Advertising Cookies: What You Need to Know

The digital advertising landscape is changing rapidly, driven by growing concerns about user privacy and evolving regulations. At the heart of this transformation lies advertising cookies, which have long been essential to targeted marketing.

But with privacy taking centre stage, advertisers and businesses are rethinking their strategies. This article explores what advertising cookies are, how they work, and how businesses can balance effective advertising with respecting user privacy in this new era.

Before we dive into the details of advertising cookies, let’s first examine how the broader landscape of digital advertising is evolving.

The end of third-party cookies

For years, third-party cookies have been the backbone of online advertising. They’ve enabled businesses to track user behaviour across websites, helping to deliver personalised ads and measure campaign success.

But privacy concerns have reshaped the rules. Major browsers like Safari and Firefox now block third-party cookies by default. Google Chrome has pivoted from phasing them out to introducing the Privacy Sandbox—a set of privacy-preserving tools designed to maintain ad relevance while respecting user privacy. This shift challenges advertisers to explore new, privacy-conscious ways to connect with their audience.

The rise of first-party data

As third-party cookies fade, first-party data has become the foundation of modern digital marketing. Unlike third-party cookies, it is collected directly from users with their consent. This includes information like browsing habits, purchase history, and preferences shared on a website. 

Businesses can use this data to personalise user experiences while complying with regulations like GDPR and CCPA. Unlike third-party cookies, first-party cookies prioritise trust and transparency, offering users more control over their data.

 It’s a win-win: users feel secure, and businesses can still deliver relevant, personalised experiences.

Cookies power much of the internet experience, but not all cookies are the same. There are mainly two types of internet cookies:

• Essential Cookies: These are the unsung heroes that keep websites running smoothly—managing login sessions, remembering items in a shopping cart, or enhancing security.
• Non-Essential Cookies: These include analytics and advertising cookies that track user behaviour to improve the user experience or deliver targeted ads.

Advertising cookies, a type of non-essential cookie, collect data such as browsing history, device type, and demographic information to craft personalised ads. Tools like Google Analytics and Google Ads rely heavily on these cookies to optimise ad campaigns and measure their effectiveness. Additionally, they play a crucial role in retargeting strategies, ensuring ads remain relevant to the audience. They are often created by third parties.

Legal requirements

Privacy laws like GDPR (in the EU) and CCPA (in California) have made cookie consent mandatory. Businesses must:

• Clearly explain what cookies they use and why.
• Obtain explicit consent for non-essential cookies.
• Allow users to manage or withdraw their consent easily.

Being transparent about cookie use isn’t just about compliance, it builds trust with users, showing that their privacy matters. Failure to comply can result in hefty penalties and eroded user trust, making it imperative for businesses to adopt ethical data collection practices. 

Advertising cookies are the tools behind those eerily relevant ads. Here’s how they work:

1. Retargeting cookies: These cookies remember users who visited a website but didn’t take an action (like completing a purchase). They help businesses serve reminders through ads.
2. Behavioural advertising cookies: These cookies analyse user preferences over time, delivering personalised ads based on browsing behaviour.
3. Third-party advertising cookies: These cookies track user activity across multiple sites and are a staple in programmatic advertising.

Advertising cookies function by tracking user activity on websites to gather data about their preferences, interests, and behaviour. These cookies identify patterns such as frequently visited pages, products viewed, or time spent on certain websites. This data is then used to serve personalised ads that are more likely to resonate with users, enhancing engagement and conversion rates.

Example: Imagine a user browsing an online store for running shoes but leaving without making a purchase. An advertising cookie tracks this behaviour, and the next time the user visits a different website, they might see an ad showcasing a discount on the exact pair of shoes they viewed earlier. This targeted approach helps businesses reconnect with potential customers while optimising ad spend.

Advertising cookies offer clear and measurable advantages for businesses:

• Enhanced personalisation: Tailored ads resonate more with individual users, driving higher engagement and conversion rates. By understanding user preferences and browsing habits, businesses can create highly relevant ads that feel less intrusive and more helpful. 

For example, a fitness brand might use cookies to promote gym equipment to users who have recently searched for workout plans.

