Given the fast paced world, the once reliable cookies, be it first party or third party, is under intense scrutiny. With Google’s on and off situationship with third party cookies, brands are increasingly shifting towards first party data strategies driven both by privacy concerns and changing ways consumers engage with digital content. However, as we move closer to a world where people are getting more and more privacy conscious, we might also be moving towards a world where third party cookies may become obsolete. In such a circumstance, it is essential to examine the limitations of first party cookies and whether third party cookies still hold any relevance.
First-party cookies have gained traction as privacy regulations and consumer expectations push brands to prioritise user data that is willingly shared.”The business controls the granularity of the rich first-party data, including profile and behavioural data. You thus get a 360-degree profile of your users,” Rahul Seshadri, director – engineering, WebEngage, told BrandWagon Online. This comprehensive view allows brands to optimise user experiences from the first visit, leveraging AI to personalise interactions based on data that is rich in dimensions, he added.
While first party data allows for a more respectful approach to personalisation, it comes with the significant limitation which is the inability to retarget users effectively. “Third-party cookies solve the cold-start problem via retargeting,” Seshadri added. Consumers are increasingly wary of brands that use data they haven’t explicitly shared. This shift in consumer sentiment is driving a transition to first-party strategies, where the data is not only richer but also more aligned with user privacy expectations.
The decline of third-party cookies
From what is understood, the effectiveness of third-party cookies, once the cornerstone of digital advertising, is waning. Cookies are outdated. Consumers have moved beyond the Chrome browser where cookies exist,” Tejinder Gill, general manager, The Trade Desk, said. As digital advertising extends beyond traditional web environments into OTT/CTV, music streaming, gaming, and mobile apps, the relevance of cookies—whether first or third-party—is diminishing, he said.
Research shows that consumers now spend over 52% of their digital media time on the open internet, particularly on platforms where cookies have no role, he added. This shift is accompanied by a growing trust in ads on the open internet, with young adults more likely to trust ads on OTT/CTV and music streaming platforms than those on social media. “ This changing dynamic is driving brands to explore new identity solutions, like Unified ID 2.0, which allow for personalised, cross-channel marketing without relying on cookies,” Gil continued.
Balancing first and third-party strategies
Experts state that the decline in the utility of third party cookies has started. In such a scenario, they still play a role in a holistic marketing strategy. “There’s probably an impact for businesses primarily selling advertising at a massive scale, but there are just a few such big players,” Seshadri said. The rest will benefit far more from a solid first-party strategy, which begins with having a good CDP, he added.
“When you combine first-party data with relevant third-party data, you get a result that’s worth more than the sum of the parts,” Gill opined while adding that this enhances targeting accuracy and reduces wasted spend. Industry solutions like Unified ID 2.0, which allows brands to start with authenticated first-party data and enrich it with third-party data to reach the right audience in a privacy-conscious way, he added. This approach ensures that brands can still leverage the benefits of third-party data while aligning with consumer expectations and privacy regulations.
Case in point
A recent campaign by PepsiCo India exemplifies how brands can successfully leverage both first and third-party data to optimise their marketing strategies, Gill added. The goal was to reach new customers through its Pepsi Slice campaign by targeting OTT viewers between the ages of 18 and 34 who had cancelled their cable or satellite TV subscriptions. By combining first-party data with third-party data, PepsiCo was able to build a custom audience segment and achieve 100% of its reach goal, delivering 13% budget efficiency and optimising ad frequency.
The future of cookies
As we look to the future, the relevance of third-party cookies will likely diminish, driven by consumer privacy concerns and the rise of more sophisticated identity solutions. “Regulations will dictate the effectiveness of third-party cookies,” Seshadri cited while “It is irrelevant whether third-party cookies will disappear or not” Gill added. The focus is now on creating a better, more advanced internet that aligns with the ways consumers engage with digital content. This new era of digital advertising is less about cookies and more about leveraging rich, first-party data to deliver personalised experiences in a privacy-conscious manner. While third-party cookies still offer advantages, will it be able to save space in the evolving data-conscious world? Or will the world travel towards a cookie-less future? We can only wait and watch…
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