Third-Party Cookies: What They Are and What You Need to Know About Them

Third-Party Cookies: What They Are and What You Need to Know About Them

Third-party cookies have long been a digital advertising staple across virtually all web browsers, including Google Chrome, Mozilla Firefox, Microsoft Edge, and Apple Safari, albeit handled differently (and abandoned) by each at different points. Still, many browsers store and process third-party data in some capacity—but that’s changing quite quickly. 

For example, Firefox announced in 2019 that it would by default block all third-party cookies. Chrome, the world’s most popular browser, didn’t automatically block third-party cookies until after the Firefox announcement. Safari followed suit shortly after.

Still, with data privacy laws in place and in the works to address growing user privacy concerns, website visitors’ personal data protection, consumer privacy issues, and other user experience considerations, the third-party cookie’s end is nigh. So, what does the death of the 3rd-party cookie mean for online advertising and ad tech?

What Are Third-Party Cookies vs. First-Party Cookies?

third-party cookies are cookies stored by a different domain(s) than the one the user is currently visiting and stored with the key task of showing targeted ads to that user on a different website. If you’ve ever seen a “Like” button on a social media web page, that button will store a cookie on the user’s browser once clicked. Similarly, chat functionality is another common third-party service.

Once the user has moved on to another site, the social media site can gobble up that cookie and learn which other websites the user visited, enabling them to “follow” the user around the Web and showing them ads deemed relevant based on their browsing history and user data.

In digital advertising’s formative years, most advertisers saw promise (and revenue) in cookies because they were great retargeting tools and, later, for frequency capping. However, real-time bidding (RTB) and exchanges elevated the experience. Enter the third-party cookie, or, behavioral targeting. Advertisers loved it: it was simple and fast, required less planning and integration than previous offerings, and made cross-site tracking and digging deeper into user behavior a breeze. 

What Are First-Party Cookies?

Unlike third-party cookies, first-party cookies work by storing a user’s session information on the site they’re currently on. For example, if a user is on a sporting goods store’s site, all cookies stored on that sporting goods site are first-party cookies. 

Think of first-party cookies as cookies that remember preferences, shopping cart information on e-commerce sites, or recognize a user who hops between pages. First-party cookies and data are prevalent on virtually all websites and are what brands see when they hop into Google Analytics.

Whether they’re first- or third-party cookies, you’ve also likely encountered the cookie banner pop-up, asking whether or not you consent to the use of cookies. Even here, there’s a lot of gray area between true consent and wordsmithery on the part of the pop-up.

But online advertising has shifted in recent years. First-party cookies may remain, but the end of third-party cookies is nigh. So, what’s the point of third-party cookies if they’re on the way out?

Should You Be Using Third-Party Cookies?

Before we face the future, we have to cover a major milestone in online privacy between 2016 and 2018: the General Data Protection Regulation (GDPR). In short, roughly two decades of largely outdated privacy concerns met sweeping updates to create the world’s most stringent data privacy regulations in Europe.

All users within the European Union (EU) and European Economic Area (EEA) must consent to website tracking cookies on any site they visit. GDPR delivered a massive overhaul of privacy protections—and advertisers were faced with equally formidable third-party server, tracking, and data collection challenges to then-standard models. In 2017, the European Commission for Regulation on ePrivacy also proposed reforms to ePrivacy Regulation (ePR) that would further protect EU/EEA data subjects and impose new hurdles for online advertisers.

Stateside, California followed suit in 2020 when it introduced the California Consumer Privacy Act (CCPA). The CCPA is a data privacy law detailing what personal information data businesses everywhere can and cannot handle for California consumers/residents.

With these sweeping regulations covering just shy of 500 million people in the EU, EEA, and California, it’s time to prepare for a cookieless future—especially if they’ve been a central part of your ad revenue stream.

Are Third-Party Cookies Cost-Effective?

Most advertisers agree that third-party cookies have traditionally been effective in terms of revenue and growing an audience. However, with third-party cookies going the way of dial-up internet free-trial discs, they’re not going to remain cost-effective (or reputationally viable) for long. 

But financial considerations are only a part of the picture; advertisers must weigh the reputational costs and benefits of opting for becoming a “privacy-first” organization. Protecting user privacy through alternative means of advertising is a must in a cookieless future. 

Considering Only Cost Doesn’t Cut It With Third-Party Cookies

Despite Google’s relatively sluggish response to blocking third-party cookies, it rolled out its Privacy Sandox in 2019. It aims to create web standards for how websites access users’ information while protecting their private information without using third-party cookies. It even launched FLoC (Federated Learning of Cohorts) before replacing it with another cookieless alternative, Topics. 

