2021 dramatically changed how third-party cookies are able to track users and these changes are here to stay. If you haven’t paid attention to the news, it’s time to listen up - the loss of third-party cookies affects advertising strategy on all digital platforms.
What Are “Third-Party Cookies”?
On the other hand, first-party cookies live on a single website and use a click ID, user ID, or IP address to identify the same user when they return to the website. First-party cookies can’t follow the user around, so it is more difficult for the ad platforms to use them for targeting, but they can track conversions on the website for 90 days until the click ID is purged.
What’s Changing with Third-Party Cookies?
This default has been slowly changing over the last few years. Some browsers, like Firefox and Safari, have now completely blocked third-party cookies from being attached to all users automatically, and Microsoft Edge has made blocking cookies their default setting. Google Chrome is going to start blocking third-party cookies in 2023. Chrome has over 50% of the world’s internet browser traffic, which will be a significant blow to the third-party cookie. Apple’s iOS update in April 2021 made it so that iPhone users have to manually opt in to receive cookies from any apps used on that phone.
How are the Digital Ad Platforms Responding?
Most ad platforms, such as Google Ads (which includes YouTube ads), Microsoft Bing Ads, and LinkedIn Ads, are switching to first-party cookies and click ID/user ID tracking. Since first-party cookies are located and stay on a company’s website and are not placed on a browser, they cannot be blocked by browser settings or by ad blockers.
First-party cookies are not as valuable for ad platforms as third-party cookies. For one, first-party cookies have to rely on click IDs, user IDs, or IP addresses to identify users returning to a site. IP addresses change whenever a user is on a new Wi-Fi connection, making it difficult to identify returning users. Click IDs and User IDs can be manually removed.
Also, first-party cookies do not follow users around and record everything they do on the internet, making it more difficult for the ad platforms to know how to target them with personalized ads. However, if an ad platform gets its first-party cookies on most websites–like Google Ads can do since most websites use Google Analytics–it can still use the IDs to build targetable interest profiles for users.
The ad platforms can also utilize the user behavior that happens on their own sites. For instance, Google can still identify users’ search history from their own first-party cookies and Facebook can still use someone’s Facebook and Instagram posts, likes, groups, and other actions to add them to different interest groups.
The exception to the use of first-party cookies is Facebook Ads. They have not started to use a first-party cookie. They are still using the third-party Facebook Pixel to track users that are not yet blocking cookies. Facebook, instead, is asking each company that advertises with them to connect Facebook with the company’s server. The server would then pass along the hashed name, email address, and phone numbers of anyone who fills out a form or completes a purchase on the website to Facebook to match with their user information from profiles so that Facebook can understand what a user does after an ad click. This is called the Facebook Conversions API.
Many companies are concerned about how this impacts data sharing laws in different areas of the world and data sharing disclosures on their website. Facebook is not forcing advertisers to do this. However, if an advertiser does not connect the Conversions API, they cannot see what many users are doing on their website after clicking a Facebook ad and cannot track conversions to that ad. This makes it much more difficult for advertisers to prove that Facebook ads are worthwhile in their marketing strategy.
In addition, Facebook has started “modeling” conversions for users with third-party cookies blocked. It is basically using their algorithm to estimate how many people who clicked on an ad might have converted on the website since it can’t track how many people actually converted. They are not labeling these conversions as “modeled,” they are just adding those conversions in with the actually tracked conversions, muddling the metrics. This makes it more difficult for advertisers to know the actual impact of their ads.
What Does This Mean For Digital Marketing Strategy?
For most ad platforms, the biggest change will be in audience targeting. Specific audience groups may be smaller or less defined than they were in the past. They also may not perform as well since the ad platforms will not know the users as well as they did when they could follow them around on the internet.
Each platform will still have its own profile and behavior information which will still be very useful in targeting. For instance, LinkedIn will continue to have its users' education and employment history information, Google and Microsoft will still have search history, Amazon will still have purchase history, and Facebook will still have profile, groups, and like/comment history of each user. This information will be siloed in each platform, making it more important for advertisers to diversify their marketing strategy to multiple platforms instead of relying on one platform to have all user behavior.
First-party business data will also become more important in targeting users with ads. Since third-party cookies cannot follow users around the internet, remarketing audiences will no longer exist. Advertisers have already noticed that their remarketing audiences have shrunk by about 50% since the April 2021 iOS update.
The Google Chrome cookie update in 2023 is expected to decimate remarketing further. Businesses will need to provide their own email lists of prospects or customers that they want to target with ads to replace remarketing. Advertisers should start thinking about how they can collect email addresses from prospects, with their consent, so that they can continue to target them with ads moving forward. One way to do this is to offer high-quality content, like how-to guides, on your site and then to “gate” that content, or require an email address to download.
Content targeting will also rise in importance. Knowing what content your audience is using online can help you target the placements where your ads show. If advertisers cannot follow individual users around with ads, they will need to put their ads in the places where their audience is spending time.
Finally, when it comes to targeting, the platforms encourage advertisers to rely on the algorithms on each platform to know both the advertiser’s goals and the users’ behavior and match them without much manual targeting. Facebook recommends, once companies collect some base conversion data in their account, that advertisers limit targeting to basic demographics like age, gender, and location and leave the rest up to the algorithm to find the best customers. Google recommends that advertisers use broad match keywords and “Smart” campaigns in conjunction with algorithm bidding to get the best performance. This strategy can work, depending on the advertising history in the account and if the company has a broad audience, but still requires an expert to know how to structure campaigns to work with the algorithms, use an effective negative keyword strategy, and make other adjustments to the account if the algorithm is spending too much money in areas that are not performing well for the company’s goals.
When it comes to Facebook Ads, each company and advertiser needs to determine if they want to communicate their server information with Facebook through the Conversions API based on their own data sharing policies and regulations. Advertisers on all platforms, but particularly Facebook, will need to realize that conversion tracking is not as robust as it was in the past. They will need to use data in Google Analytics and other analytics platforms and data from their own server and CRM to determine the true incremental impact of each ad platform and campaign.
The best way that your company can adapt to ad tracking and targeting changes with the loss of third-party cookies is to partner with an expert digital marketing agency that is up-to-date with the latest changes and can adapt your campaign strategy immediately to get the best results and insights possible. Is your marketing agency adapting or just doing the same old thing? Reach out to Perfect Search Media for an audit of your ad campaigns today!