A building block of the global advertising industry is about to crumble.
What happened: Google set January 4th as the day it will turn off third-party cookies for 1% of Chrome users, or about 30 million people, with a full phase-out coming in the second half of next year.
- Unlike first-party cookies (files a website uses for things like analytics, keeping you logged in, or tracking what’s in a shopping cart), third-party cookies are used by outside services to create a record of someone’s web activity.
Why it matters: Third-party cookies make most digital advertising possible. The phase out will be a huge disruption to the $600 billion industry.
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Programmatic advertising is the main ad targeting method for websites, social media and online video, but has been increasingly used in digital billboards, as well as fast-growing channels like connected TV, audio streaming, and retail media.
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Third-party cookies give programmatic platforms an idea of which ads someone might be interested in, but they can also create detailed user profiles that ring alarm bells for the privacy-minded.
- Firefox and Safari have blocked third-party cookies by default for years, but it wasn’t until Chrome — the browser of choice for roughly two-thirds of internet users — joined the club that we began hearing about the “death of cookies.”
Catch-up: In 2020, Google announced it was targeting 2022 for the phase out, but it was pushed twice due to delays in testing new ad targeting methods and feedback from the industry.
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A replacement called Topics aims to figure out a user’s interests based on recent browsing history, instead of tracking files. Users can also control what they see ads for, or turn off customized ads entirely.
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Topics also stores data within the browser, instead of sending it to an external server. That’s also true of FLEDGE, Google’s new system for actually targeting and serving ads to audience groupings Topics creates.
- Despite the long lead-up, parts of the ad industry still don’t feel ready for the change.
Yes, but: Some believe these replacements will give Google even more control over the online ad market, among them the U.K.’s Competition and Markets Authority.