Third-party cookies in the wake of GDPR and CCPA

On the 14th of January 2020, Google announced that third-party cookies would no longer be used in Chrome beginning in 2022. What will the implications for the industry be? How will programmatic advertising survive the fall-out? Let us explain.

First came GDPR, then CCPA, and now comes the shock announcement from Google that has rocked the industry: they’ll be removing third-party cookies from Chrome in 2022.

Whilst it’s true that Firefox and Safari have already taken action against third-party tracking, considering Google’s 66% market share, this announcement is certainly poised to have major ramifications. After all, the industry has relied on the third-party cookie for the last 25 years for essential functions. A study from last year showed that Google’s removal of third-party cookies reduced publisher ad revenue by 52%. 

What does the industry make of it?

It’s perhaps telling that, at the time of writing, no major industry player, including Adobe and Facebook, has commented on the announcement. Whilst we’re pretty sure there’s a lot of activity going on behind closed doors, including frantic reassurances to clients old and new, publicly we’ve seen no reaction from the major players as yet.

That’s not to say that the markets haven’t reacted. Retargeting giant, Criteo, saw their share price plummet in the wake of the announcement. So even if some industry experts are reluctant to take a stance, financial analysts certainly know which way the wind is blowing.

True, the industry does have two years to get to grips with the change. But the proposals Google has put forward to replace the cookie have been vague at best and are certainly not going to allay fears:

“We are confident … mechanisms like the Privacy Sandbox can sustain a healthy, ad-supported web in a way that will render third-party cookies obsolete,”

Justin Schuh, director of Chrome engineering.

The proposals essentially focus on their Privacy Sandbox and Google will soon begin trials that allow for click-based conversion measurement without third-party cookies. To track a conversion, advertisers will use an API that will send the conversion value from the browser. Once that’s done, Google will need to figure out how to run interest-based advertising without the help of third-party cookies.

It’s not surprising then that we haven’t heard from the big players yet. In a game where the goalposts are constantly moving, it’s difficult to have a definitive follow-up.

What does the future look like?

In a nutshell, hazy. With a two-year deadline ahead of us, there’s always a concern that the industry will go into stasis for 24 months. Our CEO, Erik Tammernurm, noted as much with GDPR and there’s a possibility that the same will happen now. The worst thing that could happen would be for everyone to stand idly by, waiting for cookies to be banned.

Cross-site tracking and retargeting are likely to be two victims of a third-party cookie-less world as both rely heavily on the tech. Similarly, for those involved in attribution, the world is about to change. View-through attribution and multi-touch attribution are unlikely to survive in a third-party cookie-less world and we’re probably going to see a return to last-click attribution as a result.

Another consequence for the adtech industry is that there’s likely to be a de-investment in tech that’s third-party data-focused. After all, with such an uncertain outlook, no investor is going to want to fund a venture that could end up being obsolete in a couple of years’ time. Instead, they’re going to let the dust settle, understand the lay of the land and then decide where to put their money. Unfortunately, this may well mean that third-party data-focused start-ups will suffer heavily and some may even be driven out of the market altogether. As Johnny Ryan of Brave put it: “Google is building a moat. It doesn’t need third-party cookies to track people. It has code live on virtually every single website and app.”

On the upside, companies that are working with first-party data may be in even more demand now. Experts have already predicted that first-party data will hold even greater importance in the future. Investment is likely to increase dramatically in those data sets.

Strategies for success in a third-party cookie-less world

So in a world where privacy regulations are being brought into force left, right and center and where third-party data is no longer going to be available to target and track audiences, how can advertisers continue to run successful ad campaigns?

Well, first of all, let us assure you that Google’s announcement is in no way tolling the death of the adtech industry.  Some are even commenting that this movement away from cookies will eventually be good for the industry and that the industry needs to work together to find a way forward.

For advertisers, it simply means we’re going to have to find new strategies to connect with our audiences. We’ve already mentioned first-party data as an area of growth and there’s also the ever-present possibility of contextual advertising for advertising campaigns.

What advertisers need to remember is this: at its heart, advertising is fundamentally a conversation between the advertiser and the user. Scrape away all the politics on privacy and what have you got? The potential for two-way communication. Your focus as an advertiser should therefore always be on that first opener; you want to make it as engaging as possible. 

That’s why we would recommend interactive ads as a format – they enable advertisers to engage their audiences as they automatically prompt a response from the user. And with that response comes heightened brand awareness and recall. A study by Magna Global showed a 47% lift in time spent with an interactive ad compared to a non-interactive one. The study points out that more time spent in the ad undoubtedly leads to better brand recall.

Interactive ads also lead to higher performance rates. The same study by Magna Global demonstrated that the mere presence of interaction within an ad makes the brand appear more “exciting” and made users 9x more likely to consider purchasing something.

One example of an interactive ad campaign that generated some very impressive results is from Nissan, which saw 10x higher interaction rates in its 2016 ICC World T20 tournament ad campaign compared to that of industry standards. They also saw a subsequent 4x increase in visits to the Nissan website.

At Nexd, we offer numerous interactive ad formats that can be built easily with our Campaign Manager, from the 3D Cube to the scratch to the panorama. Just remember that an interactive ad works like any other: it requires a compelling message and a clear call to action. Check out further tips on optimizing your interactive ads here.

So stop thinking of a cookie-less, privacy regulation-led advertising world with dismay. Yes, the industry is most definitely going through some major changes. But there are still plenty of opportunities to engage with your audience. The quicker the industry moves forward from Google’s announcement and starts thinking creatively, the better.

Want to know more about adapting your advertising strategy for the Privacy Era? 

Listen in on a webinar hosted by Nexd CEO,  Erik Tammenurm, Saving your Display Ad Campaign during the new Privacy Era. 
Whether in the EU or US, privacy regulations are here to stay. Erik will explain to you how privacy regulations and third-party cookies are changing your ad campaigns. Watch the webinar today!