The online ad cookie is crumbling as Google Chrome secures privacy

Businesses rethink digital strategy as the world's most popular browser phases out a key way of tracking users

The year 2024 will bring fundamental changes to digital advertising when Google’s Chrome browser starts phasing out third-party cookies. In the first quarter of 2024, the cookies will be turned off for 1 per cent of Chrome users, or reportedly some 30 million people. Google will ramp up restrictions to 100 per cent of users by the third quarter of 2024.

Cookies are small files that websites send to your browser to track your browsing activity, like history, searches, and browsed pages, according to Norton. They have been the foundation of global digital advertising for more than three decades. Retailer websites might use cookies to track what items you bought and news sites might use them to remember what stories you've clicked on in the past.

Third-party cookies help in delivering targeted advertisements to users. A first-party cookie remains on the websites users visited. Companies use third-party cookies to send targeted ads to a user across the internet, whether the user is on their website or any other.

Phasing out third-party cookies is not new: Smaller browsers such as Safari and Firefox did it a few years ago. It is significant now, as Chrome commands 60 per cent of the browser market globally. In India, it has 90 per cent of the market.

Why the shift? The reason is user privacy as mandated by the Competition and Markets Authority in the United Kingdom.

The phaseout’s impact on digital marketing will be unparalleled, according to industry players. Advertisers may experience changes in the effectiveness of targeted advertising campaigns. The precision of targeting may weaken, impacting the return on investment (RoI) for advertising spend.

Removing third-party cookies is likely to impact the digital advertising landscape, including changes in CPMs (cost per mille or cost per thousand impressions).

Advertisers and publishers must adapt to changes and find new ways to reach out to their customers, said Vinay Tamboli, senior vice-president – digital analytics & consulting business, LS Digital.

“Google, through its advertising technologies and platforms (like Google AdSense, Google Ads, and DV360), plays a central role in the AdTech ecosystem. Many advertisers and publishers rely on Google's services for ad serving, tracking, and measurement,” he said.

Not just digital marketing and advertising, online businesses will change too. “Businesses that heavily rely on targeted advertising, especially those using programmatic advertising and retargeting strategies, may face challenges. The precision of audience targeting may decrease,” said Tamboli.

The removal of third-party cookies affects traditional measurement metrics: Click-through rates and conversions may become challenging to track accurately.

Google has said it will ensure that advertisers, marketers and businesses are not left in the lurch. It has created a Privacy Sandbox to create web standards in advertising without compromising privacy.

Todd Parsons, chief product officer at Criteo who has been working with Google on the company’s Privacy Sandbox, said an alternative to third-party cookies was being worked upon. “This is monumental (the phaseout). Third-party cookies were the single most important trading capability in the adtech ecosystem. This is going to touch everyone in the ecosystem. Certainly, the intent and purpose for the consumers in terms of privacy protection is noble. But we don’t want to do anything to derive or take utility away from consumer experience,” said Parsons over a video call from France.

“The macro thing that we are watching out is whether over the next three months advertisement metrics, like return on ad spends, will perform relative to the publisher CPMs that they are achieving on their advertisement. We are also watching out for outliers where Privacy Sandbox will have to evolve their APIs in order for some of the simplest use cases in marketing to be supported, and there is a long list of it,” he said, referring to application programming interface, a way for two or more computer programmes or components to communicate with each other.

Criteo, which works with more than 20,000 clients in retail and other businesses, is educating them about other ways of making online advertisements effective.

Victor Wong, senior director of product management at Google Privacy Sandbox, said in a recent blog post: “A growing number of organisations are leaning into this change. They’re showing it’s possible to evolve their existing solutions, and build new ones.”

Businesses and marketers need to adopt different strategies, such as collecting and leveraging customer data they obtain on their own.

Tamboli said that targeted advertisements based on the content of a webpage rather than individual user data might gain prominence.

Infomo Global, a Singapore-based adtech platform, is taking the opportunity of third-party cookie removal to challenge Google’s monopoly in online advertising.  Ananda Rao, managing director and group chief executive officer at Infomo, said: “We are promoting telco-based ID on a national basis as the best opportunity for the advertising industry. We run our own ecosystem, which is anchored within the telecom carrier ecosystem. Within this ecosystem we have our own publishers and advertisers.”

In Brazil, Infomo is working with a Big Four consulting firm to bring the three competing telecom companies together to syndicate their data. “They can then compete with Google and FB (Facebook),” said Rao.

Others are working on alternatives too. “We are actively supporting clients by offering them a secure haven through in-app solutions. We believe success in this privacy-centric paradigm shift demands the right strategies, investment in first-party data, and respect for user consent,” said Vasuta Agarwal, chief business officer at Inmobi, referring to a key performance indicator.

Tamboli adds that AI and machine learning will play a significant role. "AI-powered algorithms will help in understanding consumer behaviour patterns and preferences without breaching user privacy," he added.
 

Indian startups reliant on targeted advertising may face challenges in adapting to a new advertising landscape and face difficulty in getting additional marketing funds.

“However, at the same time it opens up a big opportunity to beat established brands. Startups are very agile to understand, respond and adapt to the new way of digital marketing,” said Tamboli.