Welcome to 2020. It’s a strange land of pandemics, and everyone is trying to figure out what our new normal looks like.
Amid all this upheaval, the digital marketing community itself is also poised for dramatic changes in the not too distant future. In January, Google announced its plan to discontinue third-party cookies in Chrome within the next two years and, not to be outdone; Apple followed suit by announcing its steps to block third-party cookies by default in Safari’s Spring 2020 update.
Cookies, a staple of the open web since their release on Netscape in 1994, have enhanced user experience in various ways. Everything from authenticating logins to online cart tracking to personalization relies on cookies to function.
However, these pleasantly named packets of data also bring with them a variety of other applications – many of which have come under fire in recent years. Thanks to high profile security breaches and abuses by marketers (real and perceived) who look to tap into the goldmine of browsing data to drive results. Now, with the proliferation of privacy regulations such as the General Data Protection Regulation(GDPR) and the California Consumer Privacy Act (CCPA), cries for online privacy have reached a fever pitch and spurred the major tech giants to step in and make some changes.
What are third party cookies?
Cookies have come under fire from those concerned about data protection. Their criticism is primarily aimed at third-party cookies used by advertisers or ad servers to track user behaviour and generate virtual user profiles. If you’ve ever seen an ad that exactly matched your recent web activity, it’s no coincidence. Third-party cookies have probably “tracked” you and interpreted an interest in something from your surfing history.
This personalized advertising is one of the most effective online marketing tools, and one of the most controversial. However, before you form a final opinion about third-party cookies, you need to understand them properly.
Third-party cookies: a definition
Third-party cookies do not originate from the website operator, but a third party – such as an advertiser.
When you visit a website for the first time, the webserver usually generates a so-called first-party cookie, which stores all the user’s necessary settings and inputs. When you return to the site, this first-party cookie is ready to retrieve settings and other information such as login information. This improves usability.
Third-party cookies, on the other hand, are hosted by an advertiser’s server (“ad server”) and primarily record the user’s behaviour and path on the internet to create a user profile subsequently. Based on this user profile, it is then possible to display personal adverts to the user. Third-party cookies are powerful online marketing tools and are frequently referred to as “tracking cookies” and “targeting cookies.”
Third-party cookies are not generated by the website operator but by a third party using advertisements, targeting pixels or similar. Third-party cookies primarily collect marketing-relevant information such as age, origin, gender, and user behaviour data, and through this collection are powerful online marketing tools, especially for personalized advertising.
What are third-party cookies used for?
Third-party cookies are mostly used for web analytic purposes. This can happen if your web browser loads an advertisement or a so-called targeting pixel that is not hosted on the visited website’s server. Your web browser generates an additional cookie, the third-party cookie, because it is not assigned to the web site’s server but the advertiser. Nevertheless, this third party cookie reads all the information that the first-party cookie notes anyway – and sometimes even more.
Because web analysts are primarily interested in user behaviour, the third-party cookie usually documents the page history on a website. However, this cookie often gains valuable data only when it “recognizes” you on another website. Since your web browser communicates again with the same ad server, it can trace your path on the internet, and not only that: your behaviour on the web reveals a lot about your interests and your consumer behaviour. This creates a user profile that enables targeted and personalized advertising.
What kind of data do third-party cookies collect, and why?
Third-party cookies collect the following relevant data in particular:
- Personal data such as age, gender, and location (if readable)
- Visited the website via which the cookie was generated
- Subpages visited on the visited website.
- Time spent on the page and its subpages
If this data is collected across websites, an individual user profile can be created that enables personal advertising. Online marketing uses third-party cookies in particular for targeting, tracking, and re-tracking.
We Saw This Coming
For nearly a decade, there has been a lot of talk about the cookie crumbling and that the end is nigh for third-party cookies. While third-party cookies have been essential to advertisers, these little bits of code were only meant as temporary storage. They were instantly transformed into a cross-site tracking tool that became the spine of most online advertising models. While Google’s announcement raises many eyebrows and causes a lot of uncertainty, we have seen this coming for a long time.
How Is Marketing Going To Change?
