We’ve all heard the news. Cookies are going away. Digital advertising as we know it is going to end. Revenues are going to plummet.

Let’s settle down and take a closer look at what’s really happening and its true impact to paid search advertising.

First-Party vs. Third-Party Cookies

The digital advertising industry is leaning into user privacy like never before.

Before we get into all of the impacts, it will be helpful to understand a bit about website cookies. Cookies are essentially tracking breadcrumbs that are stored in your browser and can be divided into two categories, first party and third party.

First-party cookies are set by the website you are visiting. For example, if a user visits a website, say productsite.com, the site can set a cookie to capture information about the user’s preferences. This can include things like how the user wants to view the site, user names to log in to the site, and information about their purchase process including information like which products they have in their cart.First-party cookies are not going away.

Third-party cookies are set and can be read by third-party content on the website you are visiting.

Say there is a site, newspaper.com, which serves advertisements to their users through an advertising provider, coolads.net. In this case, when a user visits newspaper.com, they will also get content from coolads.net including an advertising pixel (code that is loaded from coolads.net and run in the browser) that may set a cookie in the browser. The cookie from coolads.net is a third-party cookie since the user was visiting newspaper.com and not coolads.net. These third-party cookies allow sites like coolads.net to track a user across sites and determine the user’s interests.

These third-party cookies are going away.

A Cookieless Future for Paid Search Advertising

So, what does this mean to your paid search advertising? Well, as it turns out, not much.

Google will continue to support first-party identity on ad platforms, which is the primary way Google targets advertising to users since many are logged into Google on their browser or use Google single sign-on to identify themselves on these pages.

Google is so confident in their ability to weather the end of third-party cookies that they have announced that they will not build alternate identifiers to track individuals as they browse across the web, nor will they use them in their products.

Apple iOS 14.5’s Impact on Paid Search

Related to all the cookieless future activity is Apple’s App Tracking Transparency (ATT) announcement that was rolled out with iOS 14.5 in April. The update will have more significant impacts to advertising on social media platforms like Facebook. This ATT initiative allows users to opt out of tracking across apps and websites.

If a user doesn’t opt into tracking:

  • Their ID For Advertisers (IDFA, a unique device identifier) is no longer accessible by apps and websites to identify the user
  • The ads they click on are only remembered for seven days
  • Only one conversion event can be attributed to a click
  • No user information is provided for conversions, which limits demographics and retargeting
  • Conversion events will be randomly delayed for up to 48 hours

On the other hand, if a user opts into tracking, there will be no change to that user’s data collection. However, due to Private Click Measurement (PCM), the framework Apple is providing for advertising measurement, Facebook is having to make significant changes to both App and Web advertising flows, which will impact optimization, targeting, and measurement for every advertiser, regardless of how many users in their target audience opt into tracking.

So, what does this mean to your paid search advertising? Again, not a tremendous amount.

This initiative pertains mainly to apps, which isn’t a significant portion of Google Advertising traffic, so the impact to paid search tracking is not significant.

In response to these changes, Google has already started using modeled conversions to mitigate future conversion loss in a looming cookieless world. These modeled conversions fill in the gaps when unobserved clicks and views are a part of a conversion by using statistical probabilities and data from users that have opted into tracking.

Overall, no action is required for advertisers, but conversion tracking and enhanced conversions can reduce the amount of modeled data that is required. It’s also recommended that you should move your Google tagging to GTM or global site tag for Google Ads (gtag.js) if you haven’t already.

Some details on different Google advertising platforms:

  • Google Search App: No change! Google Ad Settings remains the primary place for users to control their ads experience across Google properties and the web.
  • YouTube App: For logged-out iOS users on the YouTube app, where the Limit Ad Tracking (LAT) feature was removed in iOS 14.5, the “Allow Apps to Ask to Track” feature can be used to control ads personalization. We’re not expecting any significant impact from this.
  • Google Display: Advertisers running display, video, and other campaigns promoting web-based conversion goals may see performance fluctuations as Apple’s ATT policies go into effect. Google’s modeling of conversions should minimize this impact.

User Privacy Laws & Your Paid Search Marketing

So, what about user privacy legislation like GDPR and CCPA?

General Data Protection Regulation (GDPR) is a European data protection law that sets guidelines for the collection and processing of personal information from individuals who live in the European Union. The California Consumer Protection Act (CCPA) is a California law that requires businesses to tell consumers how their personal information is used and to delete and not sell this data if a California resident requests.

An increasing trend in response to these laws has been advertisers using user consent banners on their websites that allow users to opt out of tracking. Complying with GDPR and CCPA won’t impact your ability to advertise on your paid search channel or track the effectiveness of your advertising. The Google and Microsoft platforms are compliant with both regulations and are beginning to employ data modeling to ensure a comprehensive view of user behavior. We recommend consulting with your legal team to determine how you should respond if you haven’t already.

The user privacy landscape is undergoing rapid changes, and your ROI team is working hard to keep up and ensure your digital marketing investments remain effective. Let us know if you have any questions or would like to learn more.

Co-authored by:

  • David Austin, Senior Director of Technology
  • Matt Siesing, Head of Paid Seach