Introduction
In 1994, Lou Montulli first introduced cookies for data storage while working for Netscape. Although cookies existed before, he used them to save small bits of information, such as login information and site preferences, on a user’s computer. Cookies have been in use for more than 28 years. However, their usage has far exceeded the original intent, and now they are increasingly used to track users’ data and browsing history to serve targeted ads.
Ever since the early 2000s, when the use of cookies shifted from simple data storage to tracking user behaviour, many laws/directives were passed, such as the Do Not Track (DNT) header, e-Privacy Directive, General Data Protection Regulation (GDPR), The Personal Information Protection and Electronic Documents Act (PIPEDA) and the most recent – Cookie Consent Law. These laws were never adopted globally, and North America has always trailed the European Union when it comes to bringing more transparency to user privacy.
First-Party Cookies vs Third-Party Cookies
Now that we have a basic understanding of what cookies are and how we have used them historically and recently, we need to understand two main kinds of cookies used in Digital Marketing – First-Party and Third-Party Cookies. Let us consider the following everyday example to understand the difference:
First-Party Cookie (Phong), Phong is your good and trusted next-door neighbour who knows everything about your preferences. He often visits your home, borrows your garage tools, and brings them back with home-cooked food, just as you like it. Phong does not care about anything going on at your home and doesn’t share your secrets with anyone else. Phong is a good friend and a great neighbour.
Third-Party Cookie (Tammie), on the other hand, is the nosy gossip queen of the neighbourhood who peeks through the doors and windows, takes notes about everyone’s life, and spreads the word to whoever is interested.
When it comes to cookies, just like your neighbour Phong, you can trust First-Party Cookies, who respect your privacy, whereas Tammie, aka Third-Party Cookies, is always collecting your data and sharing it with the outside world.
Google’s Proposed Ban: Threats and Implications:
Now that we understand different kinds of cookies, let us understand whom Google is going after – It is not the first-party cookies but the third-party cookies. This change will profoundly affect Digital Marketers, challenging traditional user tracking methods and targeted advertisement.
Non-profit organizations that rely on targeted online campaigns to drive donations may need help in personalized outreach. The inability to track users across multiple websites will impact an organization’s fundraising efforts. It will also lead to difficulty in attributing conversions and accurately measuring the impact of specific channels.
Most organizations use Google Analytics as the primary analytics tool to measure and report on their Digital Marketing efforts. While Google Analytics relies on First-Party Cookies, where you install a snippet of code from Google on your website, and it interacts with the users coming to the website, it will not be affected by the ban directly. However, the way Google tracks your users across multiple sites you own will be affected. The ban will also affect the attribution modelling and will now have less information on the users that come to the website. Some of these limitations will be addressed using more and more data sampling, but with credible alternatives, the granularity in data insights that Google offers will take a hit.
Alternatives and Workarounds:
Now, you might wonder why Google is hurting itself. Google is already working on developing alternative tracking technologies that prioritize user privacy. Federated Learning of Cohorts (FLoC) is an approach that groups users based on interests while preserving individual privacy. More and more companies will pivot to strengthening first-party engagement and building an ecosystem promoting direct user engagement on their websites and incorporating user privacy in their mission to instill more confidence in their users towards their organization. Other alternatives include contextual advertising and server-side tracking.
Future Outlook:
Governments worldwide are pushing for more and more regulations around user privacy. We are not 100% sure just banning third-party cookies is the solution as it might lead to more opaque tracking solutions, but as of now, Google has already blocked cookies for 1% of its users and is planning to phase out third-party cookies by mid-2024 completely.
We will cover more tactical alternatives in the upcoming blog posts, so stay tuned!
