Google’s Third-Party Cookie Deprecation Is No More: What Does It Mean for Local Digital Advertising?

Collectively, there has been a sigh of relief amongst advertisers and media companies selling third-party digital advertising. If you’ll recall, a report from 2021 said broadcasters could lose $2.1 billion annually without cookies.

That financial loss did not come to fruition, but the targeting of digital ads is evolving. So, what does Google’s latest move mean for all of us?

How Did Third-Party Cookies Become So Important for Digital Advertising?

If you look back at the history of third-party cookies, you’ll learn that their development had nothing to do with advertising. Lou Montulli created these scripts to provide convenience to online shoppers. If you were on an e-commerce site and placed items in your cart, cookies ensured they stayed there if you left and returned later.

The invention created a better user experience. Then, the advertising industry became aware of how cookies worked and began to use them for monetization. Third-party cookies allow domains unaffiliated with the website to collect data and track user interactions. This data then enables the targeting of programmatic advertising. Ideally, cookie information translates to people seeing more relevant ads across the websites and apps they visit.

It’s no coincidence, then. that when you search or research a topic, you start seeing related ads across properties.

Many types of digital ads can be dependent on cookies for targeting. They aren’t perfect in how they work. For one, they count every device you use differently, which means there’s no connection across your entire internet history.

The biggest worry – and the chief motivation for cookies’ removal – have been privacy concerns. Other browsers like Safari and Firefox have already blocked these to protect privacy. Google, as the largest search engine, was expecting to join others but failed to find a feasible alternative that would ensure little disruption to the advertising market.

Google Privacy Sandbox is Google’s Alternative and Will Remain Active

The Google Privacy Sandbox uses APIs (application programming interfaces) to allow users to protect information while browsing in Chrome. Google promoted it to migrate to contextual or interest-based targeting.

Google has stated that the Privacy Sandbox will remain. Instead of a complete shift from cookies to the Privacy Sandbox, Chrome users will have a choice of whether they want to share their browsing data. It’s an opt-in model, which is what Apple did with app tracking several years ago.

Google noted its ongoing testing with the Privacy Sandbox, but its ability to recover ad performance without cookies has not been a complete success. They’ve struggled with publisher adoptions, small sample sizes for testing and other technical issues.

However, plans to move to cookieless advertising have already been in the works for years, with the industry preparing for it.

A World of Cookies and Cookieless Advertising

The ad tactics most associated with third-party cookies are those served on third-party sites. How they target depends greatly on the DSP (demand-side platform) used for programmatic bidding. Some have more options than others to match an audience based on demographics, geography, interests or past online behaviors. Retargeting is especially cookie-dependent, but a display ad can use cookies for targeting or contextual options.

So, there’ll be no major shakeup in traditional cookie advertising, but the path toward cookieless (and possibly) better targeting has several possibilities.

Contextual Targeting

Contextual targeting has been a clear favorite in the cookieless realm. An industry report found that 78% of advertisers plan to increase their use of it. In this approach, the focus is on context. Instead of using third-party data sets, targeting refers to the content of the websites and the audiences they bring.

For example, those advertising anything related to home improvement would look for websites where these audiences spend time, like HGTV or Houzz. The ad fits with the “context” and is viewed by those who find it relevant.

Ad Tactics That Don’t Use Cookies

Many digital ad options have no cookie association, including CTV/OTT, social media ads, email marketing and SEM (search engine marketing). Of these, CTV and OTT are the fastest-growing local digital ad tactics, according to BIA Advisory forecasts. The ability to reach a specific audience makes streaming advertising attractive. It also doesn’t hurt that streaming is continuously luring viewers away from traditional TV.

First-Party Data Targeting and Alternative Identifiers

The urgency to move away from third-party cookies also emphasized first-party data collection. Companies can collect customer data in many ways based on interactions and feedback. They can also use cookies to track interactions and behaviors. It allows for hyper-personalization and segmentation of a company’s direct marketing efforts.

Larger-scale first-party data targeting is also underway with privacy-compliant identifiers. They use a hashing algorithm that enables publishers to convert their first-party data into an anonymous and secure identifier.

Our industry was already forging a path to adopt cookieless advertising. The current news doesn’t erase this progress; it doesn’t change too much except the time frame. We don’t have to rush to be ready, and that’s a good thing.

Digital advertising accounts for billions of dollars of revenue for local media companies. Preserving and growing these dollars can move to being less dependent on cookies, but they’re still there to keep programmatic ads rolling without colossal disruption.

As an industry, we should all keep moving toward optimizing targeting to ensure ad campaigns reach the right people and have a positive return for advertisers.

This article was written by Beth Osborne, who leads content strategy and execution at Marketron. She’s been a professional writer for over 20 years, helping tech and software companies tell inspiring stories.

Posted at MediaVillage through the Thought Leadership self-publishing platform.

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The opinions expressed here are the author's views and do not necessarily represent the views of MediaVillage.org/MyersBizNet.