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The cookie crumbles: from third-party cookies to first-party data

June 9, 2023

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Welcome back to the Aryel’s blog, where we strive to make your marketing concerns disappear like the cookies Roberta, our Head of Product, take us every time she comes into the office.

As a marketer, you’re a natural problem solver, always on the lookout for innovative solutions to captivate your audience and stay ahead of the latest trends – yet there’s that niggling worry about an industry upheaval that’s on the horizon.
Yes, you should probably get it at this point, we’re talking about the cookieless revolution.

You’re not alone, fellow marketer. The thought of navigating a world without third-party cookies might be causing you some sleepless nights. As our digital landscape is rapidly evolving, it’s crucial to adapt strategies in a way that respects privacy while still delivering compelling content.

Today we’re diving into the deep end of a topic that’s crucial for everyone in the field, a change that’s reshaping the future of digital marketing: the cookieless future.
It’s about understanding and adapting to a paradigm shift that’s transforming the way we engage with audiences online.

Brace yourself, we’re about to embark on an insightful journey through the cookieless revolution. It might feel like a wild ride, but we’re here to make it as smooth as possible.
By the end of it, you’ll be equipped with the knowledge you need to future-proof your marketing efforts and thrive in a cookieless world.

First things first: what’s the problem with cookies?

Cookies, those tiny digital crumbs we leave behind as we navigate the web, have been the backbone of online advertising for a long time. However, as we propel further into the digital age, it’s becoming increasingly clear that our cookie-dependent strategies are leaving a bitter taste in our mouths. And here’s why.

Third-party cookies, to be precise, are the troublemakers in this scenario. They’re like the distant relatives who drop by uninvited, tracking our online behavior and preferences without our explicit consent. This tracking allows marketers to target us with personalized ads based on our online activity.

But while this may seem like a marketer’s dream, it’s a privacy nightmare for users. After all, who wants to feel like they’re being watched every time they browse the web?
This is where the real problem lies. In the name of personalization and efficient targeting, third-party cookies have been seen as infringing on user privacy. And when privacy is compromised, trust is eroded.
For marketers, as you may know, trust is everything. Without it, our strategies crumble, and our connection with our audience is jeopardized.

In recent years, regulatory bodies and tech giants have taken action to protect user privacy. Apple, for instance, has implemented changes in its iOS 14 update that require apps to request user permission to track their activity across other apps and websites. Google, the world’s most popular search engine, also announced its plans to phase out third-party cookies on Chrome by 2024. These changes signify a broader industry shift towards a more private, transparent, and trustworthy internet.

So, as marketers, it’s time for us to embrace this change. The cookieless future might seem daunting, but it’s an opportunity to reevaluate our strategies and place user privacy and trust at the heart of what we do. After all, in the long run, a marketing strategy that respects user privacy isn’t just good ethics – it’s good for business too.

The shift for a cookieless world: from third-party to first-party data

Third-party cookies, once the cornerstone of digital advertising, are being phased out. They have been used to track users’ browsing habits across multiple websites, enabling advertisers to serve targeted ads based on those habits. However, they have been widely criticized for invading users’ privacy, prompting tech giants like Google and Meta to rethink their strategies.

Google’s announcement to phase out third-party cookies on Chrome has caused many publishers and advertisers to prepare for a cookieless world. This change was significant because Chrome holds over 64% of the market share. Safari and Firefox had already phased out third-party cookies, but with Chrome’s move, it seems like we are seeing the final nail in the coffin for third-party cookies​​.

The shift towards a cookieless world is happening with a noble intention: to create a more private, transparent, and trustworthy internet for all. However, it’s not without its challenges. The death of the third-party cookie will impact many aspects of how publishers and marketers advertise. It will significantly affect identity and addressability, targeting, data privacy, and content monetization. Businesses are now tasked with finding new ways to track and identify their audiences across the web. As a result, their revenue channels and mixes may shift, and new advertising strategies are being tested.

Google, despite being the catalyst for this third-party cookie problem, is working on solutions to address it. Google’s Privacy Sandbox is an initiative for a range of experimental APIs and open-web tracking solutions, like TURTLEDOVE and FLoC, which use browser data in innovative ways to ensure user privacy​​.

Google has also developed the Enhanced Conversions tool: this feature uses first-party data to provide more accurate conversion measurements. By linking user behavior to hashed customer data, Enhanced Conversions offers businesses a privacy-safe way to track conversions and optimize their advertising strategies.

Another approach is the development of Universal ID solutions by advertising technology companies. These solutions offer a standardized ID that all participating companies can use to identify and target consumers across the web, effectively creating a commune of businesses using one uniform solution to share data. A prominent example is The Trade Desk’s Unified ID 2.0, an open-source framework that uses encrypted and anonymized email addresses for better privacy and future-proofing​​.

