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The End of Cookies: Google Begins its Data Disruption

Third party cookie depreciation will be one most impactful changes we've seen in the digital e-commerce and advertising space.

The End of Cookies: Google Begins its Data Disruption

If you’ve been in the data world for the past four years, you’ve been hearing “third party cookies are going away” incessantly. Well, the time has finally come. After many false starts by Google, we’re finally here. The depreciation of third party cookies has started.

On January 4, Google began rolling out its “Tracking Protection” test to 1% of Google Chrome users across the globe. This change will purge the collection of third party cookies from approximately 30 million Chrome users. Put into perspective, 30 million is close to the population of Texas.

This is just the first step of Google’s Privacy Sandbox Initiative. In fact, Google aims to phase out third party cookie trackers for all Chrome users during the second half of this year. That would be eliminating third party cookie tracking for a reported 3.229 billion Chrome users, as of 2021. The Privacy Sandbox Initiative aims to replace third party cookies using various privacy securing tools.

For those randomly chosen to have their third party cookie tracking disabled, they will be notified when they open Google Chrome. If the participating users cannot access a website that requires third-party cookies to be enabled, they can temporarily allow them for that site.  

A Cookieless Future for Advertisers

So, what does this mean for advertisers? For those who aren’t prepared, the eventual phase-out of third party cookies for all Chrome users could be dire. It will limit the ability for advertisers, online publishers, etc. to collect information about the affected test users. It will also thwart the ability to target test users with ads, or to track users’ website journeys. Simply put, this could be the start of the most devastating blow to the e-commerce and digital marketing industry that we’ve seen so far.  

Google’s Vice President of Privacy Sandbox, Anthony Chavez, commented positively on this major change. “With the Privacy Sandbox, we’re taking a responsible approach to phasing out third-party cookies in Chrome,” he said in a December blog post.

Although this slow rollout is a small step toward the eventual future of a cookieless reality, the result of this eventual change in the second half of next year could be dire for all industries that aren’t prepared.  

For instance, the latest “State of the Industry Report” by the National Association of Broadcasters estimates that a cookieless future could result in them losing $2.1 billion in one year. This would be 6.3% of their ad revenue. That would equate to the average TV station losing $1.1 million annually, with the average multi-station radio market cluster losing $735,163 annually.  

Further, the Interactive Advertising Bureau (IAB) reported that without third party cookies, publishers could potentially have to replace up to $10 billion in advertising revenue.

This change is set to be monumental for ad tech companies, advertisers, web publishers, and countless others who use third party cookies. And it couldn’t have come at a worse time, according to the IAB Tech Lab CEO Anthony Katsur. In an interview with The Wall Street Journal, Katsur stated, “The timing remains poor. Launching it during the industry’s greatest revenue-generating part of the year is just a terrible decision.”  

Preparing for the End of Cookies

Although this is undoubtedly the most disruptive change coming to digital advertising as we know it, there is still time. Google advises for users to take time during this testing period to prepare for third party cookie restrictions, which includes “moving to more private alternatives.” Some of these suggestions include understanding the phase out of the third party cookie, auditing your website’s third party cookie use, and also testing for breakage.  

Another solution could be first party data alternatives. Companies like DrivenIQ have been preparing for a cookieless future by building technology that is aimed at ending the need to rely on third party cookies. DrivenIQ’s CEO Albert Thompson shared his insight and optimism into Google’s latest move.

"The sunset of third party cookies by Google marks a pivotal moment for the ad industry, demanding significant innovation," Thompson said. “We’ve been working and building toward this moment for years. Now, the industry focus shifts towards first party data and audience insights, aligning with the growing need for continued collaboration on privacy. This transition isn’t just a challenge; it's an opportunity.”

Thompson’s statement reflects the industry's need to adapt and the potential of first party data in a privacy-conscious world. It's evident that there is a substantial amount of work ahead in the upcoming months, given the official phase-out of third party cookies.

Despite what businesses are doing (or aren’t doing) to prepare, it’s clear the tide is finally shifting. The end of the cookie has officially started, and it’s really going to shake up the online commerce world as we know it.