On Jan 14th Chrome announced that it is working on killing the third-party cookies in the near future. Since this update, there has been havoc in the AdTech industries and agencies to be better prepared for this to face this issue head-on.
As there is a lot going on in the Ad tech industry to be prepared for this big change, we have prepared a series to help you digest the content better and also have a complete understanding of this concept. So let’s get started.
In order to understand what is the repercussion of this decision, we need to first understand how cookies work and the types of cookies that are used in the advertising industry.
What is a Cookie?
A cookie is a text file that consists of nonexecutable which is downloaded on your web browser to store information about you and your preferences to the host server.
In 1994, cookies were created by Lou Montulli to solve the HTTP stateless problem who even earned a patent for this. Whenever the page render request was sent by the browser, the server could not identify if the request came from the same browser or a different one. Also, simple browser info like chosen language or a shopping cart item had to be stored in the server which needed more money and a larger server. So this was solved by a cookie. A text file that is sitting in your browser that communicates information about your preferences to the host server to display the pages based on your chosen settings.
First Party vs Third Party Cookie
Before you jump to conclusions that all cookies are bad. We need to understand the 2 cookies that are majorly used in the ecosystem.
First Party Cookie
The cookie created by the host domain server especially to save the user preferences like language, session, shopping cart, etc is called a first-party cookie. The first-party cookies are only restricted to the site and are encoded in such a way that it can only be read by the server which created this cookie. As this does not follow you all over the browser and is paramount to user experiences, these cookies are not blocked/ are in danger.
The cookies that are not created by the host server is called a third-party cookie. That simple! As these cookies are primarily used for advertising and communicate data to different ad servers, third-party cookies are at risk now.
To get a better idea, let us now understand as to what happens behind the scene:
Are Pixels and Third Party Cookies the Same?
Not really, but they work hand in hand.
When the user requests for the page, the 1×1 pixel is loaded which then communicates with the ad server requesting a third party cookie to be downloaded in the user’s browser. Depending on the objective, the pixels can be used to render the ad from the ad server or even collect audience insights, purchase data or behavioral data.
What are First Party, Second Party, and Third-Party Data?
Understanding the types of data is crucial to understand the consequence of Google Chrome’s cookie update. Let’s go ahead.
First-party data is the data collected by the hosting domain itself. For example: If you visit: www.example.com and you choose “Spanish” as your default language for browsing through the site, this info is saved in the first-party cookie. When you click on some other page within the same site, this info is passed on to the host server to render the next page is Spanish as well. Another example: If you visit Amazon.com and browse through different products, first-party data is used to recommend similar/complementary products to help you with your shopping experience.
Second Party Data
If you share your first-party data directly with other vendors then this would be a second-party data. This is usually used by the brands in partnership with publishers or other brands to get insightful information. For example, if Nike partners up with Bleacher’s report and shares their first-party data about their audience with them to personalize the campaign, this would be second-party data. The data management platforms like Lotame, for instance, have a private data exchange marketplace where brands can share data for multiple marketing objectives.
The data tracked by third-party cookies that send information to the server other than the host server is called third party data. As these cookies are used mainly for advertising purposes, Firefox and Apple Safari block third party cookies by default to disable other third parties to collect information about the user. Although Google is a bit late to the party, it announced that third party cookies will be obsolete by 2022. Adblockers like Ghostery are used to block these third-party cookies and advertising pixels/tag and have been growing in terms of popularity due to privacy concerns.
With Google Chrome having the largest market share of 64%, what will happen when it kills the third-party cookies? Stay tuned!