When Google announced the Privacy Sandbox in 2020, the writing was on the wall for third-party cookies. This initiative, aimed at developing new ways to deliver targeted advertising while protecting user privacy, is set to phase out third-party cookies by next year.

Many marketers ripped up their playbooks after Google’s announcement, but there’s no need to panic. There are still plenty of ways to gather the data you need to deliver targeted advertising. In fact, now is the perfect time to invest in a first-party data marketing strategy.

Keep reading to learn more about first-party data and how you can use it to deliver targeted advertisements that align with your users’ privacy preferences.

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What cookie types are there?

Cookies, which are small text files that are stored on your device, come in two main types: first-party and third-party. They’re essential for modern web browsing, but marketers can also use them to collect data about your online activity.

Zero-, first-, second-, and third-party data comic from the Marketoonist
© Marketoonist 2021

What are third-party cookies?

Third-party cookies are created by domains other than the one you’re currently visiting. They’re often used for advertising purposes, such as retargeting. For example, if you visit a clothing website and add a dress to your shopping cart but don’t complete the purchase, you may start seeing ads for that same dress on other websites you visit.

Third-party cookies have come under fire in recent years because they can be used to track users across the web without their knowledge or consent. This has led to concerns about user privacy and data security. When you see a website asking for your permission to “accept cookies,” this is usually referring to third-party cookies.

In response to these concerns, major browsers like Safari, Firefox, and Brave have blocked third-party cookies by default. Google has also announced plans to gradually phasing out third-party cookies in its Chrome browser, which is by far the most popular browser.

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What are first-party cookies?

First-party cookies are created by the domain you’re currently visiting. They’re generally considered more privacy-friendly because they don’t share your data with different domains.

They’re essential for website functionality, such as remembering your login details or keeping items in your shopping cart. They can also be used for marketing purposes, such as personalizing your experience on a website or delivering targeted ads.

As a result, they’re usually captured even if you have third-party cookies disabled in your browser settings. Many companies are now investing in first-party data strategies as a way to gather data about their customers without violating their privacy.

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Third-party cookie phase-out

So, why is Google phasing out third-party cookies?

The answer is two-fold. Firstly, there’s been a growing push for greater transparency and control over how user data is collected and used. This movement comes from the consumers themselves, who are becoming more aware of the value of their data. Many people didn’t even know their data was sold to third-party marketers until the Cambridge Analytica scandal came to light in 2015.

Ultimately, this has led to increased scrutiny of data-driven advertising, of which third-party cookies are a key component.

Secondly, Google is under pressure from regulators to address privacy concerns. The European Union’s General Data Protection Regulation (GDPR) went into effect in 2016, and similar regulations are being proposed in other countries, such as the United States and Canada. These regulations limit how companies can collect and use personal data, making it difficult for Google to continue using third-party cookies.

As a result, Google has announced plans to phase out third-party cookies in its Chrome browser. This means that marketers will no longer be able to use third-party data for targeted advertising.

To understand the significance of this measure, it’s important to know what retargeting marketing is and how it works.

What’s retargeting marketing?

Retargeting marketing is a type of advertising that allows companies to target ads to users who’ve already shown an interest in their product or service.

It can be done using both first-party and third-party data. However, retargeting using third-party data is much more common because collecting this data at scale is easier.

Why is retargeting so effective?

There are several reasons why retargeting is such an effective marketing tool. Firstly, it allows companies to reach out to users who’ve already shown an interest in what they have to offer. Thus, retargeted ads are more likely to be relevant and capture the user’s attention. Besides, retargeting was found to increase ad engagement over 400%.

Secondly, retargeting allows companies to keep their brand in front of users even after they’ve left their website. It ensures that the company stays top-of-mind when the user is ready to purchase.

Finally, retargeting allows companies to track the effectiveness of their advertising campaigns and make changes accordingly. An insights-driven approach helps to ensure that marketing budgets are being spent in the most effective way possible.

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Why retargeting is at risk

There’s no denying third-party cookies provide a complete user persona for targeting. If you know what somebody’s been looking online, you have a much clearer picture of that person’s interest than if you base your targeting just on their activity from your site.

