Google to end use of third-party cookies, reshaping online advertising and user experience

Throughout 2024, Google's Chrome browser will cease the use of third-party cookies, which have been a fundamental technology for tracking users across various websites to deliver personalized advertisements. Although the move aims to bolster user privacy, it is expected to have a significant impact on the advertising industry and the overall online experience.

Implications for Publishers

The IAB Tech Lab, an industry group, concerns that the upcoming change will particularly affect mid-sized and smaller publishers, potentially leading to a decline in revenue and even website shutdowns. Without the ability to utilize third-party cookies, businesses may struggle to understand their audience, ultimately affecting their advertising revenue and the ability to offer free content without requiring user data.

Market Dominance of Chrome

With Chrome commanding 60% of global internet traffic, the decision to phase out third-party cookies will have a profound impact on the digital advertising landscape. Given that other major browsers like Apple's Safari and Mozilla's Firefox have already implemented default blocking of third-party cookies, the industry will not have an alternative browser to rely on for targeted advertising.

Adaptation and Revenue Losses

According to Karsten Weide, a chief analyst, some publishers could experience revenue declines ranging from 20% to 40% due to the diminishing effectiveness of ads following the deprecation of third-party cookies. This significant change could result in the shutdown or reduced offerings of various websites, ultimately leading to a more challenging environment for both publishers and users.

Privacy Concerns and New Technologies

While the end of third-party cookies is intended to enhance user privacy, experts argue that it could lead to an increase in granular data collection as businesses move towards alternative methods such as user logins. Google anticipates rolling out new privacy-preserving technologies to enable relevant advertising without relying on third-party cookies. These solutions involve grouping users into larger cohorts based on their browsing behavior, ensuring anonymity while still delivering targeted ads.

Market Response and Industry Players

Despite concerns about the effectiveness of the new tools compared to third-party cookies, Google emphasizes that the initiative has been developed in collaboration with industry players, regulators and consumer advocates. While tech giants and major media companies are expected to adapt more effectively to the upcoming changes, smaller websites and publishers could face a more challenging transition, potentially leading to a shift in where ad spending is directed.

Future Landscape of Online Advertising

As the online advertising industry prepares for the end of third-party cookies, there is a sense of uncertainty and anticipation for the next phase. While larger players may navigate the transition more seamlessly, the ecosystem for mid-sized and smaller publishers could face significant challenges, ultimately reshaping the dynamics of online advertising and user privacy.