Q+A: Should the Online Ad Industry Be Worried About Google Eliminating Cookies?

Annie Korp

Jan 8

As part of an effort to better protect the privacy of its users — initially announced in 2020 — Google recently started its push toward eliminating cookies employed to track users on its browser Chrome. Starting in January, Google is doing a limited test to restrict cookies for 1% of Chrome users, with plans to eliminate third-party cookies for all Chrome users by the end of 2024.

The change is likely to have far-reaching effects, as Chrome is currently the most popular web browser, with over 60% of internet users browsing the web on Chrome.

This transition will change how digital advertisers target online consumers, because they won't be able to gather users' information in a way they have been doing for decades, share information about users' online activity between companies and gather the information that can prove ads are reaching the targeted audience.

While some marketers and digital advertising companies are concerned about the move away from cookies, Elea Feit, PhD, an associate dean for Research and associate professor of Marketing in the LeBow College of Business, believes digital advertising can still be effective without cookies.

Feit shared her insight into digital advertising through this transition away from cookies.

What is a cookie?

A cookie is a file that a website leaves on your computer to track your behavior. For instance, a retail website might use a cookie to keep track of what you have left in your shopping cart.

A third-party cookie – the ones that Chrome is eliminating – help different companies exchange information about the user. For instance, suppose you see an ad for a jewelry store on a news website. The news website will leave a third-party cookie, which helps the jewelry store know which users on their website have seen the ad. This is all done without the websites knowing the user's name or email address. Google is phasing out third-party cookies in their Chrome browser, which will make it harder to share this information between companies.

How does cookie deprecation, or phasing out, affect digital advertisers?

Cookie deprecation creates two problems for advertisers. First, it will be more difficult to target which customers see an ad. Second, it will be more difficult to track the performance of those ads.

For targeting, specifically what is difficult?

Suppose a small jewelry business wants to target customers, who have already visited their website, with ads on Instagram. Cookie deprecation makes it more difficult for the jewelry company to transmit the data on who has visited their website to Instagram.

Are there other options for targeting?

Absolutely! Advertisers have been targeting ads since the 1800s and we didn't have cookies back then.

Since the beginning of advertising, ads were targeted based on the content that the ad appears with. This is called context targeting. The jewelry business might buy ads in a luxury magazine like Conde Nast, because people who read Conde Nast are more likely to buy jewelry. A company that sells tools might advertise in how-to videos for home improvement on YouTube. Context targeting is a lot more privacy-friendly because we don't need to track the user's past behavior at all. Instead, advertisers target the user based on what she is doing right now.

I have a personal hunch that context targeting is very effective. When a user is reading Conde Nast, she is just more "in the mood" to think about luxury purchases. Using third-party cookies to target that same user when she is reading a cooking blog may not be as effective because she's not thinking about jewelry – she is thinking about cooking.

My Journal of Marketing Research paper from 2022 shows that advertisers value ads more when they know the ad context and I'm currently thinking about a new research project to investigate the effect of context targeting.

For tracking ad performance, why is cookie deprecation a problem?

Going back to the jewelry store example: suppose the store buys those ads on Instagram. Cookie deprecation makes it hard to transmit data between Instagram and the jewelry store about which customers saw the ad on Instagram and made a purchase at the jewelry store. So, it will be much more difficult for Instagram to report the conversion rate – the percentage of users who saw the ad who eventually purchased – to the jewelry store.

How should advertisers respond when the data they get on conversion rates is no longer reliable?

I personally don't think this is such a huge problem, because conversion tracking is misleading. If I tell you that 5% of people who saw the ad made a purchase, you don't know how many of those people would have made a purchase even if they didn't see the ad. Perhaps the ad was totally ineffective and all of those users would have purchased anyway! The conversion rate overstates the value of the ad to the advertiser.

Instead, advertisers should think about using experiments to measure the effects of ads. For example, you can temporarily turn off ads in one city to see how much your sales from that city go down. Or you can increase your ad spending in another city to see how much your sales increase. This gives you a true reading on how your ads are working. I have two recent papers on advertising experiments: Feit and Berman 2020 and Berman and Feit 2024 both in Marketing Science.

Another option for measuring ad performance is to use a predictive model to relate your total sales in each region to the advertising you purchased. This approach is called marketing mix modeling. I'm currently on a panel of experts working with the Marketing Science Institute to develop guidelines for marketing mix modeling and I've consulted with a few local companies on their marketing mix modeling systems.

Are there any "winners" from cookie deprecation — beside consumers who get more privacy?

Yes, the biggest ad platforms – Google, Amazon and Facebook – will be the big winners here. That's because they already have a lot of data on their users and they have less need to share data with other companies.

Amazon knows what their users buy, Google knows what they search for and where they go, Facebook knows all their friends and personal interests. So, the deprecation of third-party cookies won't affect them as much. In fact, it puts them at an advantage relative to other companies that sell advertising. Potentially, they will start to charge advertisers more, relative to independent media platforms, like online newspapers and magazines, who will continue to struggle.

Media interested in speaking with Feit should contact Annie Korp, assistant director, News & Media Relations, at 215-571-4244 or amk522@drexel.edu.

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