IDFA & Third-Party Cookies: What Upcoming Changes Mean for Marketers

Big changes are on the horizon for digital advertising. Until now, advertisers have been swimming in targeting and performance measurement options made possible by unique mobile device ID numbers (like Apple’s IDFA and Android’s AAID) and desktop third-party cookies.

But as internet users get more protective of their personal information and demand more transparency about how that data is being used, tech companies that collect this data and help create the targeting wonderland are beginning to put the control of what is shared and how they share it back in the hands of the consumer.

In this new world of greater data privacy and consumer control, a 35-year-old woman gets bombarded with a mobile ad for a men’s hair loss product. She visits Facebook eight times a day, and each time she sees the SAME IRRELEVANT AD.

As for you, imagine seeing an ad for a product that you know your best friend would love as a birthday gift. You click on it and add the product to your cart. You get distracted by a text from this same best friend, so you never get around to making the purchase.

In the old world (the targeting wonderland, if you will), you would have likely seen ads on social media or other websites reminding you to go back and complete your purchase. You might have even been given a discount code or promo offer along with the reminder.

But in this new world, you won’t get that ad reminding you that this product is in your cart. When the big day rolls around, your friend never receives your thoughtful gift — because you forgot to complete the purchase.

You promise to never let their birthday go by again without a gift, so you go to your favorite free ‘reminder’ app and discover that it now costs $2.99 a month because they aren’t getting the advertising revenue that allowed them to provide access for free.

Sure, sometimes we joke about Alexa listening to our conversations. But on some level, we have become comfortable with — and even reliant upon — a personalized internet with ads based on our interests, behaviors, connections and online activity.

Over the next two years, changes will be made to limit or completely phase out the way this data is collected. The plus side is that these changes are providing users more control over their personal data. The downside is the lack of personalization, targeting, advertising attribution and value this provides to advertisers and the apps that rely on this data for monetization.

Apple announced last year that in early 2021, iOS 14 would begin requiring all apps in the Apple App Store to ask users for permission to track them ‘across apps and websites owned by other companies’ via IDFA (Identifier for Advertisers). This is something that users could previously opt out of, but they were opted in by default.

While there is no way of knowing how users will react until the update is live, app developers are estimating opt-out rates as high as 80 percent. Opting out means they won’t see personalized ads based on their online activity — and businesses won’t be able to attribute most of their online purchases to digital marketing efforts. With 48 percent of the smartphone market being iOS devices, that would significantly change the number of people available for targeting.

While this change will affect all apps that serve ads, Facebook has been the most vocal about their aversion to the update. The majority of Facebook users access the platform via its app, and the social media company’s value proposition for advertisers is heavily weighted on targeting data and attribution measurement.

App developers are hopeful that educating audiences on the way their data is being used will increase their likelihood to opt in to being tracked, while simultaneously looking for other solutions to deliver some of the same targeting and tracking components in an environment that better protects user privacy. There will be a lot more to come on this topic once the requirement goes into effect in the coming weeks.

The other major change coming to ad targeting and tracking is from Google. Unlike Apple’s impact in the mobile space, Google’s update will have more impact on desktop activity. It was  announced in 2020 that they would begin phasing out the use of third-party cookies in 2022.

Cookies are a piece of code that gets dropped on your browser each time you visit a website and are the most common way to track users online. First-party cookies are placed by the owner of the site you visit, and data collected is not shared with other vendors. This type of cookie lets you place something in your cart on a website, leave the site, and then come back to find that item still there.

Third-party cookies are placed by domains other than the one that you are visiting and exist solely to collect information for advertising purposes. The use of third-party cookies on the Safari browser was actually already discontinued in 2017, and Firefox followed suit in 2019. However, in total, they only account for 40 percent of the web browser market share. Google Chrome makes up 55 percent of the share alone, so it makes their adoption of this trend much more impactful. When Google flips this switch, it means the end of behavioral ad targeting, retargeting and frequency capping – unless a new solution is unveiled before then.

With all of these looming changes, you can bet that all the best minds in the ad tech industry are busy trying to come up with solutions to appease both the targeting and attribution needs of advertisers while respecting the control that consumers are demanding of their privacy.

There isn’t a solution yet, but if you search any of these subjects, you could spend days catching up on the conversations that are being had. In the advertising landscape, times are a-changin.’ While it may still seem to the casual observer like one big battle royale between mega-rich tech companies, the actual impacts are most likely to be experienced by consumers and small business owners.

We’re monitoring the progress of these solutions with a watchful eye so we can inform our clients and prepare for the new new age of advertising.

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