What Third Party Cookies do and why they matter to data marketing

Third party cookie changes can be tough to understand. This guide outlines the changes to cookies, technology and data capture our members should prepare for in 2021, 2022 and beyond.

Cookies are the bite-sized pieces of data the marketing industry relies on to deliver the low-cost personalised marketing that’s exploded in popularity across advertising, brand marketing and digital sales.

But the third party tracking cookie has been put on notice, with changes likely in 2021 and 2022 that will disrupt how the programmatic, personalised digital advertising and marketing ecosystem works.

This may be the biggest change in the data-driven marketing and advertising industry since the introduction of real time bidding.

Google has announced it will stop supporting third party cookies and move towards “a privacy first web” by forcing businesses to adopt their Privacy Sandbox, and a new feature called FLoC to target interest-based segments.

These changes are especially likely to impact the smaller businesses, advertisers, agencies and marketing services that rely on low cost targeted advertising to deliver their products and services.

Here’s a 2021 guide to what ADMA members should know about cookies and the changes that are coming.

Hold up, what even is a cookie?

Cookies are used to track consumer behaviour across the internet. Cookies are usually saved as text or data files and then used for user tracking and other programmatic advertising and marketing opportunities.

Cookies also help digital experiences function well, for example by:

• Enabling automatic user log-in to prevent needing to remember passwords;

• Enhancing user experience by storing preferences so a site can look different for each visitor;

• Keeping track of items in a shopping cart;

• Recording user’s activity such as browsing history, click patterns, page visits and so on.

The third party cookie is the stale ginger nut in the cookie pack

A common type of cookie most of us know and understand is the Facebook pixel, which means a logged in Facebook user has their behaviour tracked and will be retargeted for ads in Facebook based on that behaviour.

That’s why when you visit a shopping website and might find your Facebook feed shows you ads to that same shopping website, or other interest-based ads.

Many consumers understand that using Facebook for free means targeted advertising is part of the deal - after all, if a product is free to use, consumers can assume that trading their data is one of the costs of the relationship.

The third party cookie, however, doesn’t have quite the same glowing reputation as a first party cookie such as the Facebook pixel, which is generated by Facebook, a site the consumer has a direct relationship with.

Most readers are not completely aware of the many third party cookies following them around the internet, collecting their browsing information without their knowledge or consent. These cookies underpin the targeting or segmenting that programmatically delivered advertising relies on.

Advertising technology companies may also on-sell browsing behaviour, tracking information and other ‘profiling’ collected by third party cookies to different marketers, advertisers and networks, further fueling the advertising ecosystem.

But that’s likely to change throughout 2021 and 2022 as the third party cookie crumbles. It’s also likely that smaller businesses and agencies will be most impacted by this change.

Apple, Mozilla and Google don’t want third party cookies on their technology

Like most things to do with technology, this third party cookie issue is complex.

Big players like Apple, Google and Firefox have signalled they will end technology support for the third party cookie in a move very likely to impact smaller agencies, marketers and advertisers rather than the big tech platforms or even big publishers.

For example, Apple’s changes to third party cookies not only impacts their device users, but also how many small businesses buy Facebook ads.

The big gun - Google - will also be phasing out the third party cookie by 2022, which is likely to impact both small and big players in the advertising ecosystem. Google by far has the datasets and under-the-hood technology that supports the vast majority of the Australian advertising technology ecosystem.

So what does the end of third party cookies really mean?

Basically advertisers, publishers and digital agencies will need to start to find new ways to gather, analyse and use data to target their advertising and marketing.

Add that to the changing regulatory landscape, and you can see that business certainty is the most likely casualty of this change.
ADMA members will need to stay abreast of technology and regulatory changes and make swift decisions to determine the future they want for their business.

It could become more challenging to plan, budget and scope the technology - as well as compliance costs - of data-led marketing as third party cookie changes make an impact across the ecosystem.

Larger marketing, publishing and advertising businesses should be able to adapt to third party cookie changes, as they have the budgets and expertise. Smaller firms may struggle.

It’s likely that education, compliance and technology needs will increase to make sure the industry adapts to this change.

ADMA will continue to keep members up to date with changes and offer valuable courses, webinars and guides to help navigate the change.

Learn more about Cookies:

Internet Cookie Masterclass
Internet Cookie CMO Briefing