How Third-party Cookies Impact Brands: Adapt with New Strategies

The digital landscape is on the brink of a significant transformation as third-party cookies, long a staple of online advertising, are set to disappear. This change stems from growing privacy concerns and regulatory pressures that demand greater transparency and consent in data collection. Brands have relied heavily on third-party cookies for personalised advertising, precise targeting, and measuring campaign effectiveness. 

As businesses approach this cookieless future, they must navigate new challenges and opportunities to engage their audiences while respecting privacy. The transition away from third-party cookies is a paradigm change that could reshape the very nature of digital marketing and consumer trust.

Let’s find out why third-party cookies are going away, what it would mean for online brands, and how they can adapt their marketing and advertising strategies.

What are Third-Party Cookies?

Third-party cookies are browser cookies set by a different website than you’re currently visiting. Thus, they are saved on a different domain than the one you’re currently on. Third-party cookies track users and their behaviour between websites. It helps in displaying more relevant ads between different websites. 

Third-party cookies are created when a user runs through a new website that has elements from different websites. These include third-party images or ads. If a server that hosts one of these elements responds to the request through a cookie, the cookie will be stored on the browser of the user. 

Role of Third-Party Cookies

Regardless of whether it’s a first-party cookie or a third-party cookie, both are used as advertising and marketing tools by eCommerce businesses. It’s because cookies, in a general sense, are pieces of information about your user’s online browsing activities and preferences. This information is saved by a website and other third parties. Third-party cookies are especially important for businesses since they increase the chances of a user buying something when visiting their websites. 

Now, let’s look at the major benefits of third-party cookies for online businesses. 

• Convenience: is one of the biggest benefits of third-party cookies, despite how distasteful some people find them to be. For instance, third-party cookies allow users to take advantage of pre-filled forms, including personal and financial details, shipping information, etc. Third-party cookies can also identify a user’s location and serve them the most relevant information based on their area. Thus, third-party cookies ensure better user experiences.

• Personalisation: Third-party cookies enable advertisers to personalise ads based on your user’s information. Irrelevant ads are neither helpful to the user nor the business. If the ads your potential customers find don’t compel them to take action, it’s a waste of your money. You can tailor ads based on their online behaviour, browsing activities, shopping preferences, demographics, online interests, etc. It helps brands make their ads more relevant and targeted to their customers. 

Personalisation goes beyond ads. Third-party cookies are the reason why people get related videos recommended on their YouTube feed. How would your customers find your products in related products on Amazon if third-party cookies don’t track their browsing and shopping history? Even on social media platforms, including Instagram, etc., users prefer finding content they’re interested in. 

Third-party cookies also help online businesses understand how their users interact with their websites. Eventually, this user analytics can help them improve their website’s performance. 

Why are Third-Party Cookies Going Away?

The biggest disadvantage of using third-party cookies is that users feel their privacy is being invaded online. Tracking user’s activities online across multiple websites without prior explicit concern can lead to personal data and privacy concerns. What makes this situation worse is the fact that the user’s data is owned and processed by third parties. In recent years, third-party cookies have become more complex and legally challenging. 

There is a serious lack of control and transparency regarding how users’ data is collected and used across the web. This has led to great backlash even though third-party cookies are essential aspects of digital advertising. 

Users don’t have enough knowledge about how their personal data is collected and used. This has created a sense of mistrust and unease among them. Data breaches have become too common. Personalised ads are highly personalised, so much so that it’s now making users uncomfortable.  

That’s why more governments across the world are trying to protect the privacy of website users. Regulatory measures have also been set up in response. These include the General Data Protection Regulation (GDPR) in the European Union and the California Consumer Privacy Act (CCPA). Their goal? Give users online more control over their personal data. It will also enable them to block different tracking technologies and even request their data be deleted. 

Several tech giants have also taken some major steps to address user’s privacy concerns. For example, browsers like Brave, Firefox, and Safari have blocked third-party cookies by default. Google Chrome is also taking action against privacy issues with its initiative – Privacy Sandbox. This initiative is likely to replace third-party cookies with better alternatives. These alternatives will not only address privacy issues but also support essential advertising functions. It means you’ll still be able to do targeted marketing without compromising your user’s privacy.  

Privacy Sandbox by Google will focus on different approaches, with Federated Learning of Cohorts (FLoC) being one of the most reliable ones. FLoC will group users into cohorts based on how similar their interests are. This is different from tracking individual users. FLoC can establish a balance between the requirements of advertisers and the privacy concerns of users. However, this seems far-fetched since it has already been a target of scrutiny for its compliance with data protection laws like GDPR. 

The Impact of Third-Party Cookie Ban on Businesses

Let’s find out how the end of third-party cookies will impact online businesses.

