As Third-Party Cookies Crumble, Alternatives Take Shape

Internet cookies are almost as old as the internet itself. A first-party cookie acts as a website’s short-term memory” which allows a user to click through pages seamlessly, without having to log in each time. Cookies remember passwords, preferences and basic data so that each visit to a website is customized to a user. Over time, cookies became a cog in the advertising model that powers much of the digital economy (especially online publishing). A tool that was designed to serve users has become a way for brands to follow potential customers all over the internet. These third-party cookies, as they’re called, are tracking codes that are generated by websites other than those that users directly visit. They’re tagged to a computer and collect a user’s browsing behavior by trading information with other sites that enable third-party cookies. For brands and platforms, third-party cookies offer a fuller picture of users and potential customers that goes beyond the activity they can track on their own site.

The growing awareness among governments and individuals about the importance of data privacy in the past few years has (understandably) led to concerns about third-party cookies, and the implications of the information they collect. Mozilla Firefox and Safari already block the majority of them, though Google’s announcement earlier this year to phase out third-party cookies in Chrome (which account for 65% of market share) by 2022 has made more people pay attention to the issue. Advertisers are starting to consider alternatives. Targeting ads within content such as articles and online videos is one method. In some ways, this is not unlike advertising models of the analog world, in which certain spots run during certain television programs (like, say, a Hot Wheels ad during a Saturday morning cartoon) or print ads are placed in particular magazines.

One area where this kind of context-based ad placement still happens is podcasting, which has held out from ad targeting (though given Spotify’s move into that space, it may not stay that way for long). Another is branded content within video platforms and social media, such as partnerships with creators. Studio71 was built on this kind of advertising, which prioritizes authenticity and reaching people where they are. More and more brands have dipped their toes into this model in the past few months as COVID-19 has upended traditional channels. The need to be nimble and create ads remotely has led many brands onto new-to-them platforms like TikTok, which is powered by content that has a more real, DIY feel.

The end of third-party cookies paired with the rise of a more flexible, native advertising model spells big changes for the coming year. Brands that are ready to face those challenges and change the ways they find customers online will win out. The banner ads and pop-ups that have become a familiar part of the online world could give way to something better, more innovative. There’s no playbook for our current moment, but there is a lot of opportunity.

Studio71 is the leading global media company for digital-first creators and brands.