What are cookies?
Before we dive into the third-party cookies, it’s important to understand how cookies work. Unfortunately, digital cookies aren’t as delicious as they sound. Cookies are text files that contain small pieces of data. With cookies, a website can remember your actions, and improve your web browsing experience. Cookies are chunks of data, and data is often passed on from one party to another. As a result, we can distinguish several kinds of cookies, including first-party and third-party cookies.
First-party cookies are files directly created and stored on your web browser by the website you’re visiting. They enable site owners to collect analytical customer data, remember language settings, and perform useful functions that contribute to a good user experience. Examples are pages you visited, or items stored in your shopping cart. The data owner is the owner of the domain that you visited, and the owner has gained access through user consent. It’s first-hand data, and as a result, its quality is high, and the targeting reach is exact.
A third-party cookie (3PC) is placed by a (third-party) website you're not directly visiting. Third-party cookies are made possible by embedding code from another website on the website you visit. Third-party cookies allow a third party to collect, track and use your data.
Third-party cookies are used for:
- Retargeting: Retargeting makes it possible to reach visitors who have visited certain pages of your website via image or text advertisements on third-party websites.
- Cross websites tracking: The tracking of visitors across different websites
A data provider collects third-party data with no direct relationship with the user. However, these data providers create extensive segments and profiles of users' online behavior with data management platforms. Therefore, the data is usually aggregated into datasets sold to advertisers on a data marketplace. As a result, the data quality is variable, and the targeting reach is broad.
Why is Google Phasing Out Third-Party Cookies?
Internet users want more privacy on the web. That means more transparency, choice, and control over how their data is used. The issue with third-party cookies is that most people aren't aware that advertisers are using and selling their personal data. This often leads to privacy concerns, and without alterations, they may fall in violation of GDPR and other privacy regulations.
In answer to the difficult nature of third-party cookies, browsers such as Safari and Firefox have stopped using them years ago. Now, Google is about to do the same. The search engine announced they will eliminate third-party cookies by late 2023. And because Google has as much as 60% market share in the web browsing industry, this decision means the death of 3PCs as we know them. Something that hugely impacts marketers around the globe.
What does that mean for marketers and personalization?
For marketers, the death of third-party cookies means less access to relevant data. Ads will be less well-targeted and therefore less relevant to customers. This potentially leads to a conversion collapse, while the costs will increase. The phase-out means marketers must pivot their advertising and personalization strategies. At the same time, this event also presents a huge opportunity for companies to gain a competitive advantage.
Following Epsilon's 3PC deprecation report, 80% of marketers across five different industries are 'very reliant' or 'moderately reliant' on 3PCs for digital advertising. According to the same report, 69% of marketers think this legislation will significantly impact GDPR and CCPA. So, if you’re a marketer, eliminating third-party data means you have to adapt. The quicker, the better.
The shift to first-party data
The first step of your pivot means you must prioritize first-party data collection. Surely, this is the most challenging form of leveraging data due to high bounce rates and short visit sessions. Nevertheless, it will be essential to control your data and own the data to realize growth in the future.
Marketers have always used first-party and third-party data to run targeted advertising campaigns and personalize the customer experience. With the phasing out of third-party cookies, companies must adapt to a post-3PC world. Therefore, the importance of 1st-party is increasing for targeted advertising and personalizing the customer experience.
The collection of first-party data will become an important marketing activity and a long-term trend for many reasons:
- Eventually, third-party data will disappear
- You are the boss of your data
- You build a direct relationship with your audience
- You are independent of data providers
- First-party data forms a moat around your business and gains you a competitive advantage
You can't rely on third-party data anymore. Instead, you will have to collect data and prepare for this event with a consistent and reliable first-party data strategy based on privacy, trust, and user consent.
Prepr CMS can help you with getting a head start on your competition. Our data-driven CMS can help you with collecting first-party data and personalizing the customer experience.