A world where consumers decide: The importance of first-party data

For the past four years, the marketers and businesses that have been comfortably strategising with third-party data underpinnings have been bracing for cookie deprecation impact. Then just this week Google announced its decision to back-track on their plans to completely phase out third-party cookies and pivot to giving this decision back to the consumer instead. That is, third-party cookies will still be active on Google, however consumers will have the autonomy to determine their own data settings and how it may be collected and used.

Regardless of the motive for Google’s decision, this pivot better aligns with the upcoming regulatory shifts for data protection and encourages innovative approaches in personalised marketing. As consumers take back control of their data and the prevalence of cookies inevitably crumbles, businesses will need to explore alternative data-driven strategies that focus on direct customer relationships.

The not so sweet side of cookies

Third-party cookies have developed a bad reputation and for good reason. By tracking users' browsing habits, third-party cookies contribute to the creation of detailed profiles, raising serious privacy concerns. The accumulation of such information allows for the targeted delivery of advertisements and content, often without users' explicit consent. Plus, cookies are prone to security risk as they are often exploited for tracking user behaviour across websites. Despite this, cookies have been the backbone of online advertising for a long time, enabling personalised ads by tracking users across websites. They are low cost and deliver extensive web analytics and user behaviour analysis.

Many businesses with operations deeply rooted in the convenience of cookies and that rely on them for audience insights will be letting out a sigh of relief with the news of Google’s cookie deprecation reversal. However, this decision should not be viewed as the survival of cookies but instead a slower execution. Many consumers will indeed take the opportunity to opt-out of third-party data tracking and as a result there will still be a reduction in third-party cookie tracking over time. That’s why marketers should not become cookie complacent. It’s essential for marketers to continue their post-cookie strategy work with this new era of consumer-controlled browsing environments marking an age of first-party data dominance.

The power of first-party data

While third-party data cookies are collected and managed by organisations that do not directly interact with customers, first-party data offers marketers invaluable insights directly sourced from their own interactions with customers. First-party data is generated directly from the source, is highly trusted and provides greater privacy than cookies. Think of first-party data as the organic version of its cookie sibling. Not only does first-party data ensure accuracy and reliability, but it also allows for continuous optimisation of marketing strategies based on actual customer behaviours and preferences. In fact, many industry juggernauts have been embracing first-party data years prior to the announcement of Google’s cookie deprecation plans and have seen robust results that surpass what third-party cookies can offer.

By utilising first-party data, businesses can create deeper connections with their audiences, providing more personalised and relevant experiences across different touchpoints. In the continuously evolving digital landscape, harnessing the potential of first-party data is crucial for driving sustainable growth and cultivating lasting customer relationships. Particularly so as consumers start to opt for withdrawal from third-party cookies.

Andrea Martens, ADMA Chief Executive Officer, notes that "ADMA recognises that Google's decision to introduce a new experience in its Chrome browser giving consumers more control over their online data settings, aligns with the transparency requirements under Australia’s proposed privacy reforms. Customers expect to have control over how their data is used, and any move to provide better control should be welcomed by marketers. It is a key factor in building consumer trust in the marketing ecosystem.”

Considering the future

With Google’s recent announcement, it would be tempting for businesses to succumb to the ease and comfort of sticking to what they know – cookies. But marketers should forge ahead with the work they have been putting into their post-cookie work strategies. We will still likely witness the slow demise of the cookie for two main reasons – the consumer’s choice and privacy.

Third-party cookies will still be active through Google however Chrome users will be able to turn them off. As privacy concerns by the public continue to grow, it is safe to assume that many will exercise this power to choose. In fact, in some international jurisdictions, "off" will be the default meaning that consumers would actively have to opt-in to receiving cookies. So, unless a consumer is particularly passionate about third-party cookie tracking, there likely wouldn’t be many opting in for this which will greatly reduce the third-party data pool.

Then there are the impending privacy law reforms that make third-party cookies unattractive to use. Without going into the nitty-gritty detail, in short there may be legal and financial penalties for any legislative breach regarding the collection, use and storage of consumer data. In Australia, it’s likely businesses will soon need to be able to justify that their collection and use of consumer data is ‘fair and reasonable’ regardless of customer’s consent. And that the data collected and stored is essential for business operations i.e. not collected and stored above and beyond business needs.

As the dominance of cookies likely diminishes, a shift towards privacy-centric practices is essential for establishing consumer trust and nurturing relationships. Preparing for the natural progression away from third-party data, marketers have the chance to lead with ethical and innovative approaches that prioritise consumer privacy and drive sustainable business growth.

Andrea also comments, “There is already a move away from relying on third-party cookie strategies as deprecation of such has already taken place across other browsers and consumer expectations regarding how their data is used, with consent, in fair and reasonable ways, is becoming the required standard. Those who embed their marketing strategies in these more evolved fundamental principles will be ahead of the curve in the new paradigm."

Adopting a balanced data strategy

We are inadvertently being encouraged reduce the marketing industry’s reliance on and consumption of cookie data. Marketers should think smarter not harder and implement technologies and practices that work to derive deeper insights from first-party data to stay ahead of the curve. AI powered analytics are accessible and easy to implement into a martech stack and can help marketers transitioning away from cookies by accurately identifying patterns and trends regarding customer behaviours. Marketers can also enrich their first-party data with zero and second-party data to provide a comprehensive understanding of their customers. Zero-party data is obtained from sources such as surveys and interactive content for your customers to offer feedback and can provide enriching insights into customer needs and help to identify pain points. Whereas second-party data is acquired through partnerships with other trusted organisations and expands the scope of available data to businesses while maintaining a focus on transparency and consent – which is a fundamental component of the imminent privacy reforms.

Ensuring compliance

Cookie deprecation by Google may now be pivoting but broader privacy reform and stringent regulation of consumer data is prevailing. Implementing robust data governance practices is essential to ensure compliance with legislation and to build trust with customers. Marketers should prioritise transparency in data collection and usage, by clearly communicating how customer data is gathered, stored and used across the organisation. This is more important than ever before with consumers now taking back more control of their data and what they choose to share with businesses. By fostering a culture of stewardship and respect for customer preferences, businesses can establish stronger relationships with their target audiences and differentiate themselves in a competitive marketplace. Ultimately, embracing these strategies not only helps marketers’ transition away from reliance on cookies and their associated challenges but positions them to thrive in a future where privacy and personalisation go hand-in-hand.