Google hasn’t kept cookie deprecation a secret – the company made its big plans public in early 2021. Since then, many companies have been working towards digital transformations in the data collection space, developing and implementing an extensive array of first party solutions. However, not everyone has determined the best way to move forward, including weighing the pros and cons of first-party avenues and long-term effects that may occur as a result of the end of third-party cookies.
This guide explores the future beyond third-party cookies, including what they are, why they’re going away, and what companies can do to best prepare.
What Are Third-Party Cookies?
The term third-party cookie refers to cookies placed on a website by a third-party using scripts or tags. Once these cookies are interacted with, such as clicking the like button on a Facebook post, they will then follow users across the internet, monitoring usage to build a profile of consumer behavior. This then allows the site who placed the cookies to tailor ads accordingly.
Third-party cookies are most commonly used in digital advertising; companies will use the data collected about various internet users to show ads most likely to be of interest. For many sites, third-party cookies have been the primary or sole resource in use in the publishing space.
Why Is Google Deprecating Third-Party Cookies?
There’s one simple motivator behind Google’s deprecation of third-party cookies: privacy. Online privacy has been an area of increasing concern for many years now, and customers are now more motivated than ever to keep their personal information protected.
Once third-party cookies are eliminated, Google will instead prioritize its Federated Learning of Cohorts (FLoC) instead. FLoC rolled out in 2019 and employs browsing patterns to place users into cohorts. Under this model, advertisers will have to target cohorts of users rather than individuals. The end result on a user’s end will be nearly indistinguishable, but advertisers will need to fully redesign their approaches to data collection.
What Happens When Google’s Cookie Deprecation Takes Place?
As has been made clear, the end of third-party cookies is nigh. But what will a cookie-free world look like?
Without third-party as a crutch, advertisers will be limited to using first-party cookies and Google’s private sandbox tools; companies with these methods already in play will likely need to make fewer changes. However, those that exclusively or almost exclusively use third-party data will need to implement changes early to make sure there’s a backup in place before deprecation is complete. For many, FLoC will be the next best solution, but pivoting from one to the other isn’t something that can happen overnight. Companies are encouraged to start pivoting as soon as possible to make sure there are no gaps in operations come 2024.
What Is First-Party Data?
First-party data, as the name implies, is any data collected directly by a publisher rather than from an outside source. There’s a key difference between first- and third-party data, and that’s customer consent. In a first-party data collection scenario, consumers are generally aware they are revealing personal information and have made the decision to do so.
As first-party data is collected directly, it’s seen as the most accurate form of data, and thus, is the most valuable to brands. Using this data, publishers can be sure they’re providing a personalized experience most likely to drive sales. This allows brands to target ads using purchase behavior to improve retention and repeat business, as well as provide better customer service with notifications and customer support avenues.
What Is the Difference Between First-Party Cookies and Third-Party Cookies?
The primary difference between first-party and third-party cookies is the collection source. Third-party cookies are collected by an outside source, like an AdTech vendor, and may or may not be relevant to a company’s needs, while first-party data is collected directly by a publisher from its own customers and consumers. While they have both historically had their uses, first-party data is considered more actionable and accurate.
Benefits of First-Party Data
The deprecation of third-party cookies may seem like a serious challenge to overcome, but for those willing to be innovative, changing course can be a great opportunity. First-party data comes with a lot of benefits, all of which can boost advertising and targeting efforts for better results in the long run. The primary benefits include:
- Easy Access: Current customers are easily accessible to publishers, making it simple to collect the data necessary from an existing customer base. Savvy publishers can use their own cookies, and behavioral data through platforms like social media, forms, surveys, and website activity to build highly effective customer profiles. By collecting this data and utilizing it properly, companies can provide a more personalized – and thus more appealing – experience without added hassle.
- More Trust: Consumers tend to trust brands more than third-party websites because they know who their information is going to and how it will be used. There’s a lot of ambiguity in third-party cookies, which is something deprecation is attempting to eliminate. As such, customers are far more willing to provide data to a known brand in exchange for a tailored experience.
- Better Data Quality: In most cases, first-party data is more comprehensive and correct than third-party data. The collection sources behind third-party efforts aren’t always known or relevant, and thus can deliver information that isn’t necessarily of use to a particular brand. First-party data, as it’s provided directly or indirectly by a well-intentioned consumer, means access to robust information. Programmatic advertising using first-party data has been proven to be much more effective as publishers are better able to target refined segments within a user base.
- More Accurate: First-party data tends to be far more accurate than third-party collections, which is a key benefit in improving targeting. With more specific data, companies can improve website messaging as well as campaign measurement. This allows for increased optimization across campaigns as well as website performance. In total, this can go a long way in improving ROI in addition to measuring revenue, churn, acquisition costs, and lifetime customer value.
