Google Phasing Out Third-Party Cookies: 4 Ways Startups Can Be Ready

With all the path-breaking and convention-shattering advancements that we have witnessed over the past few months, 2021 seems to be the year of a massive paradigm shift that has challenged our fundamentals at an existential level. 

The new-age startup ecosystem boomed into inexplicable branches that seem to be on a journey of unstoppable growth. All of this is in the background of a world where we saw the uprising of a cave syndrome – unprecedented changes in lifestyle, values, priorities, and well, even in professional aspirations with the recent uprising of The Great Resignation.

Another pivotal mindset shift led to a deep sense of protecting privacy, which has been around for the last few years with the launch of GDPR and CCPA, but is short to fame once again recently with Google’s latest announcement on the end of third party cookies.

What Are Third-Party Cookies?

Cookies are the piece of code that help websites save your information. When you open a website, a request token is sent to a web server and drops a string of code in your browser. This string of code stores your data.

In today’s world, personalised digital advertising is an outcome of this ‘string of code’ (it’s a 1×1 pixel). Cookies have become so common that over 95% of the websites use them. Before they became widespread, internet advertising was mostly contextual, or topical. But once the startup economy got a whiff of the delicious cookies, it spun a whole dough churning industry around it.

And now, the entire advertising industry thrives on it. Just to share some stats around it, it is estimated that if users opt-out of cookies, advertisers can lose up to 52% of their revenue.

Cookies are of different varieties – zero-party, first-party, second-party, and third-party.

Think of third-party cookies as the tail-wagging pug from the earlier Vodafone ads that would follow you to the ends of the earth. They continue to monitor and track your behavior even after you leave that particular website. First-party cookies are used to track users on unique websites and help in enhancing customer experience e.g. remembering your login details.

Why Are They In The News?

In March 2021, Google announced that the third-party cookies will be phased out. The most intriguing aspect is that they won’t support any user-level ad tracking method. At least not on their browser – Google Chrome dominates with over 68% global market share.

What Is Google’s Game Plan?

Google’s announcement has managed to kill two birds with one stone. It brought consumer attention by showing concerns around their privacy and also ensured that its competitors stayed at the bay.

However, this doesn’t mean that Google is banning all cookies. Google has now decided to end the third-party cookies as they don’t require capturing your unique behavioral data anymore. Google already has multiple ways to track your first-party data through its various products and services. 

This privacy-focused solution will eventually help the search engine giant increase the advertisers’ dependency on its other product offerings. Many small advertisers and agencies still do not capture first-party data and they may have to pay Google a premium to target users through Google’s first-party data.

Should You Be Worried?

Yes. It’s going to impact you left, right and center. It will change the way you operate your digital business. E.g. it will impact ad retargeting, ads frequency capping, live chatbots, campaign attribution, analytics, and tracking, user segmentation and what not!

These features are the bread and butter of many ad-tech, SaaS and media companies who will have to go back to the drawing board and find ways to pull themselves out of the quagmire. 

Here’s What You Can Explore

Build A Robust First-Party Data System: You require a database or a CRM or a CDP to capture user info at every touchpoint on your website and app. Usually, these initiatives are placed on the back burner. However, it is time to prioritise this at the top of your chart. I understand that this is going to be tricky. Please give it a shot. I am sure you can. 

Redefine Your Segmentation Strategy: Capture your users’ demographic, behavioral, and transactional info. Define them into useful clusters and cohorts. If you are not doing this already, there is no more delay you can afford on this front. There is a playbook for segmentation and devising targeting to maximise monetisation.

Explore Contextual Advertising: Identity your audience based on what they consume on your site and show the relevant ads. Create different types of ad slots. Segment your audience. Devise experiments. Run tests. Validate the efficacy and scale-up. 

Build A Nexus Of Co-op Advertising: Your network is your net worth. Start building a trusted network that allows us to segment and cross-promote each other. A large number of publishers and D2C brands and many of them have already agreed to do so.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.