The death of third-party cookies – long live first-party data

June 17, 2021

What’s all the crumble?

Well, unless you’ve been living under a rock, it’s no secret that third-party cookies are disappearing – and for good.

Yep, it’s true. Apple and Mozilla have already cast them out, and Google is next in line. The new protagonist of the digital advertising show? First-party data. And for those who don’t already have a strategy in place to manage first-party data, the doom of third-party cookies might keep you sleepless at night.

Why? Until recently, companies have relied heavily on third-party cookies for targeted advertising. According to McKinsey & Company, programmatic advertising accounted for 78.4% of US spending in 2020 and, among non-premium publishers, over 80% of their ad revenue is dependent on third-party targeted ads. So, this means that up to $10 billion is at risk in US publisher revenue. And this is only in the United States.

Now, imagine what would happen if we were to shut down third-party cookies as we speak, and on top of that, not have a strategy in place for first-party data. Yikes…

But wait! There is hope.

For savvy marketers ready to adapt to this inevitable change, there is still some time to adjust your approach. And if done correctly, the death of third-party cookies will feel like a drizzle rather than a thunderstorm. Because, indeed, there are other alternatives marketers can implement to tackle the new reality of digital advertising.

But first, let’s take a trip down memory lane and remind ourselves what these third-party cookies are all about.

What Are Third-Party Cookies and What Data Do They Collect?

Aside from not being the crunchy kind, a third-party cookie is a type of tracking code placed in your web browser after visiting one or multiple websites.

They are, however, not created and tracked by the websites you visit. Instead, they are generated by other domains, specifically third-party service providers which organizations pay to leave tracking code in a user’s browser (hence the name, third-party cookie). And unlike first-party cookies that are only accessible via the domain that created them, third-party cookies are accessible on any website that loads the third-party server’s code.

As a result, a third-party cookie can gather data across many different websites. What’s more, it allows you to collect different types of data from users, for instance, personal data: age, gender, location, browser, and device, as well as behavioral data, such as: visited webpages and period of usage.

Okay, so now we’ve refreshed our memory a bit and understand what third-party cookies are and what information they can collect. Now, let’s take a look at how they have helped marketers optimize campaigns and marketing overall.

What’s the Role of Third-Party Cookies in Marketing?

As you might have guessed, using third-party cookies gives marketers the ability to receive rich and relevant insights about their target audiences.

Because marketers can track users across the internet, it becomes easier to attribute user activities to the correct touchpoints in the customer journey, like for example, which channel drove the user to convert. What’s more, third-party cookies also enable cross-device tracking, which facilitates the process of monitoring online-user behavior.

These insights are, in turn, used to create targeted advertising campaigns directed towards audiences with certain traits based on the collected data.

And it doesn’t stop there!

Marketers can then also automate the processes of targeting and retargeting, thanks to tools such as a marketing automation software. This saves you time while increasing the return on investment from your target audience. In other words, marketers can sit back and relax and watch the money pour in.

But those days are soon gone.

The Death of Digital Marketing with Third-Party Cookies

So, the doom of third-party cookies has been prophesied for a while now, but why? Well, it’s actually for the same reason it has been praised – namely: data.

Specifically, it’s the sharing of third-party data that has been the subject of debate. People are now more informed about what type of data companies collect from them, and these days we are much more concerned about our privacy. In Blockthrough’s 2021 Pagefair Adblock report, among the 5’423 US internet users that were surveyed, “56% of users rated their online privacy as “extremely important” and 31% rated it as “somewhat important.” What’s more, it’s only in recent years that regulations concerning online consumer privacy have been implemented. But despite this, when asked whether users think privacy regulations such as EU’s GDPR and California’s CCAP improve their online privacy, only 14% of the respondents agreed. Not surprisingly, the big players have been pushed to act in response to consumer demands for increased data protection.

Apple, which already blocks third-party cookies by default in its web browser Safari, introduced in 2017 the Intelligent Tracking Prevention (ITP), which was aimed at limiting website tracking using third-party cookies. Then, in 2019, ITP 2.2 and 2.3 were released to delete cookies automatically after 24 hours, thus restricting client-side tracking capabilities even more. And with the launch of IOS 14.5 at the end of April, mobile applications are now required to ask users who have upgraded to gather tracking data. This means that iPhone users must opt-in to receive targeted advertisements each time they enter a mobile app. Since the launch of IOS 14.5, the opt-in rate among upgraded users is around 15% worldwide. However, among apps that have displayed the prompt to opt-in, the opt-in rate across is 24%.

