The Cookie Crumbles: Three Tactics For Successful Advertising

Prior to the internet, advertising was a somewhat random process. Many advertisements and messages were released by brands into the world with the hope that some would reach their targeted audience. The system was inefficient, but it functioned. Then something changed in the game. Companies were able to track consumers online and tailor their advertising to particular user types thanks to web-based cookies and other personal identifiers. However, third-party cookies are going to expire, meaning that the game will soon change once more.

Brands can position themselves for greater growth and more client acquisition by utilizing their own customer touchpoints, exchanging data with other businesses, and experimenting with context- and interest-based consumer targeting.

The Cookies Crumble

The internet was essentially private before cookies. Twenty years ago, Lawrence Lessig stated, “After cookies, the web becomes a space capable of extraordinary monitoring.”

Lessig, eminent legal scholar and former head of Harvard University’s Safra Center for Ethics, was a trailblazer at the time, if not a prophet. One of the major factors influencing how the web is developing today is privacy protection. For a very long time, marketers have used cookies to follow customers across the open web and show them customized advertisements depending on their browsing activity. However, cookies are quickly becoming outdated. The fact that other tracking techniques are also under pressure makes things even more difficult for advertising.

As part of its app-tracking-transparency (ATT) architecture, Apple currently mandates that app suppliers obtain consumers’ express consent before tracking them using device identifiers in the mobile app market. Only approximately 46% of consumers, according to early observations, will consent to being tracked.

This ratio may be significantly lower in nations where users have heightened privacy concerns. This effectively means that the majority of users will not be able to be tracked by app publishers using device identifiers across the Apple ecosystem. Notably, in order to construct user-level profiles within their ecosystems, both Google and Apple have stated that they will neither develop nor support workarounds like probabilistic fingerprinting.

What are first party cookies?

First-party cookies are small pieces of data that websites store on a user’s device directly, typically through the user’s web browser. These cookies are generated and controlled by the website that the user is actively visiting. Unlike third-party cookies, which are created by domains other than the website being visited and are often used for tracking across multiple sites, first-party cookies are limited to interactions within a single domain.

Here’s how first-party cookies can help advertisers:

• Tracking User Interactions: Advertisers can use first-party cookies to track user interactions within their own websites. This includes actions such as product views, adding items to a shopping cart, completing purchases, or signing up for newsletters. By understanding how users navigate and engage with their websites, advertisers can gain valuable insights into user behavior and preferences.
• Personalization and Targeting: First-party cookies enable advertisers to personalize the user experience based on individual preferences and past interactions. For example, an online retailer can use first-party cookies to recommend products related to a user’s previous purchases or interests. This level of personalization can increase engagement and conversion rates.
• Retargeting and Remarketing: Advertisers can implement retargeting or remarketing campaigns using first-party cookies. When users visit a website and perform specific actions (like abandoning a shopping cart), first-party cookies can store this information. Advertisers can then use this data to display targeted ads to those users when they visit other websites or social media platforms, encouraging them to return and complete their actions.
• Measuring Ad Campaign Performance: First-party cookies play a crucial role in tracking the effectiveness of advertising campaigns. Advertisers can use cookies to monitor metrics such as click-through rates, conversion rates, and other key performance indicators (KPIs). This data helps advertisers assess the success of their campaigns, optimize targeting strategies, and allocate budgets more effectively.
• Enhancing User Experience: By leveraging first-party cookies for data collection and personalization, advertisers can enhance the overall user experience. Tailored content, relevant recommendations, and streamlined navigation contribute to a positive impression of the brand, leading to increased customer satisfaction and loyalty.
• Compliance with Privacy Regulations: Advertisers must adhere to privacy regulations such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA). First-party cookies, being directly tied to a website’s domain, are typically considered less intrusive and more compliant with privacy guidelines compared to third-party cookies, which track users across multiple domains.

What are second-party cookies and how can they help advertisers?

Second-party cookies are a type of tracking technology that differs from both first-party and third-party cookies. While first-party cookies are created and controlled by the website domain being visited, and third-party cookies are generated by external domains for cross-site tracking, second-party cookies involve a direct exchange of data between two parties, typically involving a mutually beneficial relationship.

