On Third-party Cookies: How Google’s New Move Affects Your Financial Business?

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How Google’s New Move Affects Your Financial Business?

On January 25, 2022, Google announced that it would stop the use of third-party cookies in Chrome and replace it with a new Privacy Sandbox proposal, Topics, for interest-based advertising. According to Google’s announcement, Topics was informed by its learning and widespread community feedback from the earlier FLoC trials, and replaces FLoC proposal.

“With Topics, your browser determines a handful of topics, like Fitness or Travel & Transportation, that represent your top interests for that week based on your browsing history. Topics are kept for only three weeks and old topics are deleted. Topics are selected entirely on your device without involving any external servers, including Google servers. When you visit a participating site, Topics picks just three topics, one topic from each of the past three weeks, to share with the site and its advertising partners. Topics enables browsers to give you meaningful transparency and control over this data, and in Chrome, we’re building user controls that let you see the topics, remove any you don’t like or disable the feature completely.” said Google. Google Chrome is the most popular among users, with 2 out of 3 people in the world access the Internet using it,according to StatCounter’s data.

The new move may force digital companies to change their operation model as they do not have access to third-party cookies, and hence cannot provide their clients with accurate customer profile. So how does Google’s new move affect financial business?

Third-party Cookies

Before answering this question, we need to have a basic understanding of cookies.

Quote from Wikipedia, a cookie is a simple computer file made of text. The information stored by cookies can be used to personalise the experience when using a website. A website can use (the information used by) cookies to find out if someone has visited a website before and record information (data) about what they did.

Then what are third-party cookies?

Third party cookies are different from first-party cookies. First-party cookies are placed on the website by the owner to collect user data and remember website configuration. Things remembered by first-party cookies include language preferences, login/registration details, items in a shopping cart, and user preference, which enables a better user experience.

However, third party cookies have nothing to do with user experience. They are created for advertising, as they collect data such as user gender, age, and behaviors to help establish accurate user profile for advertisers.

Assume an ad agency A is seeking financial investors as its target audience, then A is able to cooperate with forex broker B and Fazzaco, adding its own tracking code to the webiste of B and Fazzaco.

When a user U visits A’s website, the tracking code will generate a unique identifier and will be stored as a third party cookie by the browser.

When the user U visits website B, the tracking code will send back the identifier to A through http header fields. Similarly, the ad agency will also notice the user U’s visit to Fazzaco’s website.

If the user U visits another broker C’s website, as long as it has A’s cookies (third-party cookies) embedded in, C will inform A of the identifier. After learning U’s visiting history and confirm U has also visited B and Fazzaco’s websites, A will launch targeted advertising to U.

Let’s take Gap as an example. Gap has many subsidiaries, such as Gap, Banana Republic, Old Navy, Piperlime, Athleta, and more, where each of these brands has its own official domain.

Hence, first party cookies can not be used to track users on the websites of its subsidiaries, but third parties can (be used to track users visiting ab-inbev.com, for example).

Google Adsense can collect data of users on 14 million websites by taking advantage of third party cookies.

Make and Break You

Google’s new move will bring huge potential losses to digital marketing agencies.

In the past, digital marketing agencies launch accurate campaigns through information collected via third party cookies. Statistics show that nearly 80% of American advertisers have resorted to Programmatic Advertising, which automatically send ads to audience by analyzing user data on different apps and websites, where third party cookies play a prominent role.

If third party cookies are phased out, as scheduled by Google, advertisers will fail to depict an accurate profile for a user who visits different websites, and to match users through cookie sync. Approaches once used for Pragammatic Advertising will become invalid, and new technology is required.

From crisis comes opportunity. Enterprises who keep up with the trend may take the lead in the future. Contextual targeting may return to the market as advertisers will be able to launch their ads according to topics of content. More factors will be taken into consideration, such as users’ configuration, region, and weather.

New Way Out

To find a way out for companies in the post-third party cookies era, we need to classify those companies into two categories. Giants like Google and FB has established their own advertising ecosystem with countless first-cookies data consented by users. Blocking third party cookies causes minor influence. In a sense, they may get benefits from the new move, as some advertisers will resort to these giants due to lack of advertising channels.

Normal ad agencies fall into the second category. Without third party cookies, they would find it difficult to launch targeted ad to audience. So is there a new way out?

The most popular alternative seems to be Unified ID 2.0 (UID 2.0) developed by TTD, which allows users to control whether to share their data or not. Meanwhile, UID 2.0 also sets up a supervision mechanism, where a third party operator encrypts users’ email address before generating ID. The ID token cannot be decoded unless it passes verification. It is a stronger guarantee for user data privacy.

Google’s Privacy Sandbox proposal is also a solution. It launches tarted ads without tracking user behavior by categorizing users into groups. However, some users argued that “cookies are not created for ad, but FLoC is”.

Google has another solution for solving the issue, Event Conversion Measurement API.

Let’s see how this API works.

News. Example is a news website with huge traffic and monetizes its business through ads;

Shoes.example is an online shopping store selling shoes, who need advertising to onboard customers;

Adtech.example is an ad agency.

Even without third-party cookies, shoes.example can still advertise at news.example. As no third-party cookies can be used for storage, the browser stores and relates a click at an ad banner (JS script) on news.example to the user’s order on shoes.example, and report to the ad agency.

When reporting the info to the ad agency, information will be mixed and delayed, so that user privacy can be protected. Because if the data is reported on a real-time basis, the ad agency can find the accurate time of order placement and can thus identify the real user together with the advertiser.

It is the browser (Chrome) that relates the two behaviors, so the data an ad agency can collect is subject to the limitation of the browser itself. In other words, Chrome can give part, inaccurate data at a random time.

It seems to be a one-size-fits-all solution. news.example, shoes.example, adtech.example all make money with user privacy not invaded.

However, adtech.example still suffers, as it cannot access complete user data, making it hard to analyse conversion rate and relate user behavior.

Increase in advertising budget may also force advertisers to seek more leads from CRM software, which would be a great chance for CRM companies.

Data and technology both play important roles in MarTech, but most enterprises fall short of professional IT talents. It can be predicted that more Low-code or No-code tools will emerge in the market, empowering marketers to respond to clients’ needs without spending more time in learning Java or Python.

Cookies Are Innocent

As the proverb goes, “No patch for stupid.” Cookies was born for a good reason. Technology can ease concerns over privacy, but cannot solve issues beyond.

Google’s new move does protect user privacy better, but also consolidates its dominance in the digital marketing industry. Forex brokers, fintech companies, and any other types of enterprises should start preparing for the post-third party cookies era in the next two years. At that time, we will see how it actually shapes the digital marketing world.

Cookies Are Innocent

As the proverb goes, “No patch for stupid.” Cookies was born for a good reason. Technology can ease concerns over privacy, but cannot solve issues beyond.

Google’s new move does protect user privacy better, but also consolidates its dominance in the digital marketing industry. Forex brokers, fintech companies, and any other types of enterprises should start preparing for the post-third party cookies era in the next two years. At that time, we will see how it actually shapes the digital marketing world.