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Date of Publication: 24 Feb, 2022
What’s Cooking about Cookies?
With the changing dynamics of data privacy and strict laws being imposed upon 3rd party cookies it is important for business owners and marketers to understand them and find an alternative approach to gather, analyze and reap data for businesses to build a competitive edge and grow even when the known terms are slowly becoming redundant.
This article will help you understand cookies and why is it important to shift from 3rd party to 1st party cookies.
Anirban Guha
Digital Marketing Expert | Media Strategist | Entrepreneur
Table of Contents
What are Cookies?
Cookies are text files containing small amounts of data – like your username and password – that are used to identify your computer on a network. HTTP cookies are specialized cookies used to identify users and enhance your web experience.
Cookies are created by the server upon your connection. The data is tagged with a unique ID that is unique to you and your computer.
When your computer exchanges cookies with the network server, the server reads the ID and knows what information needs to be served.
HTTP cookies enable Internet web browsers to track, personalize, and save information about each user’s session. A “session” is simply the time you spend on a site.
Types of Cookies
There are three types of cookies:
First-party cookies
First-party cookies are stored under the same domain you are currently visiting. In other words, if you are on example.com, all cookies from this domain are considered first-party cookies. They are typically used to identify a user between pages, to remember the preferences that you have selected, or to store your shopping cart. Today, it is hard to find a website without first-party cookies.
Second-party cookies
Second-party cookies are a questionable topic. Some say they don’t exist. Data that has been shared between partners is considered second-party data in general. So, second-party cookies are part of that data related to cookies.
Third-party cookies
Third-party cookies, are cookies that are stored under a different domain than you are currently visiting. The purpose of these cookies is usually to track users between websites and display more relevant ads between them. The third-party cookie is one that is set by a website other than the one you are currently visiting. Advertisers, marketers, and social media platforms are the most common third-party entities.
Let’s take a common example. Let’s say earlier in the week you looked up some hotels in Goa. You browsed a few websites, admired the photos of the sunsets and sandy beaches, but ultimately decided to wait a couple of months before planning your vacation. A few days go by and suddenly it seems like you are seeing ads related to Hotels and tourism in Goa on many of the websites you visit. Is it a mere coincidence? Not really. The reason you are now seeing these ads on vacationing in Goa is that your web browser stored a third-party cookie and is using this information to send you targeted advertisements.
What are Cookies used for?
Websites use HTTP cookies to streamline your web experiences. Without cookies, you’d have to login again after you leave a site or rebuild your shopping cart if you accidentally close the page. Making cookies an important a part of the internet experience.
Based on this, you’ll want to understand why they’re worth keeping — and when they’re not.
Here’s how cookies are intended to be used:
- Session management: For example, cookies let websites recognize users and recall their individual login information and preferences, such as sports news versus politics.
- Personalization: Customized advertising is the main way cookies are used to personalize your sessions. You may view certain items or parts of a site, and cookies use this data to help build targeted ads that you might enjoy.
- Tracking: Shopping sites use cookies to track items users previously viewed, allowing the sites to suggest other goods they might like and keep items in shopping carts while they continue shopping.
What Cookies do?
Secure websites use cookies to validate a user’s identity as they browse from page to page; without cookies, login credentials would have to be entered before every product added to cart or wish list. Cookies enable and improve:
- Customer log-in
- Persistent shopping carts
- Wish lists
- Product recommendations
- Custom user interfaces (i.e. “Welcome back, Rohit”)
- Retaining customer address and payment information
Cookies in eCommerce
A cookie’s most critical job is to maintain the user’s logged-in identity as they navigate from page to page. The website uses a user’s browsing history to improve the customer experience.
In order to create a seamless shopping cart experience, eCommerce sites use both session cookies and persistent cookies. Session cookies keep track of items added to a user’s cart as they are added. The persistent cookies will retrieve the user’s selections from the database when she visits the site again or will allow you to create personalized retargeting campaigns that encourage her to revisit her cart. This is key to encouraging conversions.
Cookies are an integral part of the Internet. A webpage would be far less useful and interactive without them. E-commerce would not be possible without them. Cookies allow websites to remember and improve.
