Death by Cookie

SEMA News—December 2021

INTERNET

Death by Cookie

Businesses Scramble for a New Way to Advertise on the Web in 2022

By Joe Dysart

Companies that rely on ad tech companies to post ads for their goods and services across the web will need a new plan in 2022, when support for that technology mostly disappears. Essentially, Google is warning businesses that its widely popular Chrome browser will no longer support the technology needed to make those ad placements—known as third-party cookies—beginning next year.

As support for third-party cookies disappears, many businesses need a new plan for web advertising.

Triggering Google’s move is widespread consumer backlash that has been building against third-party cookies for years. The technology enables ad tech companies to track consumers’ every movement as they surf the web.

“Seventy-two percent of people feel that almost all of what they do online is being tracked by advertisers, technology firms or other companies,” said David Temkin, director of product management for ads privacy and trust at Google. “Eighty-one percent say that the potential risks they face because of data collection outweigh the benefits, according to a study by Pew Research Center. If digital advertising doesn’t evolve to address the growing concerns people have about their privacy and how their personal identity is being used, we risk the future of the free and open web.”

Not surprisingly, Google’s decision to forsake third-party cookies in 2022 is sending shockwaves across the web. Sixty-four percent of all web users now use Google Chrome to cruise the web, according to StatCounter (https://gs.statcounter.com/browser-market-share), and two other major browsers—Firefox and Apple’s Safari—have already dropped support for third-party cookies.

Since the mid-’90s, ad tech companies have been using third-party cookies to continually track your movements on the web, taking note of the websites you visit, what ads you click on and similar interactions to develop an extremely informed perspective on what you’re most likely to buy. Based on that knowledge, those same ad tech companies serve you customized ads on the websites you visit that feature their ad tech, so if you visit a number of websites about bikinis and click on a few ads advertising bikinis, for example, you’ll most likely start noticing more bikini ads popping-up on many of the websites you subsequently visit.

Ad tech companies are able to place third-party cookies in your Google Chrome browser by cutting deals with websites that already feature their ads. A website featuring bikini ads, for example, has most likely also given the ad tech company running those ads permission to place a third-party cookie in your Chrome browser. That third-party cookie—owned by the ad company—begins tracking your movements on the web the moment it is embedded in your browser.

That same ad tech company has the same agreement with many of the dozens (or perhaps even hundreds) of websites you also visit in any given day, and with each website you visit featuring advertising from that same ad tech company, another third-party tracking cookie is placed in your Google Chrome browser, tracking you all the way.

Each new cookie beams back data to the ad tech company about your web movements and preferences, and each enables the ad tech company to develop an ever-deepening interest profile on you, which enables it to target ads to you on other websites featuring its technology based on your preferences.

For more than a quarter of a century, tracking consumers using third-party cookies has been an extremely precise way to target ads to consumers—and also to anger more than a few consumers who felt that such tracking violated their privacy and generally made them feel creeped-out. That consumer resentment has reached a crescendo.

“Invisible and gratuitous data collection leaves users unable to exercise their rights and protect their privacy,” said Gus Hosein, executive director at Privacy International (https://privacyinternational.org). “We need substantive, enforceable regulation to stop this exploitation of our data.”

Google, which also runs one of the web’s most powerful and widely used ad tech platforms, has apparently decided that it’s not worth further inflaming consumer anger over third-party cookies, even if that means phasing out one of ad technology’s most effective ad personalization technologies.

The upshot? Beginning in 2022, businesses that have relied on ad tech companies powered by third-party cookies will need to use alternate systems to get their brand in front of preferred audiences using Google Chrome.

“It’s time to kick third-party data for good and focus on developing relationships with your customers,” said Owen Ray, senior content marketing manager for Invoca (www.invoca.com), a digital marketing services provider.

Here are a few solutions recommended by web advertising experts:

Email Marketing Lists: While web advertising fads come and go, email marketing keeps on chugging along, offering marketers some of the best return on investment for marketers’ efforts year after year. Marketers build email lists by soliciting email addresses in exchange for providing riveting email newsletters, informative white papers, early notice on new goods and services, discounts and coupons and the like. Expect increasing numbers of businesses to double down on this tried-and-true marketing tool in the coming months.

Old-School Advertising: Back in the olden days, marketers would seek content that matched the goods and services they were selling and place ads there. A bikini retailer might embed its ads in an article about summer vacations, a local beach, or an upcoming Olympic diving competition. These days, they’re calling this old-school technique “contextual targeting,” but it’s the same idea: matching ads to content.

Buying Someone Else’s Audience: While you may not have a great deal of data on people who are interested in bikinis, another website—such as a swimsuit publication—may have plenty. Once third-party cookies are phased out, expect more businesses to buy and use information about such potential customers from such websites.

Device Fingerprinting: Similar to third-party cookies, device fingerprinting is an extremely effective tracking technology—but also extremely controversial. Device fingerprinting enables a website to reach down into your device and retrieve all the information about that device that makes it unique to you, such as the language it runs on, the web browser it uses, the times of day it’s usually used, its location, its IP address, and similar personalized data. Once an ad tech company has your device’s fingerprint, it can track you as you move across the web.

Google FLoC: While Google is phasing out support for third-party cookies, it still has every intention of continuing to track your every movement using its Chrome browser instead. To some, this distinction may sound like privacy hair-splitting. But either way, look for that tracking using the Chrome browser to be leveraged by Google sometime in 2022.

Specifically, Google said that it will use the Chrome browser to track what you do on the web and then “anonymize” the data by placing you in an anonymous group of people who share the same interest—what it calls “cohorts.” So again, if you visit a lot of bikini websites, for example, you’ll be placed in a “cohort” or group of people who visit the same and will be sent bikini ads. Again, this “anonymization” may sound like privacy hairsplitting to many, but it’s the brave new world of digital advertising come 2022, for better or worse.

Google began testing this new system—which it calls the Federated Learning of Cohorts (FLoC)—in April, with plans to offer use of the tech to select companies sometime in 2022. The only problem (at least from the perspective of outsiders) is that selling ads in Chrome based on FLoC enables Google to become the sole source of information about the billions of people who use its Chrome browser to surf the web.

Essentially, if you want to advertise to the people who use the Google Chrome browser, you’re most likely going to need to rely on data gleaned by FLoC, which—surprise, surprise—is also owned by Google. That cozy connection has led to cries of “No fair” from competing ad tech service providers, and it has also triggered an antitrust lawsuit brought against Google by 14 states and Puerto Rico as well as preliminary scrutiny from the U.S. Department of Justice and commerce regulators in the United Kingdom.

“Today’s filing underscores the broad consensus that Google’s practices require review and swift action under antitrust and consumer protection laws,” said Ken Paxton, Texas State Attorney General.

Joe Dysart is an internet speaker and business consultant based in Manhattan.