It then goes without saying that the giant Google is up next to remove its support for third-party cookies altogether. In early 2020, Google announced that they are planning to phase out third-party cookies from Chrome before 2022. Moreover, Google has also decided to not replace third-party cookies with any alternative user-level identifiers to track users across the web. David Temkin, Director of Product Management, Ads Privacy, and Trust at Google, stated the following in their announcement:

“We realize this means other providers may offer a level of user identity for ad tracking across the web that we will not — like PII graphs based on people’s email addresses. We don’t believe these solutions will meet rising consumer expectations for privacy, nor will they stand up to rapidly evolving regulatory restrictions, and therefore aren’t a sustainable long term investment.”

Aside from the big players leaving third-party cookies altogether, target ads based on third-party data have been a challenge for while now. Already in 2017, an ad-serving firm, which analyzed 20 advertisers, found that 64% of third-party cookies were either blocked or deleted by web browsers. And among devices, mobile phones stood for a rejection rate of 75%, while the rate for desktops was 41%.

However, aside from privacy being one of the main causes of Adblock usage, a bad user experience also tops the list. Because if there is something people value almost as much as their privacy, it’s not getting spammed with irrelevant advertisements. In fact, recent research shows that, among the US respondents in Blockthrough’s Adblock report, 81% use ad blockers to avoid interruptive/annoying ad experiences, compared to 58% who use it to protect their privacy. So when asked whether users would be open to light and non-intrusive ads to support web publishers, 63% responded yes.

Evidently, the user experience is a deciding factor in regards to how effective your digital advertising will be. But how can marketers achieve this now that they can’t rely on third-party cookies to enrich user profiles with relevant data? Unless you’ve not already guessed it, your new secret marketing weapon is no other than first-party data.

First-Party Data is Now More Valuable Than Ever

Okay, so let’s do a short recap of what first-party data actually is.

First-party data is information you as a company can collect from both online and offline sources that belong to you, for example, your company website, marketing automation tool, CRM, data warehouse, social media accounts, etc. Moreover, the types of data you can collect are demographic, behavioral, transactional, website session duration, customer feedback from call centers, and many more.

What makes first-party data so valuable in this soon-to-be third-party cookieless world is that:

  1. The data belongs to you.
  2. You have collected it for free.
  3. To own the data, you have had to receive consent from your users.

Because users have consented to have their data used and stored, first-party data is by default compliant with regulations such as GDPR, CCAP, CAN-SPAM, and CASL. This also means first-party cookies, which collect and track users only on your company website, can still be used. And since third-party cookies are being phased out by big players, first-party relations become essential and necessary to implement in your marketing strategy.

What’s important then is to collect and unify all your data, to create one single view of your customer. More specifically, by unifying your data you can track users across your entire ecosystem, while simultaneously not infringing on your users’ privacy. It will also enable you to aggregate relevant data into a single source of truth and, as well as allow you to gather data about your content and advertising. This lets you measure the effectiveness of your marketing efforts – to profile consumer cohorts both effectively and consistently.

By doing so, you will be able to target your users with relevant and engaging content in the right channels at the right time. But to achieve this, you will need to invest in a tool or system that can manage marketing data, resolve customer IDs, and interact with marketing and advertising technologies, such as a Customer Data Platform (CDP).

Once you have a technology in place that can help you collect, analyze and act on your first-party data, the next step is to return to the drawing board and bring out your inner creativity. Because until now, marketers have relied on third-party cookies to orchestrate and deliver targeted and relevant marketing.

Now, it’s time to create a new strategy focused on first-party data which allows you to create worthwhile customer experiences. After all, without third-party cookies, delivering an engaging experience becomes crucial for companies, since it’s the way to create and sustain connections with users.

Where should you start? Let’s go through some alternatives to cookie-based marketing.

Contextual advertising and content marketing are in (again)

Yes, it’s time to reintroduce two old friends: contextual advertising and content-based marketing.

Unlike ads that rely on third-party data to target users, “contextual advertising is an automated process where a promotional message is matched to relevant digital content. The algorithms underpinning contextual advertising select the advertisements based on keywords and other metadata included in the content”, says James Chen at Investopedia.

In other words, contextual ads depend on the content a user is viewing, instead of adapting the advertisement to data about a particular user. For example, if you’re surfing the internet and decide to visit a website that sells clothes, the contextual ad will advertise a pair of jeans to you. To compare, ads that rely on third-party cookies will instead show you an apartment you have been scouting two days earlier, which can perhaps feel a bit out of place when browsing for a pair of pants. Meanwhile, contextual ads adapt to the digital content you are currently viewing, reducing the creep factor by a mile.

