Introduction
In the evolving landscape of digital marketing and data privacy, the future of third-party cookies has become a pressing topic. For years, these small tracking files have been pivotal in shaping online advertising strategies, enabling businesses to monitor user behavior, personalize experiences, and measure campaign effectiveness. However, growing concerns over privacy and increasing regulatory pressures have prompted a significant shift in how these cookies are used and managed.
What Exactly Are Cookies? (And No, Not the Edible Kind!)
Cookies are small files that a website stores on a user's web browser during their visit. These files hold user data such as language preferences, login information, browsing history, and even items added to the cart. In some cases, they may also collect personally identifiable information, including the user's name, email address, and phone number.
There are two primary types of cookies to consider:
- First-Party Cookies: These cookies are set by the website you are currently visiting. They are designed to improve user experience by remembering settings and preferences specific to that site.
- Third-Party Cookies: These cookies are set by domains other than the one you are visiting. They are used to track user behaviour across various sites and to deliver targeted advertisements based on that behaviour.
How Are Third-Party Cookies Used in Digital Marketing?
While first-party cookies track users exclusively within your own website, third-party cookies extend this capability across multiple sites beyond your domain. This broader tracking ability has made third-party cookies a cornerstone of modern digital marketing.
Marketers utilize third-party cookies to monitor user behaviour across various websites, gathering crucial data on user interactions and preferences. This information is then analysed to derive actionable insights, which are used to create personalized experiences and fine-tune advertising campaigns.
The Rise and Decline of Third-Party Cookies
The phasing out of third-party cookies has been a major industry event, with many companies preparing for the change due to growing privacy concerns and evolving regulations. In 2019, Apple led the charge for user privacy with the introduction of Intelligent Tracking Prevention (ITP), which restricted advertisers from tracking users' web behaviour and historical data unless they directly interacted with them. Google followed suit by announcing its plan to eliminate third-party cookies from Chrome, initially aiming for a complete phase-out by 2022, later delayed to 2024. Without third-party cookies, 85% of current digital marketing strategies would have become ineffective, pushing advertisers to explore alternative methods, such as interest-based targeting or browser fingerprinting.
Why Are Third-Party Cookies Being Removed?
Currently, WordPress stands as the most widely used CMS globally. Initially introduced in 2003 as a basic blogging tool, it now powers 43.2% of all websites. This free and open-source CMS is favoured by numerous organizations, including non-profits and businesses. Users can easily and swiftly customize their WordPress sites through a diverse array of plugins and themes.
The move to phase out third-party cookies is driven by several key factors. Primarily, users are increasingly concerned about their privacy and do not want to be tracked across every website they visit. While they appreciate a personalized online experience, they demand that it does not compromise their privacy. This shift in user expectations has pushed businesses to re-evaluate their use of third-party cookies.
Additionally, new privacy regulations worldwide are addressing how user data is collected and managed. Laws such as GDPR and CCPA have led browsers like Safari and Firefox to block third-party cookies. Apple has also implemented restrictions on tracking with newer iOS versions, and similar privacy-focused updates have been introduced for Android devices.
Despite Google’s delay in removing third-party cookies from Chrome, the process has already begun, and the eventual phasing out of these cookies seems inevitable.
How Will the Phasing Out of Third-Party Cookies Impact Digital Marketing?
The removal of third-party cookies from web browsers poses several challenges for marketers:
Limited Personalization and Targeting
Without the ability to track users across multiple sites, marketers will struggle to gather comprehensive behavioural data. This limitation affects their capacity to understand user interactions beyond their own domain and track interests and activities on other websites. Consequently, segmenting audiences and crafting personalized marketing strategies will become more difficult, potentially leading to less effective and relevant marketing efforts.
Challenges in Ad Measurement and Attribution
Third-party cookies have played a crucial role in attributing sales and conversions to specific ad campaigns. Their removal complicates the tracking of customer journeys across various channels, making it challenging to measure the performance of campaigns accurately. This difficulty in performance measurement could lead to ineffective targeting and poor budget allocation, potentially resulting in a decline in conversions and return on ad spend (ROAS).
Retargeting Issues
Retargeting ads rely heavily on third-party cookies to display advertisements based on users' previous interactions with a site. The phase-out of these cookies will hinder your ability to effectively re-engage users by showing ads tailored to their past behaviours. This change could impact the efficiency of your retargeting efforts and reduce their effectiveness.
