For many years, cookies have been a primary tool in enabling the digital marketing ecosystem to flourish, enabling complex interactions between brands and customers – for example, providing relevant advertising to consumers or supporting engagement through behavioural targeting. Some recent changes supported via increasingly efficacious browser limitations have begun to erode the influence of the third-party cookie.

We began discussing some of these changes and what they could potentially spell for businesses at the start of this year. However, since then, the scope of said changes have broadened and progress is moving fast. In this blog, we’ll explore some key challenges and how the ‘Martech’ ecosystem is responding.

What is a 3rd party cookie anyway?

Back to basics!

Cookies were created way back in 1994 by a developer at Mosaic while working on the Netscape browser. Named after the CS term “magic cookie”, essentially it’s just a file stored in your local machine by your web browser and it’s vital for a few key functions – for example tracking things you’ve looked at in a retail site, login and session preferences and other aspects related to personalisation. If a cookie is third party, that just means it has been set by a different domain from than the one the user is visiting at the time. And that’s crucial to how advertising works on the internet. For various reasons – primarily focussed on privacy and risks, third-party cookies increasingly have restrictions imposed on them at a browser-level. It’s this transition that many believe will drive a fundamental change to the way brands, publishers and indeed the whole digital marketing landscape will operate in the coming years.

Browser changes

So what are these browser changes?

Well, in fact, cookies have been crumbling for a while. Back in 2017, Safari started to block third party cookies by default with the introduction of Intelligent Tracking Prevention (ITP). While that change impacted cookies in various ways (for example it also meant that first-party cookies trackability was allowed within 24 hours only), it signalled a shift in the utility of third-party cookies for Safari users. Indeed in 2018, ITP became updated to v2 in which further restrictions were applied (and workarounds to ITP1 made ineffective) – for example, the removal of referrer info to 3rd party trackers and the prevention of first-party cookie tracking in the 24 hour window set in the previous version. In 2019, Firefox joined the party when it deployed its Enhanced Tracking Protection (ETP) and switched that on by default for new users. Finally, Google Chrome will block 3rd party cookies by 2022 – as the market leader (with around two-thirds share) this move signals a big shakeup and a realisation that alternative approaches for digital marketing are needed. By 2022 it is estimated that around 80-90% of the 3rd-party cookies will be impacted. At that volume of cookies removed from the advertising ecosystem, a drive to find alternative strategies to connect user experiences across sites and brands becomes more compelling.

It’s not just cookies…

While limitations in 3rd party cookies, as discussed above, will have impacts on the wider ad-tech ecosystem for web, there are other industry changes that will bring to focus the need for new approaches. With iOS 14, Apple announced in June that they would make changes to the deployment of the IDFA – specifically that this change would require that publishers need permission from end-users before using their apps in order to make use of the IDFA. The IDFA is an identifier that is assigned to an (iOS) device and allows advertisers to provide customised advertising, enabling those advertisers to understand how people interact with app campaigns – for example, to connect ad clicks to app installs. Although Apple have now postponed the IDFA changes into 2021, the impact will still be huge, impacting large marketplaces like Facebook that rely on IDFA (and Google’s equivalent).

It’s worth noting – like much of the browser tracking changes, the IDFA changes give control back to the end user (and in the case of IDFA via an opt-in at app launch or when specific app features are enabled). So users are now better equipped to engage with app or web content on their terms – expressing an increasing tendency to adjust how they provide consent to data sharing, especially across companies they have no direct relationship with.

Control is key

What these two changes (across both web and app) signal is a pivot away from third-party data to first-party data. The marketing eco-system is dependent on interconnections to make targeted, contextually relevant marketing to users. Those interconnects are often bringing together first-party and third-party data (for example via a DMP) to build up effective audiences. And while 3rd-party cookies are crumbling, so too are the volumes or quality of matching to build up those audience segments that can then be sold by publishers to marketers.

What is becoming more evident is that there is a shift in the marketplace that places first-party data collection as a potential solution to solving the challenge from the erosion of 3rd-party data. An emerging theme is around identification – where brands can use strategies (such as incentivising logins) to connect consumers across devices – essentially mapping out opportunities to create better experiences for customers that in turn promote increased opportunity to validate who is consuming what content or digital service. Connecting that data with other first-party touchpoints (e.g. CRM systems, call-centre tech) can establish a powerful dataset that can help brands deliver people-based advertising.

That’s not the only game in town though. There are efforts to create more transparent solutions – such as open identifiers (for example adidentify.org). Indeed Google has one proposed solution in the guise of a privacy sandbox that seeks to “Create a thriving web ecosystem that is respectful of users and private by default.”. There are many such solutions competing for attention – it will be interesting to see how they co-exist and the tension between open and walled gardens approaches will no doubt provide future source materials for future blogs! Many marketing experts believe there will be a stronger focus on contextual advertising – which actually aligns with a customer-centric narrative (user control and privacy!) and pivots advertising more towards conversations that directly impact customer need. Many solutions then, no single answer yet an increasing urgency for a cookie replacement!

Data Strategy is crucial

For brands looking to connect with their customer base, this shift to first-party data collection and processing brings an urgency to data strategy. Coupled with big shifts in data privacy (GDPR, CCPA, etc) then embedding solid data governance principles into a customer-centric delivery will reap rewards in the longer term. How the overall market wrestles with the shift from third to first-party data is still not 100% clear. However, a focus on understanding your future marketing use cases combined with an audit of your data challenges, opportunities and complexities is a good start to ensure that your marketing effectiveness is maintained while also ensuring that privacy and user-choice is respected.

To find out more about our Data Strategy capabilities, please visit our Benchmarking and Strategy page or feel free to drop us a message. And to catch all of our latest updates be sure to follow Lynchpin on LinkedIn and Twitter.