Here’s how second-party cookies can help advertisers:

• Data Collaboration: Second-party cookies facilitate data sharing between two trusted parties. For example, if a publisher and an advertiser form a partnership, they can share relevant user data through second-party cookies. This collaboration allows advertisers to access a broader dataset while maintaining data quality and privacy standards.
• Enhanced Targeting and Personalization: By leveraging second-party data from trusted sources, advertisers can enhance their targeting and personalization efforts. They can tailor ads based on insights gained from the partner’s data, such as user interests, demographics, and behaviors. This leads to more relevant and effective advertising campaigns.
• Audience Expansion: Second-party cookies enable advertisers to reach new audiences that align with their target demographics. Partnering with organizations that have complementary customer bases can broaden the advertiser’s reach and improve campaign performance.
• Improved Ad Placement: With access to second-party data, advertisers can make more informed decisions about ad placement. They can identify high-value placements on partner websites that resonate with their target audience, increasing the chances of engagement and conversion.
• Cross-Channel Campaigns: Second-party data can be leveraged across different marketing channels for integrated campaigns. Advertisers can use insights from partner data to create cohesive messaging and experiences across websites, social media platforms, email marketing, and more.
• Data Quality and Trust: Unlike third-party data, which can be sourced from various unknown sources, second-party data comes from trusted partners. This ensures higher data quality, accuracy, and reliability, leading to better-informed marketing strategies.
• Compliance with Privacy Regulations: Second-party data exchanges often involve direct agreements and consent between parties, promoting transparency and compliance with privacy regulations. Advertisers can establish clear data-sharing practices and obtain user consent where necessary, fostering trust and accountability.

Overall, second-party cookies offer advertisers a valuable opportunity to collaborate with trusted partners, access high-quality data, enhance targeting and personalization, expand audience reach, improve ad placement strategies, and ensure compliance with privacy standards. These cookies play a strategic role in optimizing advertising campaigns and driving meaningful engagement with target audiences.

What are 3rd party cookies? How can it help advertisers?

Third-party cookies are tracking files created by domains other than the website a user is actively visiting. They are used extensively in online advertising to track user behavior across multiple websites, enabling advertisers to deliver targeted ads based on users’ interests, preferences, and browsing history.

Here’s how third-party cookies can help advertisers:

• Cross-Site Tracking: Third-party cookies allow advertisers to track user activities across various websites. This tracking data provides insights into users’ interests, behaviors, and purchasing intentions, enabling advertisers to create targeted advertising campaigns.
• Behavioral Targeting: By analyzing data collected through third-party cookies, advertisers can implement behavioral targeting strategies. They can segment users based on their online activities, such as product searches, content consumption, and interactions with ads, and deliver personalized ads tailored to individual interests and preferences.
• Retargeting and Remarketing: Third-party cookies are commonly used for retargeting or remarketing campaigns. When a user visits a website and performs specific actions, such as adding items to a shopping cart or browsing certain products, third-party cookies store this information. Advertisers can then display targeted ads to these users across other websites or platforms, encouraging them to revisit the site and complete their actions.
• Audience Segmentation: Third-party cookies help advertisers create detailed audience segments based on demographics, interests, and online behavior. These segments allow advertisers to tailor ad content, messaging, and offers to different audience groups, maximizing relevance and engagement.
• Ad Performance Measurement: Advertisers use third-party cookies to track ad performance metrics such as impressions, clicks, conversions, and ROI. This data helps assess the effectiveness of advertising campaigns, optimize targeting strategies, allocate budgets efficiently, and make data-driven decisions to improve campaign outcomes.
• Cross-Device Tracking: Third-party cookies enable advertisers to track user activity across multiple devices, such as desktops, laptops, smartphones, and tablets. This cross-device tracking provides a holistic view of user behavior, allowing advertisers to deliver consistent and coordinated experiences across devices.
• Ad Network Optimization: Advertisers can leverage third-party cookies to optimize their ad placements within ad networks. By analyzing user interactions and engagement levels on different websites within the network, advertisers can identify high-performing placements and adjust bidding strategies to maximize ad visibility and impact.

While third-party cookies offer valuable benefits for advertisers in terms of targeting, personalization, and performance measurement, it’s essential to note that their usage is increasingly scrutinized due to privacy concerns. As a result, many tech companies and regulators are exploring alternatives and stricter regulations to protect user privacy while balancing the needs of advertisers and publishers.

Conclusion

The emergence of device-identifier restrictions and the end of third-party cookies are sure to have a highly disruptive impact on the advertising industry—for both advertisers and other players (see sidebar “The impact on other players”). While advertisers have already had to start adapting to privacy-driven changes, they should intensify experimentation with viable alternatives to third-party cookies. If they don’t make dramatic changes in their approach to advertising, they will face significantly higher acquisition costs going forward.