3. May 2023

Life after the 3rd party cookie

What are 3rd party cookies? How do they work? And what will life for online advertising look like after their demise?

In the vast world of digital marketing and web browsing, few elements have been as ubiquitous and controversial as cookies. At their core, cookies are small packets of data stored by web browsers to remember users’ actions and preferences. These tiny data snippets make our online experiences more seamless and personalized. Before diving deeper into the evolving story of 3rd party cookies, it’s essential to distinguish them from their counterpart: the first-party cookie.

What are 3rd Party Cookies?

Cookies, in their digital sense, have been around since the early days of the web. Designed initially to remember things like login credentials, shopping cart items, and other user-specific details, they soon found applications beyond their basic intentions.

The difference between first-party and third-party cookies lies in their origin. First-party cookies are set by the domain you’re visiting. If you go to example.com and it stores a cookie on your device, that’s a first-party cookie. On the other hand, third-party cookies come from domains other than the one you’re visiting, typically advertisers or analytics providers.

It was the advertisers who saw the untapped potential of these cookies. As the web grew in complexity and content, advertisers saw an opportunity to deliver more personalized ads to users. Instead of a generic ad that anyone could see, advertisers started to utilize 3rd party cookies to understand users’ preferences, browsing habits, and more. This led to the emergence of targeted advertising. For instance, if you searched for ‘running shoes’, later you might see ads for sports apparel or local marathons on different websites. This evolution turned the web into a massive, interconnected advertising platform.

The Controversy surrounding 3rd Party Cookies

While many enjoyed the benefits of personalized online experiences (relevant ads, tailored content suggestions), concerns began to mount about what these cookies meant for user privacy.

The main issue with 3rd party cookies is the extensive data collection behind them. They track users across multiple sites, painting a detailed picture of their online behaviors, interests, and sometimes even demographic details. This comprehensive profile was often gathered without explicit user consent, leading to a growing sentiment of intrusion.

Enter the era of data regulation. The European Union, with its General Data Protection Regulation (GDPR), and the state of California, through the California Consumer Privacy Act (CCPA), introduced strict rules on how companies collect, store, and use user data. A significant aspect of these regulations was obtaining explicit consent from users before gathering their data. The age-old tactic of hiding cookie consent in long, unread terms and conditions was no longer permissible. Websites now needed clear, easily accessible consent forms, explaining the type of data being collected and its usage.

Public perception was also shifting. While some users appreciated the convenience brought about by personalized ads, many started to prioritize their online privacy. Ad-blockers and privacy-focused browsers began to gain traction, with users taking active steps to reduce their digital footprint.

The Decline of 3rd Party Cookies

It wasn’t long before major players in the tech industry began responding to the changing tides. Foremost among them was Google. Given that its Chrome browser holds a significant share of the browser market, its decisions have industry-wide implications.

Google announced plans to phase out support for 3rd party cookies in its Chrome browser. This decision, although not immediate, signaled the beginning of the end for these cookies. With the might of Google behind the move, other browsers and industry players were also prompted to reevaluate their stance on 3rd party cookies.

While Google’s decision was partly influenced by growing concerns over user privacy, it was also strategic. The decline of 3rd party cookies paves the way for strengthening first-party relationships. Businesses and advertisers would now need to cultivate direct relationships with their users, rather than relying on third-party data brokers.

First-party data, which is any data collected directly from the source (i.e., the users), offers multiple benefits. It is generally more accurate than third-party data and carries lesser privacy concerns, as it often involves direct user consent. More importantly, it builds trust. When users know that their data is being collected transparently and ethically, they’re more likely to engage positively with a brand or platform.

Alternative Solutions to 3rd Party Cookies

With the decline of 3rd party cookies, the digital advertising industry was faced with a challenge: How to deliver personalized experiences without them? The response has been a combination of old strategies and innovative solutions.

  1. Universal IDs: One proposed alternative is the use of Universal IDs. These are identifiers based on first-party data like email addresses. When users log into a website, their email or other identifier can be hashed into a unique, anonymized ID. This ID can then be used across various platforms, providing a unified view of the user. While Universal IDs respect user privacy more than 3rd party cookies, they still rely on widespread industry adoption.
  2. First-party data strategies: Brands are now focusing on collecting data directly from their users. This could be through website registrations, newsletter sign-ups, or loyalty programs. By fostering these direct relationships, businesses can gather insights about their users in an ethical and transparent manner.
  3. Contextual advertising: A return to the basics, contextual advertising involves showing ads based on the content of a webpage, rather than user behavior. If you’re reading an article about gardening, you might see ads for gardening tools. This method respects user privacy as it doesn’t involve tracking them across multiple sites.
  4. Privacy sandboxes: This is a more technical solution. Pioneered by Google, the idea behind privacy sandboxes is to allow for ad targeting and personalization without letting advertisers access individual user data. Instead of tracking users across the web, advertisers would access aggregate data, allowing for group-based targeting.

Preparing for a Post 3rd Party Cookie World

Change is a constant in the digital realm. While the decline of 3rd party cookies presents challenges, it also offers opportunities. Brands, advertisers, and marketers need to adapt to these changes to thrive.

  • Embrace consent-driven models: The era of sneaky data collection is over. Businesses must prioritize transparent data collection, clearly communicating to users what data is being gathered, how it’s used, and why it benefits them.
  • Invest in first-party relationships: Direct relationships with users are gold. Not only do they provide accurate data, but they also build trust and loyalty, crucial components for long-term success.
  • Stay educated: The post-cookie solutions are still evolving. From technical solutions like privacy sandboxes to industry-wide initiatives like Universal IDs, professionals in the digital space must keep abreast of developments to stay ahead of the curve.

Conclusion

The story of 3rd party cookies is a testament to the ever-evolving nature of the digital world. As we stand at the crossroads, balancing user privacy with the needs of businesses, it’s clear that the future lies in transparency, ethics, and direct relationships.

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