Challenges of First-Party Data
There’s a lot to love about first-party data, but it isn’t without its complications. For companies pivoting from a primarily third-party model to exclusively first-party, these are some challenges to keep in mind.
- Infrastructure Requirements: For companies who have never dabbled in first-party data, getting up and running can be quite the undertaking. Choosing a platform that will cater to data needs while still being easy to manage isn’t always easy, especially when strong analytics are a priority. Starting from scratch always takes a longer ramp-up period, particularly when former crutches – third-party data, in this case – won’t be available as a backstop. This shouldn’t be a hurried process, either; take time and do the research needed to implement the best solution vs. the easiest.
- Privacy Protection: As the primary driver behind the elimination of third-party cookies, protecting customer privacy will be paramount for those not used to worrying about these details. Publishers will need to implement clear, comprehensive privacy policies and communicate them to customers to ensure no loss of trust or reputation. Trust is a vital part of building relationships with customers, so do what’s necessary to protect them, and let them know that they’re protected.
- Customer Experience: Data collection, while important, can never come at the expense of the customer experience. Going overboard with data collection opportunities may feel like the safest route forward for those new to the first-party space, but it’s important to make sure the experience customers have on a website isn’t negative enough to deter them from future engagement. Make sure the benefits of handing over information are worth it, like tailored profiles, suggestions for new and diverse media opportunities, and advertising that matches a customer’s interest areas.
Leaders in the Industry Utilizing First-Party Data
Even though third-party cookies are still available, many companies began to pivot as soon as Google made the announcement about deprecation. Some even made this pivot before the writing was on the wall due to all of the available benefits. These companies are now considered some of the industry leaders in the first-party data space.
- The New York Times: The New York Times has been playing in the first-party data pool for quite a while now, largely due to its subscription model. With very limited free content, subscribers are required to sign up and create profiles, providing an enormous pool of personal data. This information can then be used to target ads, suggest stories, and keep users engaged with communications of interest.
- The Wall Street Journal: The Wall Street Journal employs a similar model to the NYT, but takes it a step further – there’s virtually no free content to be had, so anyone who wants to read needs to sign up. In addition, WSJ has a niche audience in the business market, which means a more professional base of readers. This has lead to a rise in high-quality advertising, and the use of first-party data to guide ad placement has resulted in nearly 40% of advertisers returning for a second campaign.
- Netflix: Streaming giant Netflix is another brand that requires a subscription to access services. When customers sign up and create a profile, Netflix is able to monitor streaming activity to make suggestions personalized to a viewer’s tastes. In fact, 80% of recommended content is based on first-party data.
- Disney+: Disney+, similar to Netflix, leans into a subscription model that allows for the collection of premium user data. Using a proprietary platform called Disney Select, Disney+ is able to use a wide spectrum of information, from buyer behavior to household demographics.
- YouTube: YouTube is a unique player in the streaming space as a platform that has both paid and unpaid users, as well as premium and user-uploaded material. YouTube attracts viewers from everywhere, across all ages and cultural backgrounds, providing access to an immense amount of data. As users are required to create a profile to upload and comment, YouTube can use its data to recommend videos and target ads to millions of consumers.
How Will Brands Achieve Success After the End of Third-Party Cookies?
Third-party cookie degradation will require big changes for some publishers, but there’s plenty of light at the end of the tunnel. There are many things brands can do to achieve success in a way that mimics the use of third-party cookies, which can be done in ways like:
- Utilizing Data Already Owned: The best place to start is to lean into data already owned. Even if a company hasn’t been intentionally collecting consumer data, there’s still likely some level of availability there. With this as a starting place, it’s easier to scale upward.
- Exploring and Expanding Current Platforms: All businesses have some sort of data management platform in place, even if it’s a basic CRM. By evaluating whether current tools are working, and what goals businesses have for the future, it’s possible to look for pain points and subsequently potential solutions.
- Email Marketing: For brands that use high ROI email tools like newsletters, enhancing this approach can be a good way to collect additional information as well as leverage third-party platforms, like Facebook and LinkedIn, before this avenue goes away for good.
- Personalization: Personalizing user experiences is among the best ways to achieve success. By giving customers a customized dashboard, targeted advertisements, the option for browser notifications, and personal product recommendations, it’s possible to provide an experience that promotes loyalty.
- Contextual Advertising: Backed by AI and machine learning, contextual advertising is a way to make sure the right ads get in front of the right users. This process is a little more automated and hands-off and leans into what behavior users are showing in the present rather than relying on past behaviors as a model.
The end of third-party cookies is unavoidable, so it’s important for brands to do what is necessary to weather the storm. Regardless of a preferred way forward, publishers need to act fast to avoid a hit to advertising revenue and compromising customer experience.