As you may have heard, Google has recently announced plans to eliminate the use of third-party cookies on Google Chrome. This has significant implications for the way advertisers are able to target audiences and evaluate ad performance on the Google Ads Network. Here are the highlights, with more detailed information below:

  • Google plans to remove third-party cookie tracking capabilities from their Chrome browser in 2022.
  • Advertisers will no longer be able to target ads to specific individual users, but rather to cohorts consisting of thousands of users with similar interests.
  • The more niche the brand or industry, the less precise ad targeting is likely to become.
  • Google’s display and retargeting ads will be most impacted, while Google search will remain essentially the same.
  • Google is continuing to test and develop privacy-oriented advertising alternatives throughout 2021, and advertisers will learn more as Google continues to release information.

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What are third-party cookies, and how do they help advertisers?

Third-party cookies enable AdTech entities like Google to track a user’s behavior on other sites across the internet. When advertisers want to target “users who visited nike.com” or “users actively researching cookware online,” it is a third-party cookie that relays the information to Google and enables advertisers to target users based on browsing activity.

Third-party cookies collect very granular levels of data. They are specific to individuals, and as such, allow advertisers to provide highly relevant and personalized ads.

Why is Google doing away with them?

In a word – privacy. The ultimate goal is to protect consumer data. 

While privacy concerns around user data online has always been a hot button issue, it’s been especially relevant in the last few years. Legislation such as the EU’s General Data Protection Regulation (GDPR) restricts data collection and cookie tracking for European consumers and will likely be a model for other countries like the US to adapt on a large scale.

With over 60% market share, Google Chrome is by far the largest browser to eliminate third-party cookie tracking, but it’s certainly not the first. Safari started blocking third-party cookies by default in early 2020, while Firefox began doing so even earlier in 2019. Chrome’s move is not trailblazing by any means, but it is certainly the most impactful given its popularity and the Google Ad network that it fuels.

What are the proposed alternatives?

Google has been developing their Privacy Sandbox, which is a new set of standards that puts user privacy at the forefront. Within the Privacy Sandbox, there are a number of proposals that play a role in replacing third-party cookies. One of the most important proposals for advertisers within the Privacy Sandbox is the Federated Learning of Cohorts (FLoC). 

Cohort-based audience targeting with FLoC: 

FLoC is Google’s proposed 2022 replacement for current targeted advertising tactics. The FLoC model creates clusters of thousands of users that are grouped by similar interests. The notion is to replace individualized ad targeting practices with relevant FLoCs, or interest cohorts. This essentially allows individuals to hide in the crowd and avoid being singled out by advertisers. Furthermore, all data on an individual’s browsing history would be stored locally, meaning it doesn’t leave the device browser to be shared with advertisers. Public testing for FLoC-based advertising will begin in Q2 2021.

Retargeting ads with Fledge: 

The FLoC framework does not cover retargeting ads. Instead, Google is developing additional replacements for retargeting via first-party cookies, the most notable being Fledge. At this stage, the Fledge proposals are still in the works, but the plan is to allow advertisers to continue executing retargeting campaigns – just in a more privacy-compliant manner. Testing for Fledge will occur later this year in 2021.

What impact do these changes have on my business?

All changes will primarily impact those running display and retargeting banner ads on the Google Ads network. They will begin to take effect starting in 2022. 

Audience targeting: 

FLoC still allows advertisers to reach audiences across the web with similar interests, but with less precision than before. Brands looking to serve ads to niche audiences will likely have the largest disadvantage, as targeting capabilities won’t be able to get as granular as they once were. For instance, demographic info will no longer be usable targeting criteria to protect information at the individual level.

Retargeting ads: 

At this time, the exact implications to Google retargeting are unclear. Retargeting relies on first-party cookies, which will still be used. Google will just be implementing additional privacy layers on top of existing practices.

Reporting: 

Benchmarking and KPIs are likely to change with the shift in audience targeting. Google claims that FLoC was 95% as effective as cookie-based targeting when generating conversions in testing, but we’ll see if this remains upon implementation. 

Google also states that a “minimum-number of conversions” will be needed to send aggregate reports. In other words, small numbers of conversions may not be eligible to appear in reporting to better enforce the “hide in the crowd” privacy mentality for its users. 

In 2022, tracking users across multiple devices will be increasingly difficult with browsing data being stored locally at the device level. On the other hand, first-party cookies are still very much alive, so all information gathered on your own domain (think Google Analytics data) will be just as accessible as it is now. 

Overall, Google’s move to eliminate third-party cookie tracking from Chrome in 2022 is a strong signal for the industry’s shift to enhanced user privacy online. It does not mean consumers will stop receiving targeted ads–it just changes the way advertisers reach them. Digital advertisers and brands will continue to adapt to the new guidelines and further develop privacy-forward tactics that leverage the power of first-party cookie data.

We’ll continue to monitor Google’s testing and updates occurring throughout the year and will provide additional resources to keep you informed. In the world of digital marketing, the only constant is change. We’re not only going to keep a pulse on these upcoming changes, we’re going to find creative solutions to tackle these obstacles as they arise. 

-The Mabbly Team

Sources and articles from Google:

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