For years, Google had been preparing advertisers for the eventual phase-out of third-party cookies. These cookies, which allow advertisers to personalize ads based on a user’s browsing history, interests, and demographics, were slated to be removed from the Chrome browser in 2024. This impending change meant that advertisers would face challenges in targeting the right audiences and would need to rely more on first-party data collected from their websites and CRM systems. However, after multiple delays, Google made the significant decision to retain third-party cookies within its Chrome browser. So, what exactly is the difference between first and third-party data, how can you benefit from cookies and what steps can your business take to build effective audiences for targeting?
Third-party data vs. first-party data
So first-party versus third-party—what’s the difference? First-party data is collected directly by a business from its customers through methods like website tracking, surveys, and CRM systems. It is valuable because it is directly relevant and unique to the business, whereas third-party data is collected by an entity with no direct relationship to the business or its audience, such as browsers or websites. While it offers a broader scope, it may not be as relevant or unique to the business.
An example of this would be cookies (not the chocolate chip kind). Website cookies are files stored on your computer or smartphone by a website you visit. These files contain data about your interaction with that website. Cookies can be either first-party data or third-party data. First-party cookies are set by the website you are directly visiting. They are used by the website owner to improve the user experience, such as remembering your login details, language preferences, or items in your shopping cart. First-party cookies are generally considered less invasive because they are only accessible to the site you’re visiting.
Third-party cookies are set by domains other than the one you are visiting. They are often used by advertisers and social media platforms to track your browsing behaviour across different websites. Using this data, advertisers are able to build audiences based on your interests, demographics and browsing history. For example, if my company needs new desk chairs, I may visit various office supply sites to research comfortable seating options. Through third-party cookies, I might be added to an in-market audience for office supplies, meaning based on my browsing history, advertising platforms like Google Ads will place me in an audience of people searching for office supplies. I’ll start to see targeted ads for black leather office chairs from Staples or other suppliers using that audience in their targeting. Third-party cookies are considered more invasive because they collect data across multiple sites, which has raised privacy concerns.
Announcements by Google
Google first announced its intention to phase out third-party cookies in Chrome in early 2020. This sent shockwaves through the digital advertising industry, prompting businesses to seek alternative methods for tracking and targeting users based on first-party data. This move was part of a broader industry trend towards enhancing user privacy and creating a more secure web environment. The initial timeline for this phase-out was set for 2022, but it was later postponed to 2024 and now has been completely scrapped.
Several factors contributed to Google’s decision to retain third-party cookies. One of the primary reasons was the complexity of developing a suitable alternative that could offer the same level of targeting ability without compromising user privacy. Feedback from the advertising community highlighted the significant challenges businesses would face in transitioning away from third-party cookies. These concerns led Google to reconsider its timeline and ultimately decide to maintain the status quo…for now.
Implications for advertisers
The decision to keep third-party cookies means that advertisers can continue their current strategies without major disruptions. This continuity is crucial for maintaining campaign performance. Advertisers can rely on the same methods for audience targeting, remarketing, and personalization, ensuring that their ads continue to reach the most relevant users.
For pay-per-click (PPC) advertisers, the retention of third-party cookies is particularly beneficial. These cookies play a critical role in optimizing PPC campaigns by providing data that helps advertisers understand user behaviour and preferences. With this data, advertisers can create highly targeted ads that are more likely to convert, resulting in better return on investment and overall campaign performance.
The need for improved tracking
While Google’s decision provides an indefinite solution, it’s essential for advertisers to stay informed about future developments. The digital advertising landscape is constantly evolving, and being proactive in understanding new trends and policy changes will help advertisers stay ahead of the curve. Other browsers, including Mozilla Firefox and Safari have already blocked third-party cookies. Regularly monitoring updates from Google and other industry leaders will ensure that advertisers can adapt their strategies swiftly and effectively.
And while cookies in Chrome will continue helping advertisers get the right message in front of the right user, there’s still something to be said for improved first-party data. Businesses that invest in Customer Relationship Management Systems (CRMs) can leverage useful data to build audiences. For example, an eCommerce store could build a contact list of users that added items to a cart without checking out. They could then use this list to show directed ads showing a timer and limited availability for a sale on the items they wanted. This strategy uses first-party data to create urgency and is much more effective than showing the same ad to a generic audience.
Summary
Google’s reversal on phasing out third-party cookies underscores the complexity of balancing user privacy with the needs of advertisers. This move allows advertisers to continue using browsing data for targeting and personalization, ensuring the effectiveness of their campaigns. However, it’s essential for advertisers to remain vigilant and prepare for future changes by exploring alternative strategies, including leveraging first-party data. Want to learn more about how you can enhance your tracking accuracy and stay ahead in a cookieless world? Contact seoplus+ to help you implement cutting-edge solutions tailored to your needs.