Similarly (and controversially) Facebook rebranded its Facebook Pixel to Meta Pixel, allowing advertisers to use the pixel as either a first- or third-party cookie. However, a class action lawsuit alleges that Meta still tracks users through in-app web browsers without their knowledge or consent—despite iOS privacy restrictions. 

This has huge reputational ramifications for Meta, an organization already facing significant consumer and government trust challenges. Most organizations can weather far fewer public trust and data privacy issues. Organizations of all sizes should prepare themselves for a cookieless future; users are much more aware (and skeptical) of how browsers store and process their data. If they associate poor practices with your brand, their experience won’t build trust—or your brand reputation.

All that to say, if the world’s largest search engine and social media giant are preparing for a cookieless future, online advertisers should likely follow suit.

Phasing Out Cookies for a Cookieless Future

Organizations reliant on third-party cookies may feel like pivoting to a new model won’t bring the same rewards. Even retail Titan Amazon has told its retailers that third-party cookies are phasing out. And, while we should celebrate wins for data privacy, we can’t deny it’s time for brands and advertisers to adopt and benefit from a more privacy-friendly (and effective) model: contextual advertising.

What Is Contextual Targeting?

Contextual advertising is a form of targeted, programmatic advertising that shows ads based on the content of a specific web page, video, social media feed, or any other supported location in a web browser. 

It’s an environment-specific type of advertising: it meets the audience where they’re browsing based on the web page’s keywords and content, unlike third-party cookies that rely on the user’s browsing behavior. 

Succinctly, contextual advertising focuses on the user’s current activity, not their journey. Contextual advertising delivers a more tailored advertisement experience because it capitalizes on only—the content the user currently sees. 

Contextual advertising relies on contextual targeting, itself relying on:

  • A website’s specific type of content 
  • The user’s implied intent or interest based on the content 

Once identified, an automated system selects only the most appropriate ads to show the user. It’s peak optimization for a cookieless, user-centered experience through this unique form of programmatic advertising. 

Why Contextual Advertising Is the Best Alternative to Third-Party Cookies 

Contextual advertising is better than third-party cookies for a few reasons. First, it’s better for users; it provides more relevant ads without tracking them around the web. That’s great news for the 82% of users who want to see relevant ads—and for the general public who remain wary of online tracking whether through third-party cookies or I.P addresses. 

Second, contextual advertising is a win for advertisers and publishers; it helps them deliver a privacy-first advertising solution that respects users while enabling a logical pivot from third-party cookies to show only the content users want to see. 

Why Should Advertisers and Publishers Care About User Privacy?

Reputation is huge. Consumers have more buying and browning options than at any other point and, if they have even a single negative experience with a brand, many see few reasons to give them a second shot. That’s especially true when it comes to privacy.

More and more consumers have at least an elementary understanding of how they’re being tracked online; they at least sort of understanding why an ad for a pair of running shoes shows up on another site once they’ve navigated from the running shoe site. Basically, they know that their browning isn’t all that private. And they’re largely not into it. 

Publishers and advertisers must understand this shift in users’ collective attitudes and respond with privacy-first solutions like contextual advertising. Not only does it acknowledge users’ concerns and give them a more respectful, private browsing experience, but it’s the way the marketing is moving; Google is phasing out third-party marketing cookies by 2023. There’s no reason to hold on to dying ad tech that:

  • Isn’t as useful as it once was
  • Faces attribution accuracy issues
  • Imparts serious legal hurdles and reputational landmines
  • Users dislike and often don’t consent to
  • Will soon crumble into the digital void 

It’s time for advertisers and publishers to embrace the change and prepare for a cookieless future with contextual advertising. 

How to Prepare for a Cookieless Future

Despite the third-party cookie’s demise, the future isn’t unknown—it’s contextual. By leaving behind a trail of crumbled cookies for a robust contextual advertising strategy, brands can deliver the right content to their audiences at the right time.

Peer39’s contextual advertising solutions give brands the most robust pre-bid contextual category library to show the most relevant ads in safe and appropriate environments. From creating custom categories for tailored advertising to planning and targeting contextual connected TV (CCTC) and mobile, brands benefit from a broad selection of solutions to reach audiences who speak more than 40 languages, making it easier than ever to win and nurture new brand loyalty. 

Reach out to learn more about replacing your third-party cookie strategy with contextual advertising.