Meanwhile, Meta, the company behind the social media giant Facebook, is not sitting on the sidelines. Meta has engineered the Conversions API, affectionately known as CAPI. This tool fosters a connection between advertiser’s marketing data – encompassing website events, app events, and offline conversions – and Meta’s systems. This connection streamlines the process of ad targeting, decreases the cost per result, and enhances outcome measurement.

With the Conversions API, advertisers can bid adieu to maintaining separate connection points for each data source. Instead, they can conveniently dispatch multiple event types, thereby simplifying their technology stack. Moreover, this tool permits server events to be utilized for measurement, reporting, or optimization, akin to other connection channels.

Publishers and advertisers can also focus on channels rich with first-party data, such as email marketing and push notifications. Unlike third-party cookies, first-party cookies provide a more direct, transparent, and privacy-compliant way of tracking user behavior. They enable businesses to understand their audience better, personalize user experiences, and develop more effective advertising strategies​​.

However, the transition from third-party to first-party cookies is not without challenges. Businesses must rethink their digital strategies, invest in new technologies, and build stronger relationships with their customers to collect first-party data. They must also navigate the complex web of data privacy regulations to ensure that their practices are compliant and transparent.

The phasing out of third-party cookies is not a dead-end for digital advertising. Instead, it’s an exciting turning point. Both Google and Meta are spearheading the development of innovative solutions that prioritize user privacy while still empowering businesses to effectively connect with their target audiences. The success of these strategies, however, hinges on businesses’ ability to adapt and make optimal use of these groundbreaking tools.

The role of first-party data and the impact on advertising

First-party data refers to the information that businesses gather directly from their audience, through interactions such as website visits, app usage, social media engagements, or direct purchases. This type of data is deemed more reliable and accurate as it comes directly from the source – consumers themselves. Moreover, it is gathered with their explicit consent, offering a layer of transparency and trust that is crucial in today’s privacy-conscious world.

The impact of this shift towards first-party data on advertising is multifold. For starters, it allows businesses to create personalized and relevant experiences for their customers. In a world inundated with generic ads, consumers crave for tailored, meaningful interactions. First-party data makes this possible by providing insights into consumer behavior, preferences, and interests, enabling businesses to design personalized ad campaigns that resonate with their audience.

Next, first-party data enhances the accuracy of targeting capabilities. Since this data is sourced directly from the consumers, it is more reliable and offers a precise understanding of the target audience. With third-party cookies becoming obsolete, first-party data-driven audience segments can serve as an effective alternative, ensuring that ads reach the right people at the right time.

Furthermore, first-party data helps improve transparency and data privacy. As consumers become increasingly aware of their digital privacy rights, businesses must uphold data privacy regulations and ensure that the data they collect is done so with clear consent. The shift towards first-party data fosters transparency as it involves an opt-in process, where consumers willingly provide their information, strengthening consumer trust and loyalty.

Finally, leveraging first-party data opens up new opportunities for content monetization. Publishers can utilize this data to understand their audience’s behavior and preferences better, enabling them to tailor their content and advertising strategies accordingly. The result? Enhanced ad inventory, diversified revenue channels, and potentially, increased growth.

However, harnessing first-party data is not without its challenges. Businesses must invest in the necessary technologies and tools to collect, analyze, and activate this data effectively. Artificial Intelligence and Machine Learning technologies are increasingly being used to manage the complexities of first-party data and extract actionable insights.

In conclusion, the rise of first-party data represents a significant turning point in the digital advertising landscape. As the curtain falls on third-party cookies, businesses must embrace this new reality and recognize the transformative potential of first-party data. It’s not just about surviving in a post-cookie world; it’s about thriving in a world that values privacy, transparency, and personalization. The businesses that understand this will be the ones who turn this challenge into an opportunity, paving the way for a new era of digital advertising.

Final thoughts

Despite these challenges, the shift towards first-party cookies presents an incredible opportunity for businesses to take control of their data and build more meaningful relationships with their customers. It’s a chance to redefine digital advertising, making it more personal, relevant, and respectful of users’ privacy.

In a world where data privacy is paramount, the transition from third-party to first-party cookies is inevitable. It’s a step towards a more private, transparent, and user-centric digital advertising ecosystem. And while the road ahead may be filled with challenges, it also holds immense potential for those willing to adapt and innovate.

It’s a chance to reevaluate and reimagine digital advertising strategies, making them more personal, relevant, and respectful of user privacy. The future may be cookieless, but it holds immense potential for innovation, growth, and deeper customer engagement. As we navigate this transition, one thing is clear: a more private, transparent, and user-centric digital advertising ecosystem is on the horizon.

Keen to explore how AR quizzes can do more than just entertain? Dive into our Pokehouse Customer Story to uncover how they used an AR quiz to understand their customers better, generate excitement for their new opening, and collect valuable zero-party data. It’s a fascinating look at the future of customer engagement.