Third-party cookies won’t be around much longer. Yes, Google pushed back the expiration date, but what most brands don’t realize are the great benefits of building a foundation of first-party data.
Most brands are sleeping on these updates, choosing to wait until the last minute to prepare. Most sites still rely heavily on third-party cookies and the early adopters of next-generation privacy practices will have great advantages.
Read on to learn more about how different third-parties will be affected in the coming years, new types of ad targeting, how to leverage first-party data and the evolutions happening in tracking tech.
First Parties vs Third Parties
First-party data is data that an advertiser owns, usually from their own business or given to them by a user. First-party data can be collected from a website, mobile app or any other property owned by the advertiser. It can also be collected through emails, social media channels and even physical locations. The big takeaway here is that first-party data is owned by the advertiser or the website that users interact with.
Third parties in ad tracking refers to companies that provide services for various aspects of online advertising, such as data collection, data storage and analysis. These third-party vendors may collect data about users’ online activities, including information about the sites they visit and the ads they see. Advertisers may purchase this data to target specific groups of people with their advertisements.
Google Analytics Runs on Third-Party Cookies
74% of the most popular 10,000 websites use Google Analytics (GA). Google Analytics is owned by Google – they have no direct relationship with the brand, except that the code is on the website. If the brand is the first party, then Google Analytics is a third party and Google Analytics uses cookies to track user behavior.
Most people don’t realize this will be a part of the fallout from the death of third-party cookies: Google Analytics, at some point, will go away. This will also be the case with other tools like Google Tag Manager.
Other Impacted Third-Party Tools
Google Analytics won’t be the only tool impacted when advertisers can no longer use third-party cookies. Another great example is DSPs and SSPs. Third-party cookies allow demand-side and supply-side providers to target ads by matching users across sites. If they were to disappear, it would mean that advertisers would have to perform their own targeting based on first-party data, which could be difficult with the limited amount of information available. In the future, DSPs and SSPs will become better at tracking users through their own first-party cookies, they will stop using third-party cookies altogether. Once updates hit, ad targeting capabilities will be greatly diminished.
Targeting In a Cookieless World
Currently, third-party cookies allow advertisers to target users with ads based on all the data that’s captured on third-party cookies in a user’s browser. Behavioral targeting analyzes your activity across the web, then serves you ads based on what it finds out about your interests and behavior.
While this is the standard practice in the industry, behavioral targeting based on third-party cookies in many instances is not very relevant: if an advertiser wants to reach people who are interested in travel deals, they might show an ad for a vacation package to someone who’s looking at computer parts. In this case, the user is not at that moment interested in travel planning. Their mind is elsewhere.
Another common issue with behavioral tracking is accuracy. There are no guarantees that the data used by behavioral targeting is accurate or up-to-date. It’s possible for companies to use out-of-date information when deciding which ads to show users, which can result in irrelevant or repetitive ads being shown repeatedly over time resulting in wasted ad spend.
When third-party cookies are no longer available, the need to serve ads to relevant audiences will still exist. Advertisers won’t just run global awareness campaigns – they’ll use contextual targeting more and more.
Contextual targeting delivers ads based on the content or context of the website or app you’re using. For example, if a user visits a travel site, they might see ads for hotels in the area where they are located. The main benefit of contextual targeting is that it does not rely on third-party cookies and can still serve relevant ads to users because they have already declared their interest by their web activity without having all their browsing history tracked by a cookie.
You should start experimenting with contextual targeting now so you’re not playing defense when privacy changes make behavioral targeting more difficult or impossible. In addition to being a powerful method of reaching people who are already interested in your category and avoiding wasting budget on ads that don’t convert, testing contextual targeting early will give agencies and brands room to set benchmarks and explain to clients or leaders why performance is changing and what to expect in the future.
Getting Started with First-Party Data
As I mentioned before, first-party data is direct data that an advertiser owns and operates. Great examples of first-party data is information captured when someone fills out a lead form or makes a purchase. This data is normally stored in a brand’s CRM, and has the potential to empower their advertising.
The most classic use of first-party data is to build audience segments. Segmenting your audience allows you to target different groups with different types of content and messaging. This could be very basic like segmenting customers versus non-customers or segmenting customers based on lifetime value or number of lifetime purchases. These audience segments can be used for any type of advertising, but only using first-party data for audience segmentation leaves a lot on the table.
New Ways to Use First-Party Data: Identity Graphs
One of the many interesting new technologies designed to thrive in a cookieless world is first-party identity graphs. In a first-party identity graph, the advertiser owns the identity data of its customers. This is valuable, because advertisers can target specific users and select specific types of ads for them.
For instance, an airline can use its own customer data to show an ad to users who have booked flights to Boston in the past two months — without needing to rely on third-party data from Facebook or Google. The airline has all the relevant information it needs to target these customers directly.
This is why first-party identity graphs are so important for advertisers. They allow advertisers to create more effective ads by focusing on their own customers instead of relying on third-party data sets that may not be accurate or reliable.
Publishers will also be focusing more on building out their own first-party data sets, which they can then sell directly or through partners. This approach helps them monetize their audiences while also improving the user experience through relevant ads that are more likely to be clicked on.
The best way for brands to start building first-party identity graphs is with server-side tracking.
Server-Side Tracking
Server-side tracking is actually the solution that Google recommended when they announced in 2020 that they would be killing third-party cookies. Server-side tracking uses First-Party Cookies: cookies that are set and stored by the website you’re visiting. These cookies live on the brand’s servers, not in the user’s browser. First-party cookies are less invasive than third-party cookies because they can’t track user activity across different sites that are visited, only the cookie owner’s site.
Don’t be fooled – first-party cookies are better for marketers as well. 1P cookies allow brands to log information for every site visitor (preferences, browsing activity, ad platform ID’s), not just users who fill out a form. Another huge benefit of first-party cookies is that the brand can set their own expiration date. This means you could identify users over a period of years instead of having cookies expire after 4 weeks, so you know who is a unique visitor and who is returning.
What’s Next
As third-party cookies become unusable, brands will need to find new ways to target ads. Common tools like Google Analytics will either become obsolete or will have to undergo major changes. Contextual targeting, identity graphs, and server-side tracking will soon become best practices for marketers who decide to be proactive.
Up next in this series will be how to return to a pre-iOS14.5 state with Google, Facebook, and Instagram.
