The New Year has begun with Google rolling out a feature that restricts access to third-party cookies – small files that collect analytic data - on Chrome to a small batch of users, and reiterating its commitment to phase it out fully by second half 2024, to meet privacy diktats. The move to end third-party cookies is expected to trigger a big shift in digital marketing strategies of brands in India where digital advertising market was estimated to have reached nearly ₹48,000 crore at end of 2023, in a total ad pie of nearly ₹99,000 crore. It is expected to escalate digital advertising costs while pushing brands to focus on first-party data, AI and contextual ads.

In a blogpost , Google’s Anthony Chavez said, “On January 4, we’ll begin testing Tracking Protection, a new feature that limits cross-site tracking by restricting website access to third-party cookies by default. We’ll roll this out to 1 per cent of Chrome users globally, a key milestone in our Privacy Sandbox initiative to phase out third-party cookies for everyone in the second half of 2024.”

While big brands in India seem unfazed by the move and many like Maruti have already put in place first party data management and consent management tools that still give them a single unified view of consumers, it’s the small publishers and ad-tech companies that are likely to be hit. Email newsletters is an alternative that many have explored but not every consumer is willing to keep sharing email IDs and login on every website she visits.

Google is offering an alternative with its Privacy Sandbox technology and FLoC (Federated Learning of Cohorts), a type of web tracking that clubs people in interest based groups. But analysts are not wholly convinced about its effectiveness.

Kashyap Kompella, CEO of RPA2AI Research, believes that a lot of the marketers are still not prepared for this shift. “With Chrome browser having nearly two-thirds of the browser market share, Google’s phasing out support for third-party cookies will have significant ramifications for both adtech and martech. Using Google’s new privacy sandbox approach, marketers will only be able to target user categories, based on their interests, but not at the individual level.”

Jessie Paul, CEO, Paul Writer said,” Advertisers will see a drop in their ability to finely target their audiences. Companies need to focus more on delivering value that makes their customers want to stay in touch with them and invest in a good customer data platform. First party cookies remain and advertisers will shift to real-time targeting.” She added that in order to get better value from their ad spend, companies will have to invest in pull-marketing and the martech that drives it.

Disruptive force

Karan Taurani, Senior Vice-President Elara Capital said the transition towards a cookie-less environment, especially considering the dominance of Android in the global smartphone ecosystem, is expected to be a “disruptive force.”“ The restrictions imposed on platforms for third-party data usage for advertising is expected to lead to a substantial increase in data costs. Advertisers are expected to increasingly favour e-commerce platforms due to their access to valuable first-party data,” he added. Taurani further said that platforms and ad tech companies may also charge higher prices from advertisers to recover the high data costs.

Himanshu Arora, Co-Founder of Social Panga pointed out that “cookies” have played a crucial role in the realm of digital advertising. “However, the landscape is evolving, and as advertisers, we must adapt and make necessary adjustments,” he said, adding that advertisers are actively exploring alternative strategies. This includes prioritising first-party data, embracing contextual targeting, incorporating advanced technologies like AI, and ensuring compliance with privacy measures, he pointed out.