The digital advertising industry has been abuzz lately, discussing the future removal of third-party cookies and how online publishers will be affected.
As a publisher, you’re probably familiar with the term “cookie” and know that cookies play a role in digital advertising. But while we’re quick to toss around the term, how many of us could give a clear description of cookies — what they are and how they are used in the digital ad industry? As they say, knowledge is power, so let’s become cookie experts together!
What are cookies?
Any time you visit a website, the site can ask your browser to store a little bit of information to use later.
A cookie is a small piece of data stored on your computer. The cookie is not a program and can’t control anything on your computer.
Information in a cookie is often encrypted, but some non-sensitive data may be easily read, such as a timestamp that shows when you accessed a certain website. It’s up to the website to decide what’s in the cookie.
When you revisit a website, your browser searches for a matching cookie on your computer and, if found, sends it back to the website to provide information about your previous activity on that site.
Cookies can make browsing life easier for internet users, which is why they were originally created.
You’ve probably noticed this over the past few decades of surfing the web. You can put items into a virtual shopping cart and they’ll still be there the next time you launch that site. Cookies make things faster, easier, and more efficient.
On the publisher’s side, cookies can provide valuable data like how many unique visitors you’ve had to your site, how many of those visitors converted to subscribers or paying customers, and lots more.
And on the advertiser’s side, cookies help brands reach the right audience with their ads and measure the impact of their online advertising campaigns.
Depending on which party is setting the cookie in the browser, a cookie may be a “first-party cookie” or a “third-party cookie.”
What’s the difference between first-party and third-party cookies?
As a general rule, when you visit a website and your browser creates a cookie, only that same website will be able to access the cookie later on. But not all the material on a web page comes from the same internet domain.
For example, a site might use images, ads, or comments provided by other sites. The “first party” is the site that you’re on, and the “third parties” are any other sites that are the source of items on that page.
Third-party cookies mean that your browser can get a cookie on one site and use it on a different website — as long as both sites have something from the same third party on them.
Some examples of third-party cookies today include when a website runs ads through an online ad platform or includes a Facebook tracking pixel, giving the website owner or advertiser information that was obtained through a different site (a third-party).
How are cookies used in digital advertising?
Thanks to their usefulness in understanding how people operate on the web, third-party cookies have become a cornerstone of digital advertising. They are a major way that advertisers can make sure they are paying to display ads to viewers who have the best potential of becoming customers.
Here’s an example:
Let’s say you visit J.Crew’s website and click on a sweater that attracts your eye. Then, you head over to your favorite food blog to find a chicken casserole recipe for dinner, and in their sidebar you see an ad for the sweater you were just looking at!
That’s third-party cookies in action.
When you visit the food blog and their programmatic ad auction takes place, J.Crew’s ad network effectively gets a big flashing green light to say, “This is someone you want to advertise to. They were just looking at one of your sweaters!”
Without cookies at play, when the ad auction took place, you might end up with an ad for a Ford Taurus, even if you have no current interest in buying a new car.
While targeting advertising based on third-party cookies isn’t the only way advertisers make decisions about how to direct their ad dollars, it is the most significant one right now. Today, the majority of ad dollars spent on independent publishers’ websites rely on this technology.
What are the privacy concerns surrounding cookies?
As technology advances, so do concerns about privacy. It might be fun to surf food blogs and shop for new outfits, but most of us also have to use browsers to look up sensitive information and look for jobs and housing. The most serious threats are from big companies that both collect and use your information, but we want to make sure that cookies can’t leak private information about you either.
People want more say in how their information is collected, used, and shared, and new laws are popping up to provide more control and transparency.
The General Data Protection Regulation (GDPR) in Europe is one example — with this new law in place, any website visitors from EU countries must consent to targeted advertising, including third-party cookies. Several states, starting with California, have similar laws.
What is the “death of the cookie”?
Because of rising privacy concerns, some internet browsers have stopped allowing third-party cookies. First-party cookies still work, but when a third party tries to set a cookie, the browser doesn’t keep it. And at the beginning of 2020, Google announced that they too would remove third-party cookies from their Chrome browser by 2022.
This decision will cause a massive disruption to digital advertising as we know it today and has resulted in an industry-wide effort to find privacy-conscious ways to replace the value that third-party cookies bring to advertisers and publishers.
At AdThrive, we’re excited to help build a future without third-party cookies!
We’re collaborating directly with Google and other industry leaders to come up with smart solutions, building and improving our own technology and systems like contextual advertising and identity solutions that don’t rely on third-party cookies, and advocating for publishers in all of the ongoing discussions around the future of digital advertising.