What Does Google’s Elimination of Third-Party Cookies Mean for Your Advertising?

With the company’s announcement in January that it plans to eliminate the third-party cookie from its browser by 2022, Google has now joined the ranks of Mozilla and Apple in charting a new course for consumer security and privacy standards moving into the future.

Now, depending on who you ask, this is either catastrophic news or a big “meh.” As a refresher, remember that cookies are simply bits of data that track a user’s activity online. Third-party cookies, specifically, allow websites that a user has not necessarily visited to track their movements online for retargeting purposes.

So, is this a big deal? What does it mean for advertising in automotive retail?

A Mixed Bag

From a consumer privacy standpoint, this is a positive development. When used responsibly and ethically, data on consumer behavior online is a very powerful targeting tool and can provide value to the consumer. But, it’s possible for this data to be used inappropriately, especially when gathered without consent from the consumer. In short, a bit more privacy and security isn’t going to hurt anyone.

In terms of the impact on your advertising, the answer is: it depends. First-party cookies – the cookies your website creates for on-site users that work to improve your site’s user interface (and, by extension, the user experience) – will remain functional. That’s good news because it means you can continue to leverage important data and insights gleaned from monitoring visitors’ activity on-site.

However, ad retargeting will be completely disrupted because retargeting relies on third-party cookies following users from site to site. That’s why Google estimated in 2019 that removing third-party cookies from its browser could initially reduce publisher ad revenue by up to 52 percent.¹

This, obviously, is a very big deal, particularly for industries that lean heavily on digital advertising and eCommerce – including automotive retail. So, what steps can you take to mitigate any potential downturn in ad performance?

The Bottom Line for Dealers

Fortunately, Google seems to have been paying attention to the rollout of third-party cookie elimination at Mozilla and Apple, both of which experienced issues that put consumer data at increased risk. In conjunction with dropping third-party cookies, Google is releasing “Google Privacy Sandbox,” an interface that presents advertisers with aggregated data derived from anonymized consumer activity online.

This alternative attempts to split the difference, shielding Chrome users from explicit identification and monitoring via third-party cookies while still providing advertisers with enough data to derive insights and make useful judgments regarding consumer behavior.

Still, the future of retargeting as we know it remains uncertain. Ultimately, it means some reallocation of your advertising budgets will be in order in the next 18 months.

There are other ways to derive contextually relevant messaging from consumer activity online, whether it’s through keyword targeting or unique identifiers for site visitors (such as user profiles). It’s also worth remembering that first-party cookies will still provide you with the most relevant data to carry out targeted advertising campaigns.

What’s the takeaway, then? If you start gradually shifting your focus to first-party rather than third-party data and begin beefing up your budget allocation in alternative areas of contextual advertising, Google’s elimination of third-party cookies might just turn out to be a big “meh” for your dealership after all.

¹ Ad Age