Google has begun the process of blocking third-party cookies in its Chrome browser, initiating a sea change in the digital advertising industry. On January 4th, Google enabled its Privacy Sandbox initiative for 1% of Chrome users, preventing third-parties from using cookies to track browsing behavior and target ads.
What are Third-Party Cookies and Why is Google Blocking Them?
Cookies are small text files that websites store on users’ browsers to remember information, like login details or site preferences. Third-party cookies are created by domains outside the one the user is visiting in order to track browsing behavior across multiple sites, often to serve targeted ads.
Google argues that third-party cookies are too invasive of users’ privacy and wants to “build a more private web.” However, the advertising industry relies heavily on third-party cookies to target and measure ads, so blocking them threatens the core ad model powering much of the internet.
The Road to Shutting Off Third-Party Cookies
Google first announced it would phase out third-party cookies in Chrome back in 2020. After pushback from the advertising industry, Google delayed its timetable several times.
Now in 2024, Google is slowly rolling out restrictions through its Privacy Sandbox initiative. As of January 4th, Chrome has disabled all third-party cookies for 1% of global users. Google plans to increase this to 50% by June and make third-party cookies obsolete for all users by 2025.
How Advertisers and Publishers Are Impacted
Advertisers have relied on third-party cookies to track users across sites in order to target ads and measure their effectiveness. Publishers and ad tech companies have used cookie data to optimize ad inventory and prices. Losing third-party cookies means losing their most valuable user data.
While Chrome only makes up 65% of total browser usage, third-party cookie blocking is expected to significantly degrade ad targeting and revenues industry-wide. Smaller online publishers may take the biggest hit.
What Happens Next for Digital Advertising?
Privacy regulations around data collection tightened significantly in 2023 in the US, EU and UK. Google is trying to steer the industry toward its proposed Privacy Sandbox tools for targeting ads without using individual profiles.
However, many in the advertising world remain wary of replacing their own data with tools controlled by Google. There are also doubts around whether Google’s alternative ad targeting models can match the performance of third-party cookies.
As third-party cookies fade out through 2024, advertisers will be pressured to gather more first-party data directly from consumers and rely more on context rather than individual tracking to target ads. New data clean rooms for sharing aggregated analytics, on-site personalization, and changes to mobile app advertising are all means of adapting.
Smaller players will likely struggle the most while advertising giants like Google and Facebook that already have direct relationships with users will be best positioned to thrive.
Timeline of Key Events
|Google first announces plans to block third-party cookies in Chrome within 2 years
|Google delays cookie phase out timeline to late 2023 after pushback from advertisers
|UK and EU implement strict new digital privacy laws
|Privacy Sandbox trials begin, but advertisers remain skeptical
|Google reveals it will take until 2025 to fully remove third-party cookies
|January 4, 2024
|Third-party cookie blocking enabled for 1% of Chrome users, initiating phase out
The road ahead for digital advertising promises to be bumpy as third-party cookies crumble. With consumer privacy taking center stage, tracking-based advertising must evolve – or die.
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