That being said, the end of third-party cookies presents an opportunity for first-party data to shine. Marketers relying on third-party data for retargeting will need to find new ways to reach their target audiences.

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What else breaks when third-party cookies go away?

In addition to retargeting, a few other areas are affected by the phase-out of third-party cookies: conversion tracking, audience building, and activation strategies.

Conversion reporting

A conversion occurs when a visitor or user takes a step toward making a purchase. This can be a trial, sign-up, or actually buying something. Conversion reporting is a way for marketers to track the effectiveness of their campaigns and plan ahead. And without reliable conversion tracking, understanding your customers’ path to purchase can be difficult.

Third-party cookies are used to track conversions by linking together the user’s activity on different websites. Without third-party cookies, it’ll be much more difficult to track conversions accurately.

Without third-party cookies, these conversions won’t show up in your ad platforms like Facebook or Google Ads anymore. Instead, they’ll be replaced by ‘machine-learning generated estimates’, which is fancy terminology for a best guess of your total conversions.

Behavioral audience building

Next, we have behavioral audience building. This process uses data from third-party cookies to create models of users with similar interests and behaviors. These models can then be used for targeted advertising.

Facebook’s Lookalike Audiences are a good example of this. Lookalike Audiences allow advertisers to target similar users to those who’ve already interacted with their brand. They base these audiences on the behaviors and interests of current customers.

Third-party audience activation

Finally, we have third-party audience activation. This strategy involves using third-party data to target ads to specific groups of users, such as those who’ve recently moved or become parents.

Advertisers use this approach because it’s difficult to reach these groups of users with first-party data alone. However, without third-party cookies, advertisers will need to find new ways to reach these audiences.

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Zero- and first-party data: the way forward

Don’t worry—all isn’t lost. While the phase-out of third-party cookies presents some challenges, there are still plenty of ways to target your audience effectively. The key is to invest in a first-party data marketing strategy.

What’s zero-party data?

Zero-party data is collected directly from your audience through quizzes, surveys, and polls. Using this kind of qualitative data, you can learn about their likes, dislikes, and opinions. The downside here is that the amount of insight you can gather is limited, and can take time, making the results stale quicker.

What’s public data?

Public data is information from sources available for anyone to use and distribute, regardless of who or where they are. This can include press releases, census results, independent research, but also data from Google Trends, Instagram, Facebook, Pinterest, Reddit, Twitter, and other platforms that have some of their data available to the public.

What’s first-party data?

First-party data is data that’s collected directly from your website or app, as in, your visitors are providing this data to you directly. This data is unique to each company instead of being aggregated from multiple sources.

It can be gathered through various methods, such as website cookies, or even sign-up forms. First-party data is also more accurate than third-party data because it comes directly from the source.

Why is first-party data the alternative in a post-cookie world?

With Google being the latest company to announce plans to phase out third-party cookies, it’s clear that this technology is on its way out. As a result, marketers will need to find alternative ways to target their audience.

First-party data is the natural alternative in a post-cookie world. It offers many of the same benefits as third-party data, such as targeting specific audiences and tracking conversions. However, it has the added benefit of being privacy-friendly.

First-party data is more valuable than ever before. Users being more concerned about their online privacy makes them less likely to share their data with third-party companies. They might even avoid your website entirely if they know you’re using third-party cookies.

On the other hand, first-party data is collected with the user’s consent. They’re more likely to trust you with their data if it’s only being used to improve their experience on your website.

Why storing your first-party data in a data warehouse is the best solution

Things won’t necessarily get more complicated when the phase-out of third-party cookies is complete. 

The key is to collect and store your first-party data in a data warehouse. A data warehouse is a repository for all your data, both structured and unstructured. It’s designed to support your data analytics needs.

What was once done behind the scenes by third-party cookies can now be done in the open with first-party data. When you store your first-party data in a data warehouse, you can segment your audience however you want. You’re not limited by the data that’s available from third-party sources.

Plus, you can be sure that your data is accurate. First-party data is less likely to be corrupted than third-party data. And if you’re using a data warehouse, you can keep track of all this crucial information in one place.

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About the author

Evan is the Lead Sales Engineer at Supermetrics. With an extensive background in both marketing and data engineering, he helps customers identify and implement marketing data stacks tuned for value creation.

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