Third-party cookies—a good riddance

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Third-party cookies revolutionised marketing, becoming the preferred choice for most marketers. They changed the game for targeted marketing and became an integral part of the digital marketing ecosystem. But they are on their way out. A slew of privacy concerns and a crackdown by regulators means by 2024, marketers will have to find new, privacy-first data collection methods.

So, what changed? Is this a loss to be mourned or an opportunity to move on to newer avenues?

The decline in favour

For years, third-party cookies have been the backbone of online advertising, enabling user behaviour tracking across multiple websites and highly targeted advertising campaigns. With widespread adoption came increased concerns about user privacy due to lack of transparency—most times, individuals weren't aware they were being tracked and what data was being collected. It's not just limited to session history but also page interactions and the links a user clicks, among other things, leading to those creepy ads that follow you around. While first-party cookies also collect similar data, it is safely harboured within the domain visited (presumed to be trusted). Therefore, users today lack faith in third-party cookies. 68 percent of US consumers worry about the amount of data a business collects, and 40 percent of individuals don't trust companies to use their data ethically.

Malicious actors can also weaponise third-party cookies to compromise user privacy. A cookie-stealing trojan also allowed hackers to control a victim's social media accounts. Bad actors can also sneak in harmful cookies through trusted sites to execute cross-site forgery attacks, which can help them execute malicious requests like deleting files at various sites a user visits.

Brands and marketers are now finding themselves in a precarious spot as major web browsers, like Safari and Mozilla Firefox, have disabled third-party cookies right from the outset. Chrome, the most popular browser, is expected to cease support in 2024. Apple was firmer-handed with its approach by turning off third-party app tracking on a device level, which was embraced by 96 percent of users.

Also Read: Why privacy measures can cause the monopolisation of online platforms

Governments, too, are increasingly strict about protecting user data, resulting in stringent data protection laws such as the GDPR and CCPA. While concerns around third-party cookies take centre stage, first-party counterparts offer some encouragement:

1) The promise of first-party cookies: They emerge as a viable alternative and the future of data collection for brands emphasising user privacy.

2) Transparency and Consent: First-party cookies are established with the user's knowledge and consent when they visit a website. This transparency builds trust and ensures that users are aware of how their data is being collected and used.

3) Data Ownership: Websites that use first-party cookies have complete ownership and control over their data. The data is collected through interactions users have with the site. This data can include purchase history, user preferences, and behaviour on your site, among other rich behavioural data. It almost eliminates the reliance on third-party data providers and the associated risks.

4) Improved Accuracy: First-party data is often more accurate based on direct interactions and user engagement on a brand's website. This accuracy enables better personalisation and targeting. First-party data uses identifiers that usually have a longer life, such as device IDs and email addresses, that allow effective cross-site tracking and ad retargeting.

5) Compliance: First-party data collection is less likely to run afoul of privacy regulations because it operates within the bounds of user consent and established relationships.

Where cookies fall short

Even in the current cookie-dominated landscape, third-party cookie performance is only passable. Their attribution accuracy is often flawed, with match rates between 40 percent and 60 percent. Auditor segments can vary greatly in quality and accuracy across leading data brokers. Users can clear their cookies or share devices with others, making it challenging for marketers to build a precise picture of individual preferences and behaviours.

Exacerbating things, users are becoming more mindful about being watched online. Many are using ad blockers or browser add-ons to fend off third-party cookies. When the data is inaccurate, the problem doesn't just stop at ineffective targeted marketing but also the erosion of trust.

Additionally, first-party cookies can only track the user while they're on the domain. When they switch to another site, visibility into the user's activity becomes zero. The timeline for the storage of the cookie data varies based on the web browser being used. For instance, Brave and Safari eliminate first-party cookies in 7 days, and Chrome eliminates them in a maximum of 400 days. This may limit marketers from carving out unique omnichannel marketing strategies for visitors.

Embracing cookie-less personalisation

A future without third-party cookies is already here. However, the right preparation for this transition could go a long way in ensuring your digital marketing efforts are not in vain.

For instance, when you have first-time users, you cannot personalise the experience immediately. However, a viable and compliant tactic is to serve them the most popular offerings based on existing customers' first-party data. Then, based on if, how, and when they interact with such elements, you can start funnelling them into narrower cohorts. Achieving this efficiently requires advanced AI/ML to glean insights based on minimal context, behaviour, and interaction time.

Also Read: Are Indian marketers prepared for a cookieless world?

Marketers must also dive deeper into their brand's analytics to discover any possible identifiers they have already been collecting. Any data from disparate sources must be unified with contextual data to build the customer's profile. They will be the training wheels while marketers get ready to ride without third-party cookies and ensure that the target audience always receives relevant, engaging content.

The transition may be challenging, but it ultimately offers a more sustainable and ethical path forward for digital marketing.

The writer is co-founder and chief product officer at CleverTap.