Cookieless Future: A New Age for Digital Marketing

Customer Engagement, Marketing, Targeting
Cookieless Future: A New Age for Digital Marketing

The digital space is changing; brands and advertisers are entering a new era where they must learn how to function in a cookieless world. Conversations around data privacy have been ongoing for decades, and we’re about to see some major changes at a scale never seen before. What are these changes? What does “cookieless tracking” mean? And is all of this really only about consumer privacy? Let’s jump right in!

Key Takeaways

  • Cookies, the little data blocks with some behavioural information about your web browsing activities, started raising questions about data privacy and misuse of information.
  • Starting 1 July 2023, Google will completely eliminate third-party cookies and Universal Analytics will no longer be available, so you need to switch to GA4 before then.
  • Cookieless tracking refers to data tracking without the help of third-party cookies; first-party cookies are staying with us.
  • Cookieless tracking will make retargeting campaigns difficult for brands and advertising agencies, and therefore, advertising-based revenues will drop.
  • Cookieless advertising will be less relevant to consumers, raising advertising costs. In parallel with this, consumers may have to start paying for certain services that were previously free of charge.

Okay, let’s start with the basics. Cookies, also referred to as HTTP cookies, are small data blocks created by web browsers like Google Chrome, Safari and Firefox. They are essentially data trackers; the browser collects and stores the user’s behavioural data, which allows brands and advertisers to use this information for remarketing purposes.

For a more technical explanation, head over to Segmentify Tech Blog: Storage Wars: Cookies vs Web Storage

Lou Montulli, the inventor of HTTP cookies, is reaching into a giant glass cookie jar filled with chocolate chip cookies.
Lou Montulli, Inventor of HTTP Cookies | Photo: By Peter Adams — Faces of Open Source 

Third-Party Data vs First-Party Data

Cookies contain information to identify you and offer you an enhanced online experience. This could be about remembering your login information, knowing your most frequently visited pages, storing your credit card information for future purchases, etc.

So, what’s up with third-party and first-party cookies? What’s the difference?

Technically, they are almost the same thing. They both contain the same type of information and can perform the same function. However, they are different when it comes to how they are used.

First-party cookies, for example, are created by a domain or a website to enhance your online experience. This makes life easier for you by storing certain information on your browser in case you return to that website later. This information could be your username, password, payment information, email address, if you’ve added something to your basket, etc. The purpose is to save you time and essentially provide a better experience.

First-party cookies can also enhance your online experience with personalised product recommendations based on your behavioural data and personal taste. They also help customise the content you’re being exposed to.

Now, third-party cookies are not created by a domain or a website. Instead, they’re created and placed by the advertisers. Their aim is to retarget you with personalised campaigns and messages. Yes, it’s those ads that follow you everywhere you go online.

Table comparing the third-party cookies and first party cookies with illustrations of bitten chocolate chip cookies on it. The host for the third-party cookies are advertisers; they track users across different websites with the purpose of targeted advertising; their function is to follow users around the web with retargeting campaigns and messages.

The host for the first-party cookies is the domain users are visiting and they track users only on that domain with the purpose of providing a smoother online experience. They store login information, site preferences, payment information, shopping cart items, etc. Both third-party cookies and first-party cookies require user consent.

Now the question remains: Why is the world going cookieless? And what the heck does “cookieless” mean?

Growing Privacy Concerns 

Well, technically, it’s Google that’s going cookieless. But let’s rewind the tape a bit.

Sure, personalisation and being offered personalised content is cool, but at some point, people stopped and started asking, “Hold on a second. Why do you know so much about me?”.

Technological advances helped brands and companies build hyper-personalised retargeting campaigns. And for a while, all was good; people enjoyed seeing the things they were actually interested in. However, somewhere down the line, this started to feel a lot like cyber-stalking. We’ve started having heated conversations about data privacy and the much-needed regulations.

Consumers felt they should have the right to know if, where and how their data is being used. Which led to regulations and laws like GDPR (General Data Protection Regulation) and CCPA (California Consumer Privacy Act) being enacted. These laws ensure that data tracking happens with the consumers’ consent. These changes signalled to the Internet companies and tech giants that maybe they should start building a cookieless future.

What Does “Cookieless Future” Mean?

Well, a cookieless world is one where companies find a balance between privacy and data tracking. “Cookieless describes a way of marketing in which marketers are less reliant on cookies — bits of data that contain consumer personal identifiers.” explains Asa Whillock, the former Head of Product Operations and Strategy for Adobe Digital Experience.1

Essentially, we’re talking about a future where there’s going to be a lot more transparency in how companies use consumer data. And the central figure in this whole conversation is…you guessed it, the good old Google.

