Emptying the (Third-party) Cookie Jar

April 6th, 2021

Google and several of its fellow Internet conglomerates announced recently that third-party cookies are going away. Privacy advocates cheered. Ad sales reps fretted. But most people were left confused.

What the heck is a cookie? And why should I care if they’re going away?

Cookies are little pieces of data left behind when you visit a website. For those of you with kids, think of your fourth grader hanging out in the living room all day with a box of Oreos. You’d be able to tell exactly where he was by the crumbs left behind.

The Internet isn’t much different. Wherever you go on the web, you leave behind a cookie. For many years, advertising sales companies have made money by collecting those cookies, making assumptions about the people that left them behind and selling ads to marketers who want to reach those specific people.

This produced online ads that were tailored to people based on their online habits. It created profitable, unique advertising. But it also caused privacy concerns.

Those privacy concerns are the public reason that Google, Apple and other major Internet companies said they will no longer allow third-party ad networks to use their platforms to collect cookies. But there is more to the story.

To clarify, first-party cookies will still be alive and well. For example, when you visit Nike.com to purchase a pair of shoes, Nike is likely collecting and storing your computer or phone’s cookie in its own pile of data. Since it is Nike’s data collected from Nike’s site, it’s considered Nike’s “first-party data.”

That practice is not going away.

The change you’re hearing about is around third-party cookies. These are cookies that are collected by outside groups, generally large ad networks that purchase this cookie data and then use it to sell targeted marketing to advertisers. Think of ad networks as warehouses that collect cookies from all across the Internet and then sell them to companies who want to reach the customers who left those cookies behind.

For example, Nike doesn’t know what its customers are doing on other sites. But it can work with an ad network to purchase ads that have been targeted toward people who have looked for athletic shoes. This is why you are bombarded with Nike ads after looking for a shoe on another site.

The problem with third-party cookies, for many people, is that it feels, well, creepy. Imagine booking a surprise anniversary trip to San Diego for your spouse … only to blow the surprise when they see “Visit San Diego” ads all over the family desktop.

That type of hyper-individual targeting is likely to happen less often with Google’s changes. But moving forward, Google’s Chrome browser will still track your web browsing. Only now it will place you into buckets called “FLoCs” or Federated Learning of Cohorts. So if you look for running shoes, you may be put into a FLoC that groups people interested in exercise.

That means companies won’t necessarily serve ads based on your individual browsing habits. But they can serve ads to groups of people who have shown similar interests. Bottom line – ads that are generally tailored to your website habits are not going away but they may not be as relevant to you personally.

Still, the changes mean that brands need to better understand their own first-party data. In other words, get more familiar with your own customers. It’s usually easier to generate more business from someone you know than to find new business from someone you don’t. So develop a list of customer emails and addresses. Place button pixels on your website so you know what people do when they visit. Just a small investment in first-party data capture tools can pay big benefits down the road.

Advertising power is now in the hands of people who control their own data. So make sure you have an understanding of your customers by monitoring their actions on your site, collecting their contact information and encouraging customers to join loyalty programs.

For example, if you run a restaurant, use your website traffic, app downloads and in-venue traffic to understand your customers’ needs. Find out which dishes your customers order most often and how spicy they like their pad Thai. Understand where your customers live, what they do and start to unearth unique characteristics of your customer that you could use to help capture more like-minded people. That type of information can help you tailor the message to your customers, find new customers, and get them both to purchase again and again. And again.

The days of relying on other companies to tell you about your customers are going away. Google knows its customers better than anyone. You can too.