So, to truly maximize the value brought by contextual ads, marketers must once again give time and effort to content creation and see it as a key component in their overall marketing strategy.

Aside from contributing to sales goals, content can be used to both attract and engage with users, in exchange for information such as their contact details. According to research conducted by McKinsey & Company, organizations should encourage visitors to register or subscribe in exchange for free content (such as white papers and subscriber-only content). Moreover, companies should also consider offering premium content exclusively for paying subscribers.

This way, companies can receive more first-party data from their users and in turn adapt the content according to details received about each user.

To get into the details, take a look at our >> CDP Guide.

First-party data + email marketing = true

Using content as lead magnets and creating targeted ads is great and all, but it’s not enough – [you] also need to reach out.

How? Well, by email of course!

Sure, marketing automation using third-party cookies is not an option anymore. But remember, as we’ve discussed earlier, first-party data is your new strategy. And with all that information you have [legally] stored about your customers, you can target users with personalized content (like a newsletter or email ad) that brings value to them and increases the likelihood of conversion.

What’s more, email marketing is cost-effective. In fact, a survey showed that 59% of marketers in b2c said email marketing is their biggest source of return on investment, and for those who used segmented campaigns the increase in revenue was a staggering 760%. And to top it all off, the cost per acquisition has generally taken place before acquiring an email address to your email list.

The beauty of email marketing is also the ability to further segment your audience, which can be achieved via progressive profiling – which is the process of collecting smaller sets of data at a time from your audience. This way, despite third-party cookies being out of the picture, you can collect details about your users upon request, without infringing on their privacy.

Now, if you’re worried about users perceiving your emails as spam, remember two things:

  1. Thanks to first-party data, you can tailor your email content according to their specific wants and needs, making the content you’re offering highly relevant.
  2. Using the right tools and technology, for instance, a CDP or a Marketing Automation tool, you can adapt the timing of your email send-outs to the user in question (yes, that’s pretty cool).

By combining email marketing with your content strategy, you can create relevant and engaging content, which in turn brings about a better customer experience – which is key in tomorrow’s third-party cookieless world.

[Target Ads] on Your Social Media Platforms

The beauty of social media? You can create targeted ads based on your first-party data.

When creating ads using platforms such as Facebook or LinkedIn, marketers can enter their existing first-party data and match different data points to create so-called lookalike audiences. This way, you don’t depend on data from the audience you’re targeting. You only target segments of people, or even target individual users, on the platform that match the details of your first-party data.

Thanks to this, you can target audience members with highly personalized marketing campaigns. And another big plus with social media marketing, of course, is the opportunity to also receive earned media through organic engagement.

Google’s First-Party Cookie – Give it a Go!

Have you heard about Google’s privacy sandbox? It’s a relatively new initiative proposed by Google that will substitute the removal of third-party cookies. According to Google, the objective of the privacy sandbox is to contribute to “a safer, more sustainable, and more private web.”

Unlike its predecessor the third-party cookie, Google’s first-party cookie won’t be able to identify and track individual users. Instead, it will rely on Federated Learning of Cohorts (FLoC), meaning that individual users will be hidden within a larger group of people who share common interests.

Sure, hyper-targeting users is perhaps not an option using Google’s first-party cookie. However, the upside of the story is that you have –surprise surprise– first-party data. Although you won’t be able to target individual users, you can still target groups of users based on data you have collected about your existing audience.

Since Google’s sandbox initiative is still a work in progress, we encourage you to keep up to date with the latest news concerning the project.

Take Advantage of Social Media Analytics

Having social media platforms means you can also monitor insights about relevant audiences which help you further understand their wants and needs. For example, you can measure which content your audience is engaging with most and then adapt future posts accordingly. What’s more, social media channels are also a great place to learn more about your competitors and uncover industry trends, which also can help you conduct better market research and better position yourself in the market.

Social media insights can then further enrich your first-party data, which you then use to create targeted and tailored content that is both relevant and engaging to your audience.

The Doom of Third-Party Cookies Doesn’t Have to Be Your Doom

The assertion made throughout this article is that the doom of third-party cookies is near. But for some companies like Apple and Mozilla, this is already a reality. And it’s the online privacy concerns among consumers that have brought about this reality. What’s more, the savior is no other than first-party data. And companies that are aware of this change and willing to adapt their business strategies will discover that the doom of third-party cookies is not the end. It’s simply a slight detour in their journey.

Want some help on where to get started? Let’s get in touch, and let us help you embark on this epic journey!