In January 2020, Google announced that Chrome would not support third-party cookies by the end of 2022. Then in March 2021, the company announced that it would stop using behavioural targeting and would not allow third parties to replace cookies with alternative identifiers.2

A big move regarding the cookieless world and privacy came from Apple: In April 2021, the tech giant announced that the iOS 14.5 update would implement App Tracking Transparency.3

The reason for this announcement was privacy concerns around cross-app tracking, which allows ad targeting based on the user’s behaviour on other mobile apps. In other words, App Tracking Transparency was bad news for advertisers who relied on this third-party data for retargeting.

So now the apps have to allow the iPhone and iPad users to opt-out from cross-app tracking, which gives more control to the individuals over their own mobile app data and how it’s being shared with third-party apps and companies for ad targeting purposes.

iPhone screen with the “App Tracking Transparency” notification. The pop-up asks the user, “Allow ‘App’ to track your activity across other companies’ apps and websites? Your data will be used to measure advertising efficiency.” The user can “Ask App Not to Track” or choose to allow tracking.

Back to Google: What is GA4 and Why Do We Need to Prepare?

GA4, also called Google Analytics 4, is Google’s last major analytics update. The beta version was initially called an App + Webb property and has been around since July 2019. And since its official launch in October 2020, GA4 has been the default Google Analytics version, replacing its predecessor Universal Analytics.

GA4 was developed because of the conversation around data privacy and the implementation of privacy laws such as GDPR and CCPA. Additionally, Universal Analytics was not designed for today’s analytical needs and expectations since it was not compatible with mobile apps.

GA4 offers privacy-first tracking, AI-driven predictive analytics, and cross-channel data measurement, making it the most advanced property available. In contrast with Universal Analytics, which only allows for tracking on websites, GA4 allows for tracking on both websites and mobile apps.

And as for the measurement model, GA4 uses a new model that allows the measurement of both events and parameters via a variety of new metrics. Among GA4’s benefits for brands, the following are included:

  • Better focusing on the user journey and user engagement
  • Simplified goals and events with a suite of pre-made actions and events such as clicks, scroll behaviour, transactions, file downloads, first visits, etc.
  • AI insights for predictive metrics that allow you to make data-driven decisions on a larger scale

It’s a one-way ticket for Universal Analytics: Starting July 2023, it will be replaced entirely by GA4 as Google Analytics’ new measurement solution. Your business must transition to GA4 sooner rather than later to ensure continuity in reporting since Universal Analytics will no longer receive data from your website. You now have less than one year to switch to GA4, but the sooner you do it, the more data you will have stored in your GA4 property.

Starting July 2023, you will have access to the historical data in your Universal Analytics property for six months. We suggest that you export your historical data during this period at the latest since you will not be able to access it after this six-month period.

Is This Really About Privacy, Though? 

We’d be lying if we said privacy was the sole reason for switching to a cookieless retargeting. It’s quite the contrary, actually. Let’s break it down together:

Justin Schuh, the former Director of Chrome Engineering, explained the users’ demand for greater privacy, transparency, choice and control over how their data was being used were the main drivers for the development of GA4.2 He also implied that the company was evolving to meet these demands.

The consumers’ concern over privacy has indeed grown over the years. According to a KPMG survey, 86% of US consumers say data privacy is a growing concern for them, and 68% are concerned about the level of data being collected by businesses.4 But there’s more to the story.

In 2019, The Irish Data Protection Commission (DCP) started looking into how Google was providing advertising services across the EU and whether their use of personal data for targeted apps was in line with European privacy laws.5

We should note here that the DPC has been criticised heavily for not following through with their investigation and was actually sued by the Irish Council for Civil Liberties (ICCL) on the grounds that the DPC’s statement of issue has excluded data security from the investigation, which ICCL believes to be the most critical part of the issue.6

It’s a no-brainer that these types of high-profile investigations, combined with the increased consumer concerns over privacy, pushed Google to take action. But as you might’ve guessed, there’s still more to the story.

Pie chart that resembles a cookie shows the percentage of global desktop browser market share. Google Chrome has the biggest market share, with 77%. Safari with 9%, Mozilla Firefox with 8% and Microsoft Edge with 6% follow Chrome. The data is taken from the WordPress hosting platform Kinsta.

With a market share of 77%, Chrome is the most widely used desktop browser.7 And yes, you’ve guessed it right! This new switch to cookieless tracking and GA4’s introduction will make Google even bigger in the market.