How Cookies can help Businesses?
- Smooth functioning of eCommerce and improving user experience.
- Gather data for analytics, which helps the business to understand consumer behavior.
- Creating and targeting Ads to specific users according to their preferences.
Why do Online Businesses need to care about Cookies?
There are 3 good reasons why any online business should care about cookies:
- Cookies are regulated in many regions of the world, but particularly strict rules apply in Europe and California.
- Consumer awareness about cookies is increasing.
- The digital economy itself is turning towards consent.
Marketing in the age stricter norms of Data Privacy
With Google’s phase-out of third-party cookies, many brands will begin using first-party data to better target ads. How will this affect your paid marketing strategy?
No need to start over with your marketing strategy. There are a few changes you should be aware of, though:
- Brands will need to focus on collecting first-party data: Now is the time to gather data about your audience if you haven’t already. Send out surveys, host contests, or use website tracking tools to learn more about your audience.
- Competitive analysis will get harder: Third-party data has the disadvantage that you and your competitors use the same targeting data. You may find it harder to understand why your competitors take certain actions if third-party cookies are removed.
- Ads may get more personalized: It is easier to create a personalized experience using first-party data, which is information from your actual site visitors.
There is little chance that the switch away from third-party data will have a major impact on marketing on a day-to-day basis. The majority of brands will begin to rely on first-party data more; however, Google is also developing a privacy sandbox that will allow brands to target users while not invading their privacy.
Advantages of only Using Data from 1st-Party Cookies for Ad Personalization
Why should you consider moving to data from 1st Party cookies rather than relying solely on Google’s privacy sandbox?
For starters, most brands are increasing their reliance on first-party data, which likely means they are seeing positive results. According to Google, 87 percent of APAC brands consider it critical to their marketing efforts.
Let’s look at a few other benefits to consider.
- First-party data is more accurate: First-party data is information you collect about your customers. This makes it more accurate because you know who it is about and where it came from.
- Boost marketing performance: it is so much more efficient at driving consumers to take action.
- Your competition does not have the same data: With third-party data, you and your competitors can buy the exact same data, which makes it pretty hard to be competitive. However, your competitors don’t have access to the data you collect, making it easier to test new initiatives or uncover opportunities about your own traffic and customers.
- You can double down on personalization: With first-party data, you can dive into personalization, secure in the knowledge that your data is accurate.
- It is more standardized
- First-party data is cheaper
How to use Data from 1st-Party Cookies for Ad Personalization?
We’ve covered what first-party data is, why Google is ditching third-party data, and a few of the advantages of using it. How do you actually put first-party data to use? Here’s what you need to know to use this data for ad personalization.
Determine how to leverage data from 1st-party cookies
Think about how you will use the data before you start collecting it. How you collect data and how you use it will depend on how you intend to use the data.
You might use it to:
- build brand awareness
- reduce churn
- send timely ads
- Get leads
Make a plan to gather data from 1st-party cookies
Unlike third-party data, you can’t just buy first-party data; you’ll have to gather it yourself. Luckily, there’s no shortage of ways to gather it.
For example, you can collect data using 1st party cookies from:
- website visitor tracking tools
- your mobile apps
- offline surveys
- social media channels
- user registration for your website
- contests
Consider how you will use the data to personalize your marketing before making a data collection plan. Retargeting ads, personalized product recommendations, and account-based marketing, for example.
Ask permission to gather the data
A major problem with third-party data is that some web users don’t even realize they are being tracked. It’s imperative to be transparent about your data gathering practices as first-party data grows in popularity (and privacy laws begin to limit the data we collect about audiences).
Make sure your audience understands what data you collect, what you do with it, and how it’s stored. Transparency about data collection and usage isn’t just the right thing to do, it is required by law in some places, such as the EU’s GDPR.
Test, Tweak, and Retest
Third-party data is what it is. Data collection methods and types cannot be changed.
A/B testing ads to see what your audience responds to with first-party data allows you to test and find out how you can collect the best data by modifying how you collect it.
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