• Optimised ad spend: Advertising cookies enable businesses to target specific audiences more effectively, ensuring that marketing budgets are spent wisely. This precise targeting reduces wasted ad impressions and increases ROI. For instance, businesses can identify and focus on high-converting user segments, boosting profitability.
• Performance tracking: With tools like Google Analytics and tracking cookies, businesses can measure the effectiveness of their ad campaigns in real time. These insights allow for continuous improvement by identifying which strategies work best. Metrics such as click-through rates, bounce rates, and conversion rates help refine future campaigns.
• Cross-platform consistency: Cookies ensure a seamless advertising experience across multiple platforms, such as desktop browsers, mobile devices, and apps. This cohesive approach strengthens brand messaging and user engagement.

Despite their benefits, advertising cookies raise valid privacy concerns:

• Tracking without consent: Many users remain unaware of how much data is being collected about them. This lack of transparency often leads to discomfort and mistrust, particularly when users feel surveilled without their explicit agreement.
• Risk of data misuse: Without robust safeguards, personal data collected by cookies can be vulnerable to misuse or breaches. This is especially concerning when cookies store sensitive information such as IP addresses, location, and browsing history. For example, a breach could expose users’ personally identifiable information (PII), damaging both user trust and brand reputation.
• Loss of trust: Over-aggressive tracking practices, such as bombarding users with retargeted ads, can alienate potential customers. Users may perceive such tactics as invasive, leading to negative associations with the brand.

The value of personalisation

Personalised advertising is highly effective—it has been proven to drive better engagement and deliver stronger results. However, achieving this level of relevance while maintaining user privacy requires careful planning and a thoughtful approach. Consumers appreciate ads that align with their interests and needs, but not when it comes at the expense of their trust. Striking the right balance between personalisation and privacy is essential for long-term success.

Building trust through transparency

Transparency is the foundation of user trust. Businesses can:

• Explain clearly how data is collected and used.
• Offer simple tools for users to manage cookie preferences.
• Regularly update privacy policies to reflect new practices.

Transparent communication builds credibility and reassures users about the ethical use of their data. For example, businesses can create visually appealing, user-friendly consent banners that simplify the decision-making process.

Key challenges

• Complex regulations: Privacy laws vary across regions, making it difficult to maintain ongoing compliance.
• User resistance: Many users opt out of non-essential cookies, limiting the data available for personalised advertising.
• Technical demands: Managing consent seamlessly across multiple platforms, browsers, and devices requires sophisticated systems.

Best practices for cookie consent

To overcome these challenges and build a privacy-conscious advertising strategy, businesses should implement the following best practices:

• Simplify consent language: Use clear, non-technical language in cookie banners to improve user understanding and engagement.
• Offer granular controls: Allow users to personalise their cookie preferences rather than forcing an all-or-nothing decision.
• Implement script blocking: Ensure that non-essential scripts remain inactive until users have explicitly provided consent.
• Use Consent Management Platforms (CMPs): Tools like CookieYes help streamline consent management, ensuring regulatory compliance while maintaining a seamless user experience.

The decline of third-party cookies doesn’t mean the end of personalised advertising. Businesses are exploring innovative alternatives, such as:

• Contextual advertising: Instead of relying on user data, contextual ads target based on webpage content. For instance, a fitness blog might display ads for workout gear.

• First-party data strategies: Collecting data directly from users—through email sign-ups, surveys, or loyalty programs—enables personalised experiences while ensuring privacy compliance.
• Privacy-preserving technologies: Emerging tools like Google’s Privacy Sandbox aggregate user data and use machine learning to deliver ads without compromising individual privacy.

Measuring effectiveness without advertising cookies

Even without advertising cookies, businesses can still gauge their advertising impact:

• Leverage first-party data: Analyse user data collected with consent to gain insights into preferences and behaviours.
• Adopt privacy-friendly analytics: Tools that use anonymised data help measure ad performance without invading privacy.
• Focus on contextual metrics: Track engagement metrics for ads served based on content relevance rather than user data.
• Encourage user feedback: Surveys and polls can reveal valuable insights into ad effectiveness and user preferences.

The transition to a privacy-first advertising landscape is both a challenge and an opportunity. Businesses must adapt to the loss of advertising cookies by embracing first-party data, contextual advertising, and privacy-preserving technologies.

At CookieYes, we empower businesses to navigate these changes with tools that prioritise compliance, transparency, and user experience. From customisable consent banners to automatic script blocking, we help you build trust with your audience while achieving your advertising goals.