Third-Party Data and Third-Party Cookies Are Not the Same
Google’s recent announcement that it will change how its Chrome browser handles cookies has created some confusion about the impact on advertisers and ad tech platforms, particularly around the creation, selling, and buying of third-party data. Unfortunately, much of the confusion stems from a lack of clarity on the key terms.
Although third-party data and third-party cookies sound similar, they are very different things. I often find that marketers and media confuse the two.
Third-party data vs. third-party cookies
Although third-party data and third-party cookies sound similar, they are very different things. I often find that marketers and media confuse the two. So let’s be very clear: a third-party cookie is a cookie placed on a device by a website from a domain other than the one a user is visiting in order to store personalization preferences and tracking information. For example, when you visit a retailer’s website (e.g., Retailer.com), a cookie may be placed in your web browser from one of Retailer.com’s marketing technology partners (e.g., martechpartner.com) to remember that you were interested in that new suit and allow Retailer.com to subsequently market to that user across sites/channels beyond the Retailer.com domain.
Alternatively, third-party data typically refers to data that did not originate with the buyer or seller. Its origin is with a third party. Third-party data include various types of information, whether it be demographic, interest, or intent data, and, depending on the source, there are many ways third-party data is acquired and used by marketers. It might have originated in an offline consumer data file onboarded through a partner like LiveRamp. Or it could be related to the collection of common consumer actions on publisher websites like commenting on an article or sharing it on social media.
With that in mind, the flagging or blocking of third-party cookies doesn’t necessarily affect third-party data because the two are completely different elements in a company’s set of consumer data. Depending on what that third-party data is and where it’s coming from, more aggressive treatment of third-party cookies by the Chrome browser may or may not have a material effect on the scale of third-party data. For example, if Retailer.com wants to digitally market suits to people of a certain age, gender and household income, it can purchase 3rd party demographic data from a consumer data company that has brought such data into the online world from offline records via a data onboarder such as LiveRamp. That demographic data was not created by tracking consumer activity across the web via third-party cookies — but it is third-party data. Finally, third-party data can be associated with mobile advertising IDs (MAIDs) and OTT device IDs, and in those cases, the data would not at all be affected by changes to treatment of third-party cookies.
So, third-party data and third-party cookies are not the same thing. However, the changes coming to the Chrome browser will impact the ad marketing ecosystem in several meaningful ways, and marketers need to be prepared.
First-party data and third-party cookies
In the short term, news around the upcoming Chrome changes might cause unwarranted confusion between third-party cookies and third-party data. Over the longer term, there’s another important dynamic that marketers need to understand — namely, the relationship between first-party data and third-party cookies.
Third-party cookies play a critical role in the onboarding of offline data into web environments and are also the best connectors to sync such data with activation platforms such as DSPs, ad servers, or even attribution platforms. Historically, third-party cookies have been the ID plumbing of choice for connecting and activating first-party data. Without robust ID connectivity via third-party cookies, marketers and their technology/media partners have to rely on a hodge-podge of different ID types and inefficient connection techniques. While it might be compelling to talk about the ascent of first-party data in the marketing ecosystem, we all must pay close attention to how such data can be utilized in an open independent web. Otherwise, the only places marketers will be able to use their first-party data is within the large walled gardens, thereby scaling and fortifying their market power over everyone else.
There is also the solution of zero-party data — data that customers willingly share with marketers, which is being hailed as the avenue to rebuild trust and create meaningful connections with consumers. With zero-party data, everything is “declared” because it is user-supplied and self-reported. Take, for example, consumer responses to a poll or survey.
Forrester recently heralded zero-party data as a major opportunity, especially in lieu of continued regulation over the collection and use of audience data. Most importantly, zero-party data can be incorporated and combined with marketers’ first-party data for an even richer view of the customer. Connectivity is key here as well and suffers the same challenges as first-party data. Without effective web ID infrastructure to transport zero-party data from Point A to Point B, such data will be trapped at the source. Once again, marketers need effective web ID infrastructure — via third-party cookies or suitable alternatives — to activate these data assets.
For advertisers, the recent Google Chrome changes offer a clear improvement over the current “keep or delete” options, offering greater control and transparency for users. However, advertisers should bear in mind the distinction between third-party cookies and third-party data and that recent moves by browser companies may not have a direct impact on the underlying data they collect or activate. Third-party cookies and third-party data are both just two elements in the larger picture of consumer data that companies take advantage of for their campaigns and ad buys.
Regardless, advertisers should get ready for continued changes in the ecosystem, and the first step of preparedness is to focus on their first-party data and the opportunities there.
As Chief Marketing Officer, Adam leads Lotame’s global marketing and product teams in helping publishers, marketers and agencies solve complex business challenges with unstacked data solutions. His diverse experience balances art and science, and includes stints as an aerospace engineer and patent attorney, plus 21 years in consumer media and marketing technology in leadership roles at Viacom Media Networks, Time Inc., Hearst, and PebblePost. Adam is co-inventor on four issued U.S. patents related to interactive video advertising technology.