideration from the advertising industry at large.

Here’s what online advertisers and marketers should know

Right now, there aren’t any changes to the use of third-party cookies in Google Chrome scheduled for 2022. The outcry from digital advertising groups, ad tech companies, and the advertising industry at large has forced Google to push changes back to 2023.

But this doesn’t mean you should wait around until then to understand what is going to change when it finally arrives. Instead, this pushback gives you much needed time to prepare a strategy for the moment when Google starts blocking third-party cookies.

It will be no longer a solid strategy to rely on the data from third-party cookies.

With the increasing use of ad blocker plugins, in-browser user settings that give more refined control, and of course, the pending change from Google to cookies in Chrome, the quality of online advertising methods which heavily relies on third-party cookies to effectively target and track users will continue to dwindle.

Recently, Google created an initiative called Privacy Sandbox. This initiative is committed to improving the safety and security of the open web at a general level and prevents the unnecessary tracking of users as a part of its mandate.

But there must be an alternative?

As it stands right now, Google’s decision is to continue eliminating third-party cookies from their Chrome browser.

Google had initially proposed a new technology called ‘Federated Learning of Cohorts’ (or FLoC for short) based on Privacy Sandbox, which aimed to replace third-party cookies entirely. It’s since been scrapped (as of 25th January) and replaced with what Google are calling Topics API. 

What is Topics API?

With Topics, a user’s browser identifies their top browsing interests for the week and groups them into clusters, like “Auto & Vehicles” or “Books & Leisure”. This information is stored for three weeks before being deleted. 

So, where does privacy come in? 

These topics are selected on a user’s device only and don’t involve external servers. 

When users head to a participating site, the Topics API will select three topics in their browsing history to share with the site and their ad partners, allowing the site to present users with meaningful ads based on their topics, without entirely sacrificing their privacy.

As you can imagine, Google’s Privacy Sandbox fundamentally alters the types, quality, and strength of targeted advertising data available from users to ad tech companies, and in turn, online marketers.

How will this impact advertisers and marketers?

Here are some of the most significant impacts the upcoming changes will make:

  • Retargeting with cookies becomes a thing of the past—Third-party cookies deployed by advertisers to track devices and behaviours to retarget advertisements simply won’t work. However, Google has developed an alternative technology called ‘Turtledove’, which is intended to address this issue.
  • Audience Suppression will no longer be possible—with grouped Topics API data, it will be impossible to remove an audience segment from results.
  • Frequency Capping isn’t available—With the device identifier hidden in grouped data, it becomes impossible to frequency cap anonymous prospects.
  • Measurement will be limited—Without cookies, the measurement of ad performance and user data associated with advertisements will only be available in a limited fashion.
  • Lookalike Audience targeting is out of the question—Advertisers can’t create lookalike audience profiles or use collected data to effectively target or retarget these audiences.
  • Cross-site personalisation and A/B testing become difficult—Without device identifiers, it becomes much more difficult to perform true A/B variant testing to determine ad performance.

What’s the future of online advertising?

Critical changes to the way browsers collect data, specifically in Google Chrome, may seem to alter the very nature of digital advertising as it stands. There are a few things for the enterprise market to remember.

Advertisers have understood that this change was coming some time ago with the adoption of GDPR and CCPA placing heavy restrictions on what can and can’t be achieved with the use of third-party cookies.

Information collected through direct user interaction on a website—otherwise known as first-party data—will remain untouched, so increased direct engagement with users and planning and adopting a first-party data strategy is critical.

Subscription data and Second-party data collection will become even more important than before as these are often both user-driven and generally of good quality.

In the immediate future, advertisers should keep an eye on news about Google’s plans for the Chrome Browser, third-party cookies, Privacy Sandbox, Topics API, and any new developments which arise throughout 2022.

Third-party cookies are drawing to a close in 2023. But while other enterprise eCommerce marketers scramble for the panic button, a savvy few are quietly crafting customer acquisition strategies that will safeguard their future success in a cookieless climate.

What can you do today to create a long-term customer acquisition framework that allows you to lead campaigns with creativity and experience, instead of third-party data?

Join us in March to start building your framework for cookieless customer acquisition. Register to our free webinar 

Preparing for cookie-less customer acquisition in 2023.

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