How the Loss of Third-Party Cookies Will Affect the Future of Digital Marketing?

The Background: What Has Happened Recently?

As the privacy concerns and controls about the protection of personal data have been raising since few years, many tech giants such as Facebook and Twitter started to take action to improve their security systems and be clearer about how they keep and use the data of the users. Moreover, the recent legislations like General Data Protection Regulation (GDPR) aims to protect and encourage customers to have more control on their personal data, and to ensure transparency on the usage of customer information by companies. As a result, these protective regulations have also affected the cookie policies and lead to a crumbling of third-party cookies. This trend began with disapproval of third-party cookies by well-known browsers Firefox and Safari and continued with Apple’s decision on the apps that they won’t be holding a device identity unless the related customer consent to that (Remekie, 2021). Lastly, third-party cookies which are also identified as tracking cookies, have been blocked by Chrome, Google’s leading browser. Besides, Google has declared that the company will not publish a substitute for third-party cookies, and in March 2021, it has announced the first-party data will be the new substitution for third-party cookies (Tracking Cookies are Dead: What Marketers Can Do About It, 2021).

After mentioning the terms “first-party” and “third-party”, let’s take a deep dive into the purpose of third-party cookies in general, and then go deep into the future impacts of their loss in terms of digital marketing.

What Does the Loss of Third-Party Cookie Mean?

Unlike the functional first-party cookies which help website owners to collect information; third-party cookies, -also known as marketing cookies- are formed by domains, not by the website. These cookies are used for marketing purposes, mostly for online advertising, by allowing advertisers to track the user every time they visit a website. For example, when a user visits a news website, a first-party cookie is created and held by the website. Then, when the website benefits from ads made via different websites, third-party cookies will be created and these will be held in the computer of a user rather than a website itself (1 et al., 2021). If we have a look at the pros and cons of third-party cookies, it is obvious that they can be beneficial for advertisers and practicable for users by ensuring them targeted ads in the light of “personalisation”. But, on the other hand, visitors have also struggled with privacy concerns as they can’t control which companies are gathering and using their personal data. Even being protected by GDPR’s cookie consent, users wouldn’t able to see for which organisation their data will be using after they have consented to related website (2021).

As cookie-based data is considered as an important input for digital marketing campaigns, basically, demise of third-party cookies means less data to be processed. Therefore, the new conditions lead to marketers and advertisers to find less costly solutions, and to be more creative when it’s come to design a digital marketing campaign. Agencies and brands may be dealing with offering non-targeted ads to their customers by having less clear consumer behaviours. Consumers will be affected positively in terms of privacy issues, but they might be exposed to more irrelevant ads (Juneau, 2021). Publishers will also be affected by the loss the third-party cookies as they rely on cookie-based data. The study conducted by Google among top global 500 publishers, shows that disabling access to third-party cookies decreased the average revenue of publishers by 52% (2021). According to Cookiepedia, The Daily Mail holds 19,136 third-party cookies on its site (Know your cookies: A guide to internet ad trackers - Digiday, 2021).

Source: https://digiday.com/media/know-cookies-guide-internet-ad-trackers/

What Happens Next? What Marketers Need to Do?

• Marketers will be relying on first-party data, high quality data or real-time data.

• Personalisation is still possible considering the value of first-party data.

• Contextual advertising/targeting will be replacing the cookies.

• People-based marketing/advertising will be targeting customer’s real-time behavioural data.

• Advertising might be more human engaged rather than automated systems (Tracking Cookies are Dead: What Marketers Can Do About It, 2021).

Keywords: Third-party cookies, First-party cookies, First-party data, Advertising, Privacy, GDPR

Ilgin Damla Omay

References and Sources

1, C., 2, C., Scanner, F., Function, T., Base, K., Subscription, M., Edition, F., Now, B., Subscription, M., Us, A., Us, C., Demo, R., Quote, R., Consent, C., Rights, D., Consent, M., Management, D., Support, Q., Tools, F., Scanner, W., Button, C., CMP, I., Developers, F., Publishers, F., Agencies, F., Calculator, R., Directory, P., Partners, R., Partners, M., TCF, I., DPC, I., 220, N., PDPA, T., Library, R., Base, K., Plugins, I., Hub, D., Us, A., Us, C., Demo, R., Quote, R., Plans, C. and Edition, F., 2021. What is a Third-Party Cookie? | Knowledge | CookiePro. [online] CookiePro. Available at: https://www.cookiepro.com/knowledge/what-is-a-third-party-cookie/ [Accessed 21 March 2021].

Digiday. 2021. Know your cookies: A guide to internet ad trackers - Digiday. [online] Available at: https://digiday.com/media/know-cookies-guide-internet-ad-trackers/ [Accessed 21 March 2021].

Invoca.com. 2021. Tracking Cookies are Dead: What Marketers Can Do About It. [online] Available at: https://www.invoca.com/blog/tracking-cookies-are-dead-what-marketers-can-do-about-it [Accessed 21 March 2021].