Inaccurate Reporting
Many analytics tools depend on third-party cookies for measuring and reporting various metrics. With their removal, these tools will struggle to deliver accurate reports on interests, demographics, and user behaviour. The loss of detailed data can result in less precise insights, making it more difficult to understand your audience and assess the performance of your campaigns effectively.
What Are Some Alternatives to Third-Party Cookies?
Even though third-party cookies are being phased out, users are still online and waiting to engage with your offers. To continue understanding and reaching your audience effectively, consider these alternatives:
1. First-Party Cookies
Unlike third-party cookies, first-party cookies remain a viable option. Implement them on your site to track user behaviour during their visits and gather valuable data. This data, known as first-party data, is owned by you, making it legally yours to use and leverage for making informed marketing decisions.
2. Zero and First-Party Data
First-party data refers to the information you collect directly from your users with their consent, while zero-party data consists of information users willingly share with you. To build a robust data repository and lessen reliance on third-party cookies, incorporating both types of data is essential.
First-party data can be gathered through various channels beyond just cookies. You can collect valuable insights from mobile apps, social media, and offline interactions. Additionally, engaging users through surveys, polls, forms, quizzes, and reviews helps in acquiring preferences, intentions, and personal details voluntarily.
3. Server-Side Tracking
Server-side tracking involves sending data directly from your website's server to the tracking server whenever a user interacts with your site. This approach eliminates the need to store cookies on the user's browser for tracking purposes. By manually placing relevant tags to capture events, you gain control over the data collected. Server-side tracking allows you to monitor various site interactions, such as page views, form submissions, and e-commerce transactions, providing a comprehensive view of user behaviour.
4. Tracking Pixels
Tracking pixels are small code snippets embedded on web pages that monitor user behaviour when the page loads. Unlike third-party cookies, tracking pixels do not store data on the user's device; instead, they store information on a server. By integrating tracking pixels into your web pages, advertisements, and email campaigns, you can gain valuable insights into how users interact with your brand across different channels. This method offers an effective alternative for tracking user engagement without relying on cookies.
5. Unified IDs
Unified IDs offer an alternative to third-party cookies by providing a method for tracking users across websites and devices. Users voluntarily opt into this system, providing their email addresses, which are then anonymized to create unique identifiers. These identifiers allow you to monitor user behaviour without relying on third-party cookies, offering a more privacy-conscious approach to tracking.
6. Google’s Privacy Sandbox API
The Google Privacy Sandbox is a suite of APIs designed to enhance online privacy while still enabling businesses to reach potential customers. Instead of tracking individual users, the Privacy Sandbox organizes users into cohorts based on similar browsing patterns. You can target these cohorts with your ad campaigns, bypassing the need for third-party cookies while respecting user privacy.
From Third-Party Cookies to First-Party Data: A Strategic Shift
The digital advertising landscape has undergone significant changes in recent years, with the increasing emphasis on data privacy and user consent. One of the most notable developments has been the move away from third-party cookies, which were widely used to track user behaviour across the web. As companies navigate this evolving landscape, it's crucial to understand the importance of transitioning to first-party data strategies.
Google’s Reversal and Its Impact on the Industry
After widespread adjustments to prepare for the cookie ban, Google surprised the industry by announcing they would no longer phase out third-party cookies from Chrome. For advertisers and ad networks, this may have come as welcome news. However, privacy advocates likely see this as a setback. This shift has also increased pressure on companies to develop first-party or zero-party data strategies, encouraging businesses to rely more on their own data sources. By focusing on direct interactions with their customers, companies can better understand their needs rather than making assumptions through third-party insights.
In a recent blog post, Google announced that rather than phasing out third-party cookies, they plan to introduce a new feature in Chrome. This feature will allow users to make informed decisions about their browsing data, with the option to adjust these choices at any time across their web activities.
The Privacy Showdown: Apple vs. Google
Apple, a firm advocate for user privacy, has stayed consistent in its stance, even launching ads on social media before making its official announcement. It will be fascinating to watch how Google adjusts its approach and conveys these updates.
In our view, while the focus on privacy and the economic implications of third-party cookies remains, they aren't disappearing entirely. Instead, they will need to evolve with the shifting landscape.
Conclusion
The transition from third-party cookies to first-party data represents a significant shift in digital marketing practices, driven by increasing privacy concerns and evolving regulatory landscapes. Embracing first-party data offers numerous advantages, including enhanced privacy compliance, improved data accuracy, and strengthened customer relationships. By collecting data directly from user interactions with your website, apps, and other owned channels, you not only ensure greater reliability and ownership of your data but also build trust with your audience through transparency and consent.
