The Death of Third-Party Cookies

How Can Affiliates Continue to Track Revenue Amidst Online Tracking ID Changes?

For years, online marketers have been using cookies to perform a variety of functions that let them target, track, and learn about consumers. But with that soon to be a thing of the past, affiliate marketers are left wondering how they will be impacted.

The growth of online consumer activity has led to savvier users. They are demanding additional protections when it comes to their privacy and the collection of personal identifiers and data on the internet. Because consumers are increasingly more aware of their privacy, there has been a rise in using ad blocking software. However, browsers including Firefox and Safari have also been blocking third-party tracking options with cookies since 2013.

For example, consumers have been using more ad blockers. “In 2019, roughly 25.8 percent of internet users were blocking advertising on their connected devices. This figure is expected to keep growing.” (Statista) Now, software providers are making more changes.

 

Most of this user data is collected through cookies. First-party cookies are pieces of code generated and stored on a website by the visitor’s computer. This type of cookie is most often responsible for remembering passwords, basic data about the visitor, and other preferences. It does not allow the website to see data related to a visitor’s behavior on other non-affiliated websites. First-party cookies aren’t collecting personal information.

A third-party cookie is essentially a piece of code with a tracking ID that is placed on a web visitor’s computer when they go to a website. Third-party cookies send data to the third party who created the cookie (it might be an advertiser) that enables that party to learn about a web visitor’s overall online behaviors. This could include websites they frequent, purchases they’ve made, and interests they’ve shown on other websites. Marketers use this data to build detailed visitor profiles that can be used for retargeting. This is the cookie that follows them around the internet when they are browsing. And this is the cookie that irks users the most.

 

Users Push for More Privacy

These data collection practices have long made online users uncomfortable. In response, changes in online data collection have been slowly evolving over the past decade with more stringent regulations put into place.

In October 2019, Europe’s highest court ruled that users in the EU must actively consent to all cookies when they visit a website. Under the GDPR rule websites can’t receive, use, or track any of the user’s cookie data without visitors specifically opting-in to a third-party cookie. Similarly, in January of 2020, the California Consumer Privacy Act went into effect. It’s similar to the GDPR, but not quite as inclusive or far-reaching.

Google announced that it will start blocking third-party cookies by 2022. This is a big deal since Google’s Chrome controls 70% of web usage.

And while Google isn’t blocking all cookies (they will still support first-party cookies), the tech giant recently announced they won’t be building “alternate identifiers” to track individuals as they browse across the web. However, they are developing a Privacy Sandbox. Company officials explained the Privacy Sandbox might include a tool to allow marketers to continue to publish and circulate ads to the right audiences without having the same amount of user data. A Google blog post said, “The most significant item in the Privacy Sandbox is Google’s proposal to move all user data into the [Chrome] browser where it will be stored and processed. This means that data stays on the user’s device and is privacy compliant.”

Additionally, Google claims to have already seen successful advertising results from FloC, a technology that tracks groups of like people rather than individuals in Chrome.

However, many have questioned Google’s commitment to privacy, including its decision to phase out third-party cookies, pondering whether it is really to improve privacy or instead to gain a further grip on the ad market by forcing the adoption of Chrome’s own first-party cookie.

 

Impacts for Affiliates

Google’s imposing hold on the market ultimately means that targeting and retargeting through ads will be a lot more challenging for online marketers. However, many industry watchers say the upside is that mobile users will not be impacted because they automatically receive a unique tracking ID from their respective mobile operating systems. Thus, banning third-party cookies only affects desktop users, which accounts for about 50% of all online traffic, according to Statista.

So how does all of this impact affiliate marketers? Most say it doesn’t – since affiliate marketing primarily relies on first-party cookies. Still, the entire affiliate ecosystem must be aware of the changes and protect themselves from a primary reliance on systems they do not control – like future governance and imposed regulations, or monopoly-related policies.

“Once again, the affiliate industry will have to adapt to changing technology, but it is not anything that we have not already done many times before,” Tricia Meyer, PMA Executive Director said. “Whether it’s changing how an affiliate and a merchant work together or an affiliate changing their business model completely, the industry as a whole will adapt.”

Meyer also noted that she expects this to be a topic of discussion at the PMA’s first-ever virtual conference later this month. “The most important thing for everyone is to stay educated about the changes and what they mean for your particular business. Look to the solution providers who are staying ahead of the curve in alternative tracking methods, and see how they can help you find new opportunities,” she said.

 

Alternatives to Cookies

Affiliates need to begin looking at the wide array of alternative tracking methods that are cropping up.

Todd Crawford, VP Strategic Initiatives at Impact, said tracking is still possible without cookies and pixels, but the method depends on the tracking solution you are using and your (the advertiser’s) integration capabilities.

“It is no longer as easy as simply slapping a pixel on your confirmation page and relying on a cookie to do the work. Server-to-server integrations are now the best and recommended solution for reliable, future-proof tracking,” he explained.

Others also suggest revitalizing older strategies, such as contextual targeting, which allows for circulating PPC ads on websites that rank for similar keywords as your ad. Fingerprinting is also gaining popularity again. Fingerprinting works by collecting diverse technical blueprints of visitors, so their profile can then be recognized on other sites.

More can also be done with first-party data by tracking additional things that visitors do on your own platform. This can be done in a Customer Data Platform (CDP). Additionally, many companies are working to create a seamless and personalized experience across different websites using Customer Identity Access Manager (CIAM) platforms that allow users to create their own profile and use it to log in to various websites or applications.

There are other initiatives that are gaining some steam, The Trade Desk is building version 2.0 of Unified ID, which doesn’t rely on third-party cookies and is open-source.

 

Affiliate Response to Online Tracking Changes

There are challenges and pitfalls with all these proposed solutions. And, naturally some users are taking matters into their own hands by signing up for temporary machine-generated emails in order to conceal their real email address. Jumping on that movement, Apple is aggressively pushing its Sign In With Apple SSO service, which generates a unique, random email address that forwards to a user’s personal email.

For affiliates and the merchants they promote, it is critical that they stay on top of responding to the new tracking changes so that no one in the chain is losing revenue due to the rapidly evolving online environment.

“With the continuing transition from cookie-based to cookieless tracking, it becomes even more important for an agency like ours to keep the lines of communication open with our clients, and affiliate partners alike,” Roger Snow, Founder and President of Snow Consulting said. “We want all our clients to modify tracking (Mobile-PC) accordingly, so all revenue is tracked and not one affiliate partner loses out on earned commission.”

The bottom line is not to panic. Be sure to fully vet any software or solutions that purport to help transition away from third-party cookies. It’s simply best to stay up to date on any data privacy moves that could impact your business and be prepared to evaluate what might work best for you.