First-party data.. third-party cookies.. If you’re a marketer, advertiser, or work in data engineering, you’ve probably been hearing these terms a lot recently. But what exactly does it all mean and how does it impact your work and your business?
A few important definitions before we dive in:
First, it’s important to clarify: despite sounding similar, third-party cookies are not the same thing as third-party data.
Third-party data is data that is stitched together from multiple sources other than your own (e.g. US Census data, voter registration, mortgage records), which companies may purchase to enrich their existing or target audience profiles. In addition to these traditional data vendors, there are a growing number of modern data processors that collect, organize, and sell third-party data via APIs that sync with your marketing and sales tools (e.g. Clearbit).
For example, a large furniture retailer might purchase third-party data about people who have recently moved (perhaps via aggregate data of people who recently filed an address change) to send direct mail coupons to those households.
Third-party cookies are small packets of data that are created and stored on your computer or devices by—you guessed it—third parties that follow you while you browse the web. These cookies track and collect your behavior across multiple sites to create more robust online profiles of you and other consumers, which then help advertisers (and competitors) more accurately target you.
For example, you’re looking at a kitchen appliance on Target.com. You also visit Wirecutter or other ecommerce sites to research further. Later in the day, you’re browsing the web and notice an ad from Best Buy showing the same kitchen appliance for cheaper. In this case, Best Buy used a third-party cookie to track your browsing behavior and lure you with an offer to purchase with them instead of Target.
If you were searching for new appliances, packing boxes, and moving companies, the furniture retailer from the previous example might also employ third-party cookies to identify you as a potential new mover.
Ok, makes sense, so what’s the problem? Well, driven by GDPR and increasing consumer privacy demands, third-party cookies are soon to be a relic of the past. Safari and Firefox have already blocked them for years, but recently, Google also announced plans to phase them out of Chrome by 2024.
To be clear, the end of third-party cookies does not mean the end of third-party data (as you learned above, they’re unrelated). But it does mean that marketers who currently rely heavily on cross-site tracking and robust data profiles for advertising, retargeting, and audience pinpointing should start planning alternative strategies for finding success.
So where should you focus your efforts?
Well, it’s almost universally agreed that zero- and first- party data are the most reliable and valuable—when you collect data through direct relationships and interactions with your customers, you know it’s high-quality, accurate, and relevant to your business. By leveraging first-party data, you can create personalized and targeted touchpoints across your customer lifecycle, resulting in higher engagement and loyalty and improved customer experience. Plus, it’s free.
And in a world with rising consumer expectations for privacy, a first-party data strategy ensures a mutually consensual, trustworthy, and beneficial relationship.
To begin collecting first-party data, start by identifying all of your data sources and grouping them into the appropriate data types—e.g. identity data, interest data, activity data.
Once you’ve identified these categories and sources, it’s time to start filling in the gaps. Where and how can you enrich this data? Why do you need it? How will you get it? How will you use it?
Here are some opportunities to build and grow your zero- and first-party data:
Don’t panic! Most of your current marketing strategies and channels won’t be affected, and since Apple and Mozilla have blocked third-party cookies for years, these advertising tools have likely already weakened in effectiveness.
The best thing to do is to stay up-to-date with news related to data privacy and third-party cookies, while shifting your focus to strategies that leverage zero- and first-party data. Be sure to also vet any solutions during this time that will help you transition away from third-party cookies.
Lastly, marketers are creative by nature. This is an excellent opportunity to brainstorm new ways of connecting with existing audiences and potential customers without the use of massive amounts of data and hyper-specific targeting. Investing in these strategies will go a long way in future proofing business goals in a privacy-forward way.
