The Third-Party Cookie Is Dead. What Is The Future Of Online Advertising?
After the announcement posted by Google, in January 2020, arguing about gradually blocking the third-party cookie from Chrome browser in two years, Google posted another announcement in March 2021, which clarified that “once third-party cookies are phased out, we will not build alternate identifiers to track individuals as they browse across the web, nor will we use them in our products.” The time of the third-party cookie is over and online marketing businesses are losing their opportunities and space to tracking users at an individual level because of the increasing demand for user privacy. Users require more transparent and controlled data usage in a privacy-secured web ecosystem. Therefore, there is an inevitable trend for the replacement of the third-party tracking and innovation of privacy-focused tracking.
Alternatives of the third-party tracking: anonymous and aggregated tech
Before introducing the alternative tools, we need to understand the definition of the third-party cookie. According to Pamela Bump’s article, “The Death of the Third-Party Cookie: What Marketers Need to Know About Google’s Looming Privacy Pivots”, he argues that the third-party cookies are “tracking codes that are placed on a web visitor’s computer after being generated by another website other than your own”. It means that the third-party cookie can help the advertiser track web visitors’ overall online behaviors and interests when they visit multiple websites. With the individual-level data, advertisers can set completed visitor profiles to differentiate target audiences and implement hyper-targeted strategies.
To Solve the privacy issues of individual tracking, Google revealed the Privacy Sandbox as a replacement of the third-party cookies. Justin Schuh, the director of Chrome Engineering, explained it in the Google blog post: “Some ideas include new approaches to ensure that ads continue to be relevant for users, but user data shared with websites and advertisers would be minimized by anonymously aggregating user information, and keeping much more user information on-device only.” Compared to the individual tracking tech of the third-party cookie, Privacy Sandbox is a new idea of data tracking by segmenting and aggregating anonymous user data in groups, from a perspective of privacy security.
The Federated Learning of Cohorts (FLoC) of Google is a specific implement of the Privacy Sandbox in the test phase. It is an AI system that targets web users with similar interests. According to Matt Burgess’s article, “Chrome’s Cookie Update Is Bad for Advertisers but Good for Google”, this article introduced this system: “the machine learning system takes your web history, among other things, and puts you into a certain group based on your interests.” The FLoC focuses on tracking people at a group level rather than individual level. It is the answer provided by google that the future of online advertising business is the development of anonymous group tracking technology.
Potential issues of blocking the third-party cookie
In fact, Google is the company who benefits the most from the procedure of blocking the third-party cookie. With the banning of third-party cookies, online advertising businesses who rely on the third-party data and individual data for audience targeting would be harmed the most. However, Google would not be harmed because it forced all online ad business to transfer from the third-party cookie to the first-party cookie, which makes website owners can track the visiting record of web visitors in their own website. As the biggest browser in this world, Google Chrome made up more than half of the web browser market. It dominates the first data collection with its powerful search engine and services. After blocking the third-party cookie, the data control will be centralized by tech giants like Google and more advertising investment will be spent on Google.
On the other hand, there is a potential issue with Google’s FLoC system. Due to the system based on group gathering data with similar characteristics, individuals in the system might be easily inferred. Moreover, in Matt Burgess’s article, he mentioned that “Leparmentier and others commenting publicly on Google’s FLoC proposals have questioned whether the system will group people by sensitive attributes such as race, sexual orientation, or disability.” When tracking at group level, the automatic segmentation will cause potential problems when people are segmented into categorie sensitive groups.
How to adapt the change in data tracking for online advertising business?
- Use Privacy Sandbox and FLoC to track data in an anonymous and integrated way.
- Transfer from usage of third-party data to first-party data.
- Innovate and build strategies without cookies and massive data.
