Third-party Cookies are Going Away: What Should Retailers Do about It?

Every website is required to ask for consent to drop first- and third-party cookies on your browser, though not all do. While you may not know exactly how cookies work, you likely know that cookies track user information. A cookie is a small text file that lets a website remember you. There are two forms of cookies: first-party cookies and third-party cookies. First-party cookies are set and accessed by only the websites you visit, which help the website remember you so that you have a good user experience each time you visit. Third party cookies are set by a third-party outside of the website you visit, and they track a consumer’s movements on different websites in order to build consumer profiles or provide targeted advertising.

If you’re a marketer, then third-party cookies are essential for targeting ads to potential buyers. On the other hand, many data privacy advocates view third-party cookies as an infringement of personal privacy, especially third-party marketing cookies that track websites and products you visit. Third-party cookies are also viewed as a security threat that can be exploited by hackers to access user information. Given the rising concerns of user tracking, privacy issues, and security risks, Google announced it will discontinue the use of third-party marketing cookies by the end of 2023.

It’s important to note that Google’s target date of December 2023 is their current estimate of eliminating marketing cookies. Google has already pushed back this target date once, and they may very well push it back again. Google could hypothetically also reverse course altogether and never eliminate third-party cookies. Regardless, the subject is on the table, and retailers must be aware of the potential impacts, because this decision, when and if it occurs, will dramatically change the highly targeted digital marketing channels that have been so successful for retailers this last decade.

You may be wondering what retailers can do to prepare for this change in order to continue successfully identifying and marketing to your customers in a targeted and efficient way? In this two-part blog series, we’ll share our thoughts on what retailers should know and do now so that you’re ready when marketing cookies are supposed to go away in two years.

Create an In-house, First-party Data Platform

Traditionally, retailers have relied on data management platforms and third-party data service offerings in order to understand customers, behavior patterns, preferences, and segmentation. With the demise of third-party cookies, changes in device identifiers, and stringent privacy regulations from policies like the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), retailers will find it increasingly difficult to utilize indirect methods in order to understand and target prospects and customers. Therefore, retailers must own first-party data about their customers, and by that we mean you must build an in-house data platform for collecting, storing, and managing data in order to identify and understand your customers. This would ensure that you’re not reliant on external and indirect data sources—when, and if, marketing cookies go away.

While this in-house, first-party data strategy is largely driven by the end of third-party cookies, there are a few more good reasons to create your own first-party data platform:

• Gain more value from your existing internal customer data.
• Become data sovereign.
• Future-proof your customer data strategy.

Let’s break down these points, starting with gaining more value from your internal data. Many retailers already collect first-party customer information from in-house sources, such as contact centers, point-of-sale transactions in stores, and ecommerce purchases. But that data is usually siloed in different applications across the organization. Therefore, you don’t gain the maximum value from your internal customer data. However, if you strategically consolidate your existing first-party data, then you can create a 360-degree customer view. Taking it even further, if you also augment and enrich your customer information with third-party data—from vendors like OnAudience, Lotame, and Nielsen—then you can create a much more in-depth, detailed, and holistic customer view.

Then, as a retailer, you can drive your customer segmentation, targeting, and engagement initiatives, as well as your overall marketing strategies from a position of data sovereignty, instead of heavily relying on external data management vendors and third-party data services. Furthermore, you’ll have complete control over the data because your company has collected the first-party data, and, above all, you own it.

The Nuance of Third-party Data

Now, we’d like to highlight a fine point pertaining to third-party data sources. These data sources are available today, and they will remain available when marketing cookies go away at the end of 2023. However, cookie-driven, third-party data will change—we just don’t yet know how it will change. According to Tinuiti, Google is testing cookie replacements and tools in order to mitigate workarounds, which “leaves the industry in limbo as replacements and next steps remain largely uncertain.” That uncertainty regarding cookie replacements is the nuance we mentioned. You’ll always be able to purchase third-party data in order to augment and enrich your internal information. We just don’t know how the elimination of marketing cookies as a consumer data source will impact the wider world of third-party data. We also don’t know if cookie replacement technologies will be widely adopted or ubiquitous in the same way as third-party cookies. So, stay tuned, and together, we’ll see how this topic evolves.

With that said, once you own, manage, and control your first-party data, no matter what technology replaces cookies, you’ll be far better off managing the changes than competitors who may have their heads in the sand. In fact, if you strategically plan your path to data sovereignty now, then when December 2023 rolls around and third-party cookies do go away, you’ll be well-positioned to utilize whatever technologies may replace marketing cookies.

In the second blog of this series, Retailers: Become Data Sovereign Before Third-party Cookies Go Away, we outline a high-level plan for creating an in-house, first-party data platform.

If you’re ready to discuss your in-house, first-party data strategy, AWS is here to help. Contact your account team today to get started.