How Will Cookie Deprecation Affect Northbeam? An Explainer

I don’t know about you, but every year I resolve to cut sugar out of my diet only to find myself ordering gourmet cookies online by early February (at the latest). This year I’ll have no choice: Google recently confirmed their plan to completely deprecate third-party cookies by the second half of 2024 is on track.

Beginning in Q1, 1% of Chrome users will migrate to the new Privacy Sandbox ecosystem and have third-party cookies disabled. Google says this will give developers and advertisers enough time to learn the new environment and prepare for a cookieless future that will dramatically alter the internet landscape.

So fellow practitioners, what do we make of this? Is this the end of digital marketing as we know it, or the continuation of a trend in privacy concerns that Apple accelerated with the release of iOS14? 

And more importantly: how is third-party cookie deprecation going to affect Northbeam data? Short answer: it won't.

What is "Cookie Deprecation?"

If this is the first time you’ve heard about Cookie Deprecation, let’s briefly discuss what cookies are and why they’re important for digital marketing.  

Cookies 101: Cookies are small text files that help identify individual users on the web. There are cookies on every website you visit which are then stored on your computer’s web browser. They were first introduced in 1994 to allow people shopping online to store items in a virtual shopping cart; a functionality that we now take for granted as eCommerce marketers.

These are first-party cookies: cookies that belong to the owner of the website to help improve the user experience and collect anaytical information on customer behavior. Since they belong to the owner, these cookies are not at risk of being disabled by Google or any other browser provider. 

Third-Party Cookies function the same as a FPC, but belong to someone else who mainly uses the cookie to track activity across the web for online advertising. These tracking (and problematic for privacy) cookies facilitate much of modern marketing by allowing external parties to create user profiles and target ads based on their individual behavior. 

So why are they being banned? Shortly after their introduction, advertisers began using them to track user data including interests, demographics, location, often without the consent of everyday consumers. Shady practices such as “zombie” cookies that were difficult to delete eventually led to increased regulation such as the now ubiquitous consent pop-ups.

However, it was the ad tech giants who were the biggest culprits as evidenced by the Cambridge Analytica incident and subsequent repeated revelations of further violations.

In the mid- 2010s, data privacy gained more momentum as popular browsers including Apple’s Safari and Mozilla Firefox started taking these concerns more seriously and curbed the use of third-party cookies before eventually banning them altogether. Google’s move is notable however because 63% of global web traffic flows through Chrome.

Third-party cookies were already unreliable before, but the move to Privacy Sandbox will be their final death knell. 

What are the implications?

Although we’ve been preparing for a cookieless future for a while, many marketers still rely on third-party cookies to understand consumer behavior such as purchases, interests, affinities, and browsing behavior. Insider reports that 78% of marketers still use cookies for ad buys, meaning most of us are in for a rude awakening very soon.

Let’s explore the effects of disabling third-party cookies on various platforms and strategies.

User tracking and targeting will be significantly hampered so any campaigns that rely on third-party cookies will see a drop in performance. Certain tactics such as behavioral targeting, retargeting (incl. cross-device tracking), and audience extension will all be dramatically less reliable once Chrome completely disables third-party cookies.

User profiles won’t be as detailed so targeting will lose some personalization, and the ability to build lookalike audiences with third-party data will no longer be possible. Frequency capping will also be affected due to the inability to accurately determine how many times an ad has been served to a specific profile. This only emphasizes the importance of leaning into a first-party data strategy as quickly as possible.

The big ad tech platforms rely on a mix of first and third-party cookies to target and serve ads. Post iOS14.5, marketers have already seen a drop in the efficacy of campaigns and precision in targeting, leading to fewer dollars being spent in social and digital. Facebook estimated a $10B loss in revenue in 2022 from Apple’s privacy changes; imagine how much more they stand to lose once Google phases out third-party cookies altogether.

Programmatic advertising may also see a drop in performance due to auctions relying heavily on targeting data. Expect these platforms to respond with more first-party products that rely on walled garden data (probably with a price premium) to keep your ad dollars in their ecosystem and circumvent some effects of cookie deprecation.

Measurement: Generally, multi-touch attribution is currently handled by a third-party cookie on a brand site associating a conversion event with an impression from third-party cookie on a publisher site. Without third-party cookies, marketers will need some sort of other identifier to attribute revenue to campaigns.

However there are already plenty of tools such as cohort analysis, segment analysis and media mix modeling (MMM) that can help you better understand performance without needing third-party cookies. In other environments such as CTV, cookies have never existed yet several analytical tools exist for attribution.

Probabilistic modeling and AI/ML are already speeding up this transition away from cookies; we think marketers will (as they always have) figure something out. Some even think attribution will significantly improve due to the high levels of bot activity in third-party data: a decline in fraudulent clicks and impressions should boost data integrity in general.

How will cookie deprecation affect Northbeam?

Short answer: it won't. We've run internal holdout tests where we've experimented with removing cookies from our modeling and 98% of our data was unaffected.

If you're using Northbeam for your ad attribution, cookie deprecation will not affect your reporting.

In our (humble) opinion, a cookieless future is another reason for marketers to move from targeting-led strategies to creative-led strategies. We’ve been preparing for the cancellation of third-party cookies since the beginning of Northbeam: many of our strategies post iOS14.5 were created to emphasize first-party data because we knew eventually that would be the only data we could rely on. 

"Years ago, when we were starting Northbeam, we knew this was coming. Google's been telling us for years they were going to do away with cookies," said Austin Harrison, CEO and Co-founder of Northbeam. "So preparing for that future has been our mission. It's not just about cookies, it's about advertising more effectively in a more privacy-minded era. That's what we're about."

First and foremost, we don’t rely exclusively on third-party cookies in our attribution modeling. The core of Northbeam's MTA tracking solution uses a first-party cookie from your website, which is exempt from Google's third-party cookie deprecation plans.

We leverage only first-party data to resolve customer identities and expect to see minimal if any effect for our customers and clients because Chrome’s upcoming changes will not affect our pixel’s functionality. The first-party data we create has so many touchpoints that third-party cookies are just a tiny drop in the bucket of our overall attribution models.

Our collection and user stitching heuristics are designed for a cookieless future. It’s the reason why our customers (such as The Ridge) trusted us for their attribution needs: Northbeam is a future-proof solution in your marketing stack that will evolve to handle the changing environment.

That’s why we introduced MMM+ and are continuing to push out new features and updates. The Google announcement is mostly significant because of the scale of web traffic handled rather than the actual changes being implemented.

Although Northbeam brands won’t be affected by Google’s cookie ban, will yours? Reach out to us, we’re always happy to give you our take.  

‍