• With the end of third-party cookies, you may face challenges while delivering highly targeted and personalised ads. It will lead to potentially lower conversion rates, increased ad spending, and more inefficiency.
• If you rely on re-targeting to re-engage users, your marketing strategy will be greatly hampered. It’s because you’ll have limited access to user data. Eventually, you may face difficulty reminding your potential customers of your products and services. It’ll directly impact your sales and strategies for customer retention. 

What Can Businesses Do About Third-Party Cookie Ban

Here’s what brands online can do once third-party cookies come to an end.

• Embrace first-party cookies

First-party cookies will be your go-to marketing strategy once third-party cookies come to an end. First-party data is secured directly from your users, unlike third-party data that is collected from external sources or third parties. First-party data can include data from your user’s interaction with the website, CRM, social media, mobile apps, customer feedback, etc. 

Accuracy and relevancy will be their intrinsic value. This data will be a direct representation of your user’s behaviour, preferences, and needs. First-party data will also help you tailor your marketing strategies and meet the specific demands of your target audience. 

• Explore new options for advertising 

With the phasing out of third-party cookies, other options for marketing and advertising are gaining popularity. These are AI-driven targeting and contextual advertising.

As the name suggests, AI-driven targeting uses artificial intelligence (AI). Insights are derived for targeted advertising by using AI to analyse large sets of first-party data. AI-driven targeting offers several benefits, including predictive analysis, automated segmentation, real-time optimisation, dynamic ad creation, and more.

Contextual advertising, on the other hand, is being hailed as one of the best alternatives to third-party cookies. It’s discussed later in the blog.

• Ensure compliance and privacy 

Privacy and security of personal data is paramount. Compliance with data protection laws shouldn’t only be a legal requirement for brands only. It should be the cornerstone of their approach to deliver excellent customer experience and ensure their trust. That’s why complying with current legal requirements may not be enough. You’ll have to be prepared for any changes in data protection rules and practices in the future. It’s essential for brands to understand how these laws work and the framework for the collection, storage, and use of users’ data. 

You should also have a clear consent mechanism for collecting your user’s data. You can do so by displaying an easy-to-spot and read banner on your website for consenting to the use of cookies on your website. You should collect data that’s actually necessary and use that data only for which it was collected. This principle of data minimisation will help you reduce the chances of data breaches and privacy issues and ensure compliance.

Alternatives to Third-Party Cookies

In addition to the first-party data discussed above, there are other alternatives to third-party cookies. Let’s look at some of the major ones.

• Zero-Party (and First-Party) Data

Zero-party data is very closely associated with first-party data. This data is not personally identifiable. However, it has been collected from consumers by way of quizzes or other engagement techniques. Customers can also share their data directly with brands via surveys. Brands can collect zero-party data in a first-party way, and it’ll still be completely valuable. 

• Contextual Advertising

Though contextual advertising is an old method, it’s gaining popularity recently. It refers to the method of placing ads on a website based on its content instead of the user’s past behaviour, browsing history, etc. When ads are matched based on the content of a web page, it ensures relevance to the interests of the users. This also increases the chances of engagement. It’s because the ad now displayed aligns more closely with the content being consumed by the user. It’s also compliant with data protection laws since it does not rely on the tracking of personal data. Contextual advertising involves the use of algorithms to analyse and understand the content on a web page. This method also ensures more accurate placement of ads. 

• Google Topics

This is one of the winning alternatives to third-party cookies. Google Topics is an approach based on browsers. It assigns a limited and rotating number of topics to a browser based on the activity. However, this alternative to third-party cookies has a significant drawback. If someone else uses the browser in between one session of a particular user, it’s going to be wasted impressions. Google Topics will also not have information or categories based on demographics. You’ll need demographic information, especially when you operate industries like telecom, finance, arts and entertainment, etc. 

• Identity Resolution

Identity resolution is one of the most viable alternatives to third-party cookies. It’s because it is privacy-compliant. It also offers a holistic view of your user’s identity across different devices and platforms. Identity resolution uses both zero- and first-party data. This data is owned and controlled by the brand itself. It’s used only between a brand and its visitors. 

Conclusion

The demise of third-party cookies presents a pivotal moment for brands to rethink and innovate their digital marketing strategies. By embracing first-party and zero-party data, brands can build more genuine, trust-based relationships with their customers. Investing in privacy-centric technologies and transparent data practices will not only comply with new regulations but also enhance customer loyalty and engagement. 

As the end of third-party cookies comes near, the brands that succeed will be those that prioritise customer consent and trust, transforming the end of third-party cookies from a challenge into a catalyst for more meaningful and effective digital interactions. This shift offers a unique opportunity to create a more personalised and respectful online experience that benefits both businesses and consumers.