The Importance of Using 1st Party Data with the End of Third-Party Cookies
Global concern for online privacy from users and government bodies has initiated a new paradigm regarding digital behavior data collection. This shift is changing established dynamics and practices in the advertising and marketing sectors, impacting the entire chain of ad development, publication, and measurement.
These changes follow regulatory measures such as the General Data Protection Regulation (GDPR) in Europe, the California Consumer Privacy Act (CCPA) in the USA, and the General Data Protection Law (LGPD) in Brazil.
A major adaptation point is the end of third-party cookie use by browsers, which are known for tracking user behavior online. Google Chrome, the world’s most used web browser, has announced it will delay the third-party cookie blocking deadline to early 2025. Despite this postponement, it is expected that Chrome will follow the lead of other major players like Safari and Firefox in disabling this type of data collection.
What Are Third-Party Cookies?
Third-party cookies track user behavior on the web. Their primary role in digital advertising is to enable personalized ads by targeting users based on specific actions or demonstrated interests, such as interactions on a brand’s website or searches conducted through browsers.
These cookies also allow for granular measurement and analysis of user behavior data, facilitating result tracking and precise campaign optimization.
New Challenges in Digital Advertising
As mentioned, the main role of third-party cookies is user data collection. Their discontinuation unfolds into several pain points:
- Loss of Precision in Ad Targeting
Third-party cookies help in understanding online user behavior, enabling the creation of detailed interest and habit profiles. Without this tool, achieving the same level of ad targeting precision becomes challenging, potentially reducing campaign effectiveness.
- Difficulties in Measurement and Analysis
Besides targeting, third-party cookies assist in campaign attribution and analysis, enabling measurement of metrics like return on investment (ROI). Without these data, performance evaluations become challenging, complicating budget optimization.
- Impact on User Experience
While privacy protection is a clear benefit of eliminating third-party cookies, there’s also potential negative impact on user experience. Behavioral data enables highly specific segmentations, ensuring relevant ad visibility. Without these data, users might encounter less relevant ads.
Addressing these challenges essentially involves adapting and reimagining online ad measurement. The adopted mindset shift should be based on a privacy-centered approach from the outset.
Emerging Alternatives and Solutions
The focus of any solution should be based on three essential priorities: valuing 1st party data; adapting measurement and segmentation processes using advanced modeling; and continuously updating and testing innovative tools and solutions.
Below, we list some alternatives that embrace these essential pillars:
- Use of 1st Party Data
1st party data is based on direct collection with consent, serving as a central tool to address faced challenges. With explicit user consent, companies can effectively personalize customer experiences while adhering to data protection laws. This requires transparent communication about data usage and ensuring value addition in exchange for user consent.
- Strengthening Customer Relationships
By investing in first-party data, brands have the opportunity to enhance customer relationships, creating richer, personalized experiences. Strategies like loyalty programs, personalization based on purchase history, and customized content are ways to use this data to improve engagement.
- Universal Identifiers
Another emerging solution is the development of universal identifiers, proposed to replace third-party cookies for tracking and segmentation. These identifiers, based on user consent, aim to create a more transparent and secure digital advertising system.
- Contextual Advertising
Contextual advertising, which uses page content information to determine which ads to display, is gaining traction as a viable alternative. Unlike behavioral targeting, which relies on user browsing history, contextual advertising uses current user interest, analyzing tags, content, and page category to present relevant ads. This approach is particularly effective for specific content and can significantly increase purchase intent.
A Data Clean Room is essentially a digital space where data can be shared among different partnering entities, analyzed under strict security protocols.
This allows combining various sources of 1st party data to privately generate insights about audiences and campaigns. In this environment, data are encrypted throughout their lifecycle, enabling performance analysis without cookies, enhancing customer understanding, and facilitating collaboration among brands, retailers, and other data partners without exposing sensitive information and ensuring compliance with regulations.
Google’s Privacy Sandbox initiative aims to create technologies that protect online privacy while supporting digital businesses. The proposed APIs transform browsers into active guardians of user privacy, operating locally on the device to protect identification information. To date, over 30 proposals cover everything from strengthening privacy boundaries to ad measurement and preventing hidden tracking.
Some key proposals of the Privacy Sandbox include CHIPS for cookies in partitioned storage, Related Site Sets for declaring domains belonging to the same entity, and the Topics API for interest-based advertising. Other proposals of interest are the Attribution Reporting API for linking ad actions with conversions, and protection against hidden tracking, such as reducing User Agent information and protecting IP addresses. These initiatives aim to strengthen user privacy while maintaining the viability of personalized ads and free online
content.
- Customer Data Platforms (CDPs)
Customer Data Platforms (CDPs) are technological solutions that enable companies to collect, store, manage, and activate 1st party data in a unified manner. CDPs focus exclusively on data collected directly from customer interactions across various touchpoints. This includes data from websites, mobile apps, social media interactions, purchase transactions, and much more.
One of the main advantages of CDPs is the ability to offer a complete and unified view of the customer, integrating data from various sources. This enables companies to better understand their consumers and consistently personalize the user experience across all channels. With more accurate insights into customer preferences and behaviors, brands can develop more effective marketing campaigns, create richer user experiences, and, consequently, enhance customer loyalty and value over time.
- Machine Learning Algorithms
The use of machine learning algorithms for behavioral segmentation represents a significant tool with the end of third-party cookies, allowing brands to target their ads based on user behavior patterns and preferences without directly relying on third-party cookies.
A currently highlighted example is Marketing Mix Models (MMMs), which use statistical techniques, such as multiple linear regression. These models analyze historical time-series data to identify causal relationships between a company’s marketing mix and the performance of certain KPIs (sales, registrations, etc.). The advantages of MMMs include privacy preservation, resilience to offline, flexibility, and independence from cookies.
- Cross Media Measurement
Cross Media Measurement is an innovative approach in the advertising and marketing industry, designed to capture and analyze audience behavior across multiple media channels, including linear TV, connected TV (CTV), desktop, and mobile devices. The primary goal of CMM is to provide a unified view of the effectiveness of advertising campaigns, allowing advertisers and media planners to gain a more comprehensive understanding of how different audience segments interact with their content across various platforms. This is essential for optimizing media strategies and ensuring that marketing messages reach their intended audience efficiently.
The rule is to be a protagonist, not a passive observer
We conclude, thus, that despite the discomfort caused to the entire online advertising ecosystem with the end of third-party cookies, this is an inevitable global movement that will affect the entire digital media ecosystem. However, this challenging situation presents opportunities to rethink approaches and prioritize the central point of any business: the customer.
Competitive advantages can be achieved through proactive initiatives at this time of transition — early preparation and prioritization of explorations and testing of available solutions, as well as the development of specific solutions tailored to business realities, will ensure greater tranquility without performance loss during this transition period.
Explore the possibilities of 1st party data and turn challenges into opportunities with DP6! With extensive knowledge of changes in the digital market and a team specialized in emerging technologies, DP6 is ready to help your company navigate the post-cookie era. Contact us to discover how we can assist in transitioning to a greater focus on 1st party data and implementing innovative solutions tailored to your needs.
Profile of the Author: Juliana Vital Ferreira | Urban Architect and Economics student, I have been working as a Business Analytics Consultant at DP6 for over 4 years. Focus on Data Visualization, Media Performance Analysis, and Omnichannel Journeys.
Originally published at https://www.dp6.com.br.
