Last updated: Third party cookies going away: Preparing for privacy-first web with CDP

Third party cookies going away: Preparing for privacy-first web with CDP

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Google plans to eliminate third-party cookies in favor of a more privacy-compliant approach by 2024. This should be cause for interest, not alarm. Our collection of and relationship with data will continually evolve.  

In March 2021, Google issued a statement saying it won’t offer or use alternatives that allow individual ad targeting, either—the goal, a privacy-first web. They have since softened their stance, delaying third party cookies going away. 

Apple also has unveiled plans that will make it harder for mobile apps to collect third-party data that helps advertisers send targeted digital ads. What does this mean? Prepare for changes to third party cookies because to ignore that writing on the wall is risky.

What are third party cookies? And what’s the difference between 1st, 2nd, and 3rd party data?

Third party cookies are cookies placed by a domain other than the website you are visiting.

Third-party data is the acquisition of data from neither the first party nor the second party, but rather through strategic placement of data gathering cookies by a third-party. It seems complex, but the core data and the associated levels are straightforward.

First-party data comes from the source, second-party data is acquired through the sharing of first-party data.

Third-party cookies and clear-cut attribution will soon be marketing tools of the past, yet that future is hard to imagine today. Keep in mind that time is money, the value of first party data grows over time, so acting now is priceless. Real quick, let’s establish what a cookie is: A cookie is literally a text file with small amounts of data stored on your browser.

Are third-party cookies bad? Eh, everything in moderation and with a dose of honesty. Most organizations rely heavily on cookies and attribution to:

  1. Understand customers
  2. Learn more about prospects
  3. Invest in various digital channels 

What will the future of marketing look like? Can marketing budgets survive a privacy-first web without third party cookies?

Well, there are several organizations already warming up to the cookie-less future – claiming updated advertising practices are more effective. Could we really be moving toward greater trust and more accurate advertising? 

Which data is found in a cookie? What is a cookie crawl?

A cookie crawl is an automated, systematic search of web pages to index content. The find on one page will then send the crawl forward through the internet. Data such as personal email cannot be turned up in this kind of crawl unless the information had been deliberately shared by a user on a web form.

An evolving strategy: How eBay changed its mind about PPC and third party cookies

Third-party cookies are powerful advertising tools. In a November 25, 2020 Freaknomics podcast episode, the hosts dive into why:

“Thanks to the cookies on your phone or computer — such a cute name for such a powerful tracking device — you are constantly telling the companies who installed those cookies exactly what you are interested in. You also tell them where you live; what you wear and listen to and eat; which political party you hate less than the other.”

Companies use this information to get relevant messages in front of you, on your various devices. And they pay a lot of money to do so.

eBay asked that question to the tune of $1 billion a year they spent on various marketing activities. More than half of that budget was going toward targeted digital ads. They hired consultants to help determine the ROI of that spend. They talked about a variety of different mathematical theories to use to measure it – none of which sat well with the consultants.

Finally, they landed on a natural experiment with paid search ads, or PPC.

  1. First, they turned off branded keyword ads.
  2. They also turned off ads for specific searches like “used guitar.”

eBay expected sales to drop by 5%. Instead, they dropped by half of a percent – statistically equal to zero. 

“eBay believed that for every dollar they’re spending, they’re getting roughly a dollar-and-a-half back, meaning 50 cents of net profits,” said Steve Tadelis, a researcher on the project for eBay in 2011, on the Freakonomics podcast. “And what we showed is that on average, they’re losing more than 60 cents on every dollar.”

What happened without third party cookies?

The story made headlines, but few companies tested out a similar experiment with their own ads. Third-party cookies have become an online security blanket. And researchers like Tadelis conceded that the paid ads worked better when targeted at consumers who weren’t already familiar with eBay, or who weren’t already eBay customers. 

“Targeting really is key,” said Tadelis. “If eBay would be able to better target ads to customers that are not frequent customers, that’s where you would get the real bang for the buck.”

So, targeting works – but only marginally. Let’s look at another case study.

Bacardi puts first-party data to the test (And it beats third party cookies)

In October 2020, Bacardi ran a test for a new product in a new market – using 100% anonymized data rather than the individualized third-party cookies companies typically have access to on platforms like Google and Facebook. 

The campaign went like this: The company wanted to promote Bombay Sapphire in the UK to see if it would increase sales in the region. To do so, the company “took 10,000 anonymized identities of people who had visited the gin brand’s distillery or website, and sent them offers like promotional emails or Instagram ads promising drink recipes and early access to new products,” writes Alexandra Bruell for the Wall Street Journal

The result was a 9% increase in click-through rate as compared to campaigns Bacardi had run before using third-party data.

Moreover, “the new campaign also saw a 14% increase in cost efficiency as measured by a cost-per-click metric.”

It gave the Bacardi marketing team confidence in the new privacy-first web policies of companies like Google and Apple and a future without third party cookies. Quality customer data can still be acquired with third party cookies going away.

A privacy-first web instead of the third party cookies reality

“We will need to hold and own a lot more of our own consumers’ data ourselves, and rely less on the gatekeeping of Google and Apple or borrowing in other people’s data,” said Sebastian Micozzi, senior vice president of digital transformation at Bacardi. “This challenges us to look at new data sets.”

While this may be a new challenge for brands that have gotten used to unlimited consumer data access, it can be a welcome improvement to current metrics.

After all, the former chief marketing officer of Unilever, Keith Weed told Freakonomics, “The more relevant you are to the audience, the more interested they’ll be in your message, and the more interested they’ll be in your message, the more likely they are to buy your product.”

And the most relevant you can be to your audience is having them already know you, and give you permission (i.e. consent) to advertise to them. A transition from third party cookies dependence to customer profile strategy and the benefits of customer data platforms might be necessary, but more than that, it’s promising!

Re-earning consumer trust after backlash against third party cookies

As of 2019, 72% of people feel that almost all of what they do online is being tracked. 81% say that the potential risks they face because of data collection outweigh the benefits, according to a study by Pew Research Center.

Re-earning the trust of customers with consent management and CX improvements available through CDP is the path forward. The trust of consumers on the web may be the catalyst needed for online shopping to hit the market penetration rates we know are possible thanks to China’s wide-spread e-commerce success

The U.S. lags, but with privacy fixes on the horizon, and many businesses already seeing success, it might not for long. 

Do you really know your customer? Find out how a CDP uncovers the insight you need to power CX that drives growth. Start HERE.

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