What do marketers love the most? Cookies! For years, brands have been using cookies to track website visitors, improve user experience, and collect data to target ads.
But the way we use cookies and collect data will change immensely. In March 2021, Google Chrome announced the phase-out of third-party cookies. And by late 2023, it is expected that third-party cookies will no longer be accepted on the search engine. But first-party cookies will continue to be supported.
So what’s the big deal, and how will it impact a brand’s digital marketing strategy? To understand this better, let’s start from the basics.
What are third-party and first-party cookies?
Cookies are small text files that are stored on your computer or mobile device when you visit a website. They are widely used for making websites work or work more efficiently, as well as to provide information to the owners of the site.
For example, if you were to visit a website and log in, a cookie would be used to store your username so that you don’t have to enter it every time you visit the site. In the same way, if you put something in your online shopping basket and leave the site, the contents of your basket will be stored in a cookie so you can find them again when you return.
There are two types of cookies.
First-party cookies are set by the website you’re visiting. They can be used to remember things like your preferences and generally improve your online experience. For example, a website might use a first-party cookie to keep track of the items you have in your shopping basket or whether you’ve logged in to the site.
Third-party cookies are set by someone other than the owner of the website you’re visiting. They are most commonly used for advertising and digital marketing activities and can be used to track your online activity across multiple websites.
For example, if you were to visit a website with an ad from a brand, that brand could use a third-party cookie to track how many times their ad was shown to you. So while you may be visiting www.example1.com, a third-party cookie could be set by www.example2.com. Third-party cookies are sometimes also referred to as tracking cookies.
What are Google’s plans?
The third-party phase-out was initially announced in February 2020, but Google accelerated the buzz around it with an announcement that they would not build alternate identifiers to track individuals.
One of the reasons for this cancellation mentioned by Google in a blog post was the growing distrust of third-party cookies. It doesn’t allow users to control where and how their Personally Identifiable Information (PII) is stored or used.
Although there have been other browsers, Chrome is not the first browser to disable third-party cookies; it currently dominates 64% of the web browser market and over 50% of global web traffic.
source : gs.statcounter
So, when Google makes a change, the digital marketing world takes notice.
What will replace third-party cookies?
At the crux of the issue, the simple idea is that the users should willingly provide personal information and clearly understand who gets to use their data.
So, what will replace third-party cookies, and how can digital marketing adapt to the changes?
There are three main proposals for how the digital marketing industry can show consumers relevant ads and measure the success of marketing campaigns without relying on third-party cookies.
1. Google’s browser-based model: FLoC
The browser collects information about what a user does online and saves that data locally on their computer. Based on the websites visited and content consumed, the browser would assign them to a cohort alongside several thousand people with similar interests. So every time a person visits a website, their browser would tell the site which cohort they belong to, and advertisers can then show them ads tailored to their interests.
Google Chrome is currently testing a beta version of this which is called Federated Learning of Cohorts (FLoC). This model improves privacy since it does not get collected in a centralised server, and it can’t be sold to third parties. Additionally, advertisers never see any specific information about a group of users in the same cohort.
2. First-party data tracking
First-party data comes with fewer challenges around complying with privacy regulations and managing user content. Publishers collect their first-party data about their audience, which might include information about the content they are viewing, the kind of topics they tend to be interested in, and possibly survey responses about their interests and demographics.
Advertisers who seek to target specific audiences can use this data to segment audiences and sell ad space to them. Large-scale publishers like New York Times, Vox Media, and Insider have already launched their own ad targeting systems based on first-party data.
3. Identity-based tracking
A central authority would assign every web user an advertising ID based on a trait that is not likely to change often, like an email address. So every time a user logs in to a website with their email address, advertisers can identify and track them using their specific ID.
This model protects privacy since user IDs would be encrypted. So advertisers won’t see a person’s email address. Instead, they would see a random string of characters that correspond to that email address.
What does this mean for digital marketing?
1. Take control of first-party data
The cancellation of third-party cookies means that digital marketing strategy will have to rely heavily on first-party data. This means that brands will need to provide value to customers in order to persuade them to hand over their personal data willingly. The bigger the value, the bigger the competitive advantage.
With such a shift in focus, digital marketers will need to find new and innovative ways to collect first-party data. In order to make this happen, marketers may need to:
- Make changes to their website design
- Review the user experience
- Create new content
- And offer new incentives in exchange for personal data.
It’s also worth noting that first-party cookies are less likely to be blocked by browsers as they are essential for website functionality. However, it is still important to give users the option to opt-out of being tracked.
2. Democratise unified customer data
Getting customers and prospects to authenticate or log in and identify themselves in some way (email address, phone number, etc.) will always play a critical role in collecting first-party data, understanding individual interests, preferences, and behaviours, and delivering better experiences.
Brands should also work on creating a unified view of each customer and making that data easily accessible to cross-functional teams when they need it so they can personalise experiences and thereby drive business growth.
3. Mitigate complexities of data management
To continue grabbing onsite and cross-channel data, some will put pressure on marketers or IT teams to make considerable changes to their web infrastructure to manage multiple domains, subdomains, and various databases. The more complex the data management solution, the greater the risk of errors, lost data, and decreased team productivity.
Digital marketers need to look for technology that offers a simpler, more centralised way to manage first-party data collection across sites and channels. It also offers the ability to share data with key marketing and advertising partners in a way that doesn’t require heavy lifting from IT.
Keeping ahead of the competition
Regulations are limiting the use of customer data, so digital marketers need to take action by delivering more effective and targeted advertisements across the right channels with the right product.
Digital marketers who are able to quickly adapt to the new landscape and take advantage of first-party data will be in a more suitable position to succeed.
With a strategic shift, the right tools, and emphasis on first-party data as the basis of their customer-centric strategies, companies can reduce the effects of third-party depreciation and set themselves up for long-term success.
Need help with your company’s digital marketing strategy? Contact us at Litmus, one of India’s best digital marketing agencies, today!