The decision to get rid of third-party cookies and switch to cookieless tracking will affect billions and billions of web searches, which means it will affect the money made through advertising because now, we have to deal with cookieless advertising and cookieless retargeting. Naturally, advertisers will be forced to focus their investments on Google products because they will not be able to track effectively, hence enhancing Google’s market share.

Is GA4 GDPR Compliant?

Apart from GA4 and cookieless tracking allowing Google to get even bigger, there’s one major setback that we need to discuss. The GA4 is not exactly GDPR compliant.

Google has not reached an agreement with European regulators regarding data transfer between the EU and the USA. Google saves user data on US-based cloud servers, including the EU residents’ information. This is a problem because Google has to comply with US laws since it’s a US-based tech company.

A legislation called Cloud Act states that when requested, Google must share certain data, even if it is located outside the United States. And according to certain EU legislation, transatlantic transfers of personal data from the EU to the US are illegal if companies cannot ensure the data will be safe from the US intelligence agencies.

The GDPR law also prohibits certain features, such as data sharing between Google products. For best results, use IP anonymisation, do not share GA4 collected data with other Google products, and update your website’s privacy policy when using GA4.

The Business Will Not Be As Usual

Upon Google’s announcement in January 2020 about phasing out third-party cookies, the Association of National Advertisers released a statement expressing their disappointment in Google’s decision. They declared that cookieless targeting would significantly damage digital advertising.

For Brands and Advertisers

Cookieless tracking will undoubtedly make retargeting campaigns more difficult. Brands and advertising agencies might find adjusting to a cookieless world difficult since they’ve become heavily reliant on third-party cookies.

It will be more challenging to deliver relevant offers to consumers around their current interests or intentions in this new cookieless world. In light of these changes, predictive algorithms can no longer be used effectively to show personalised ads to consumers, resulting in decreased revenue.

This is how Onur Teler, VP of Marketing at Segmentify, sees this new era of digital marketing: “Although most adtech companies are or have prepared for the shift, the biggest winner is going to be Google overall. Since the launch of GA4 on 14 October 2020, Google has been pushing digital marketers and companies to shift into GA4 and has postponed cookieless tracking a couple of times, but “next generation tracking” is yet to come. Will users be as private as they think they’ll be? What will happen with DMPs, and CDPs, and will this shift help big adtechs to generate more revenue? So what really was the sole purpose of this change? Welcome to the new era of the “cookieless & private” experience!”

For Consumers

Eliminating third-party cookies will result in less relevant ads for consumers, as mentioned above. So far, a majority of online content and services have been free of charge. However, consumers are now facing the risk of having to pay for services that have been free until now because of the significant losses that will be experienced in advertising-based revenue.

The Cost of Digital Advertising Will Increase

Cookieless tracking will make it difficult for retargeting campaigns, raising advertising costs. Advertisers and brands are going to have to be smarter about budget allocation and learn not to rely on automation as much.

Let’s illustrate this with an example. Imagine a woman named Ashley coming to your brand’s website. Sadly, Ashley doesn’t make any purchases or leave her contact information (e.g. email address); she simply leaves the website without taking any action. 

In a cookieless world, you can’t target Ashley with one-to-one marketing campaigns. As we’ve said, this causes a lot of confusion among digital marketers who got so used to building their personalised marketing campaigns around the data collected through third-party cookies. You might even say they sort of got lazy.

As a result, building campaigns that create value is going to be incredibly challenging under these circumstances, which will raise advertising costs. So you will have to be more strategic about reaching Ashley and your other potential customers.

Time to Face the Music

The digital landscape is changing, whether we like it or not. Fighting against these changes doesn’t seem to be an option at the moment. The best way to approach this is to embrace this cookieless future we’re stepping into as soon as possible.

The rules of the game are changing and we’re entering a new age for digital marketing. So don’t panic and start getting ready for the transition to GA4 if you haven’t already. And in the meantime, keep your eyes on the horizon for The Smart Advertiser’s Guide to GA4 😉

References

1. “Cookieless” by Adobe Experience Cloud Blog
2. “Building a more private web: A path towards making third party cookies obsolete” by Chromium Blog
3. “Why the new iOS update is such a big deal” by Vox
4. “Corporate data responsibility: Bridging the consumer trust gap” by KPMG
5. “Google’s Ad Exchange faces privacy probe by Irish regulator” by BBC News
6. “ICCL sues DPC over failure to act on massive Google data breach” by Irish Council for Civil Liberties
7. “Global Desktop Browser Market Share for 2022” by Kinsta

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