Juneau, T., 2021. Council Post: Digital Marketing In A Cookie-Less Internet. [online] Forbes. Available at: https://www.forbes.com/sites/forbesagencycouncil/2020/05/18/digital-marketing-in-a-cookie-less-internet/?sh=13d751121e2d [Accessed 21 March 2021].

Remekie, S., 2021. What Happens to Marketing When the Cookie Disappears?. [online] CMSWire.com. Available at: https://www.cmswire.com/digital-marketing/the-demise-of-the-cookie-and-the-rise-of-first-party-data/ [Accessed 21 March 2021].

Services.google.com. 2021. [online] Available at: https://services.google.com/fh/files/misc/disabling_third-party_cookies_publisher_revenue.pdf [Accessed 21 March 2021].

www2.deloitte.com. 2021. [online] Available at: https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/consultancy/deloitte-uk-cookie-less-marketing.pdf [Accessed 21 March 2021].

Using Cookies to assess digital marketing performance

 What is a cookie?

Before we start it is important to know what exactly the cookies are and how it helps in the field of digital marketing. So, cookies are a piece of code that lives on your web browser and stores information in the user’s web browser to identify and enhance your experience online. This technology is utilized to work with different capacities which include keeping track of stateful data such as items added into the shopping cart, keeping data from applications that have already been filled out (for autocomplete function), Account- protected servers receive the user’s account information and log-in status through authentication cookies. (Kaspersky 2021)

With an increasing understanding of privacy concerns and laws like the EU's General Data Protection Regulation (GDPR) and e-privacy, there is a greater need to educate consumers about what cookie files are, what information they should hold, and what types of cookies are available. (Clearcode 2021)

Now we will see the types of cookies. Essentially cookies are divided into first-party cookies and third-party cookies from a technological standpoint. However, all store the same data and can execute the same task. But what makes them unique is how websites build and use them.

 First party cookies

They are specifically stored by the domain (website) you are visiting. They enable website owners to collect analytics data, remember language preferences, and perform other valuable functions that aid in the delivery of a positive user experience.

Third-party cookies 

As mentioned even they perform the same function as cookies do but third-party cookies offer information that lets advertisers identify their audiences' taste and expectations beyond their interactions with the brand.  Exposing trends and other user data can be used to help influence potential marketing strategies. To view related advertisements, they store information across web domains and across interactions, hopping from browsers to social media applications and beyond. They are created and saved in a user’s web browser to monitor their online activity through various websites. (Adroll 2021)

Cookies in Digital marketing 

Now let's see how cookies are used in facilitating your digital marketing function. Considering Targeted digital marketing, web cookies are used in delivering many forms of personalized digital ads. They save user data and behavior records, allowing advertisement providers to reach a specific customer audience based on factors such as gender, age, interests, location, actions on websites, and actions on search engines or social media.

Cookies may be a tiny aspect but it plays a crucial role in promoting targeted ads on social media platforms. Without cookies, accounts could not be generated, downloaded, or maintained; without the user profile, consumer data would be unavailable; and without the data, targeted ads would be impossible. To begin thinking about social media accounts in this way – as freely surrendered caches of user data – is to obtain an understanding of how Facebook has created one of the world's most powerful targeting empires. It's even a little unsettling.(Targetinternet 2021)

 Using third-party cookies to assess marketing performance.

 Well, you have already seen third-party cookies in motion if you've spent some time on the internet. It is quite often that you have been to an online retailer and looked at a few items only to find advertisements for the same items on entirely different websites? Third-party cookies operate exactly in the same way. they observe your actions outside of the brand's ecosystem and then use it to provide personalized marketing to help you move from surfing to a paying client. In the long run, the information gathered from third-party cookies is used to create accurate consumer profiles.

Consumers are becoming more aware of how advertisers use their personal information as they do more of their business online. As a result, there is a growing trend for an online marketing future that is more privacy-friendly. Google's decision this year isn't the first time browser creators have restricted the use of third-party cookies; Safari did so in 2014, and Mozilla's Firefox in 2019.( Targetinternet 2021)

 

 Viewing the web cookies can be an interesting experience. Each one is intended to support a specific purpose while also adding a subtle layer of color to your online experience. We get the feeling that, while cookies aren't great, we can't imagine life without them.

- Spoorthi Joshi S

 References

 AdRoll. 2021 |MEGAN PRATT |Third- party cookies and digital marketing: what’s next? https://www.adroll.com/blog/marketing/third-party-cookies-and-digital-marketing-whats-next ( Accessed on 21^st march 2021)

2.      Targetinternet 2021 | The digital marketing guide to web cookies | target market| https://www.targetinternet.com/digital-marketing-guide-to-cookies (accessed on 21st march 2021)

3.      Clearcode 2021| Michal Wlosik, Michael Sweeney| First party and third- party cookies: what’s the difference? https://clearcode.cc/blog/difference-between-first-party-third-party-cookies/#cookie-types ( Accessed on 20^th march 2021)

4.      Kaspersky 2021| what are cookies? https://www.kaspersky.com/resource-center/definitions/cookies ( Accessed on 20^th march 2021)