Marketers now have two options as we see: change the way they market or ignore the targeting of ads. While the former option is risky, however, the rewards are worth it. The latter means blindly throwing ads informant of consumers with little or no context of what they are interested in. This might sound like the wild west, but it was how things were years ago. It was not unheard of consumers in desert areas would see ads for beach umbrellas. As strange as it may sound, this does portray what marketing with no information or consumer interest could look like.
Analytics is the key:
Companies like Shopify, though, have benefited a lot from the information provided by cookies; they saw the writing on the wall and are smart to be using web analytics to dictate how consumers are shown customized ads. It’s no secret that companies can analyze their site traffic to target based on the data collected.
Google Privacy Sandbox:
Google has provided a Privacy Sandbox with the mission to “Create a thriving web ecosystem that is respectful of users and private by default.” Google has admitted that third-party cookies are only a part of the problem. Though the Privacy Sandbox project feels pretty theoretical right now, it hints at only scratching the real privacy problem’s surface.
Since Google’s announcement on third-party cookies, they have also announced that they plan to ultimately hide the user agent string rendered as part of every web request. The user agent string displays information about the visitor’s browser and operating system. This allows marketers to see this information, and additionally, they also get an idea if desktop or mobile was used to browse the platform.
We have gone around and around Contextual Advertising without giving it much thought. That needs to change now. Contextual Advertising is where the ads on the page are related to the content on the page. Contextual advertising scans keywords in the text of the page and renders related ads to that content.
For example, suppose the user views a website pertaining to sports, and that website uses contextual advertising. In that case, the user may see advertisements for sports-related companies, such as memorabilia dealers or ticket sellers. Contextual advertising is also used by search engines to display advertisements on their search results pages based on the keywords in the user’s query.
When ads are based on the content on the page, they are indeed targeted. A reader is reading a blog about trending running shoes and seeing ads for running shoes, making complete sense and is very much relevant.
Contextual ads are cost-effective and have been proved to get the visitor to engage more often. Visitors are also more satisfied seeing ads related to what they are reading. More information can usually be uncovered about someone by what they are consuming at the moment than which segment they were profiled into weeks or months ago.
Test contextual solutions that allow you to identify and connect with audiences at pivotal moments in their journey.
Build First-Party Data:
Brands now have to consider the need to start building first-party data strategies seriously. There is no doubt that not every company has the technical know-how to develop its first-party data strategy.
Test new technologies that use a first-party opt-in cookie to find audiences. Be okay with a small scale to start—and be wary of any solutions that can scale quickly. It likely means they are just jerry-rigging the current system vs. doing the hard work of getting consumer opt-in.
Google’s upcoming change is about to bring in a radical change in the core business model for brands.
Do everything with the customer in mind:
Merissa Meyer (Co-founder of Lumi Labs) said, “innovation is born from the interaction between constraint and vision.”
The current state of media and advertising has handed the marketers a constraint. It is now up to the marketers to keep an eye on the vision and build a solution to media sustainable addressability for the long haul.
How Consumers Will Feel About This?
Consumers have been concerned about privacy and how their data is being used. Personalized ads are not of any concern to the consumers. Instead, it is how hackers can use the information for surveillance purposes. With no guarantee that either of these consumer’s problems will be addressed by this change, in the long run, the consumers will end up confused about this move from Google.
Undoubtedly, there is a small win for the consumers in this for sure. However, let’s not forget the real winner is Goggle itself. Google can see what everyone does all the time. This is the perfect scenario where the keeper of all data is keeping data to itself.
The immediate advantage consumers get out of these changes is that it will force the brands to communicate with consumers in a more direct manner, which will become a win-win for both sides.
Marketer’s Way Ahead
The death of the third-party cookies doesn’t have to be a reason for despair. Marketers’ concern needs to be turned into planning and concrete actions.
With two years of head start adapting to the new reality should be the focus point. Therefore, it is essential to begin to think about solutions now.
Yes, the death of third-party data is an undeniable landmark. Changes will be necessary, and, understandably, many marketers are concerned. However, with proper planning, right strategies, out of the box thinking, this too shall be another one of the hurdles that Digital marketing will pass with flying colours.