It would be a flagrant understatement to cite the role of third-party cookies in advertising as we know it today. However, the current trends have forced it to take a back seat as programmatic advertising and Ad-Tech companies are looking more towards first-party cookies and, subsequently, first-party data.

But what is programmatic advertising?

The term “programmatic advertising” refers to the automated selling and buying of advertising space on the internet. It also integrates information about traffic patterns and online targeting strategies to deliver ads more accurately, efficiently, effectively, and on a larger scale, resulting in higher ROI for publishers and advertisers.
Programmatic advertising is becoming more well-known than traditional advertising as it is beneficial to both advertisers and publishers. Programmatic advertising can help the publisher identify a new market as leads, customers who visit their website or online store first, etc. The programmatic approach also helps advertisers save money by focusing on specific demographic groups instead of selecting an area for their ads.

Why were third-party cookies vital to programmatic advertising?

There’s a good reason why marketers made use of third-party cookies. The most significant advantage was the mechanism of cross-site tracking enabled through its use. Third-party cookies embedded in a site can track user behavior and data on the host page and any of the pages that are open in the browser.
Cross-site tracking allowed AdTech companies to weave intricate data profiles on users, which helped programmatic advertising. Intricate data collected could be used to show targeted ads to users.

Then why is the industry moving away from third-party cookies?

The fact that third-party cookies can collect data through cross-site tracking is a massive breach of privacy. They are collecting more data than they should be, and then it’s getting processed and sold to advertising vendors.
To curtail such practices, certain tech companies such as Apple took the lead with their anti-tracking protocols that cut the cord on cross-site tracking and, apropos to that, third-party cookies. Mozilla also followed suit while Microsoft and Brave made a strong case with their privacy-first approach.
Google is perhaps the last standing company in that regard after an extension on the phasing out of third-party cookies. Then there are the global data privacy laws that are gunning towards privacy compliance and consented data collection. All these factors have led to businesses with websites looking for an alternative to first-party cookies.
How the role of Third-Party Cookies in Programmatic Advertising and AdTech is diminishing and switching to first-party cookie
How the role of Third-Party Cookies in Programmatic Advertising and AdTech is diminishing and switching to first-party cookie

Is there a reason we see the switch to first-party cookies?

With third-party cookies running their last lap, first-party cookies and first-party data are fast emerging as an alternative in the foreseeable future. First-party data refers to marketers’ customer information through their CRM, websites, and subscription records. The offline and online sources include websites applications, social media, CRM, or surveys.
Aside from the external factors coercing a switch to first-party cookies, it has several benefits.

1. Performance marketing –

First-party data gives better attribution insights, which means you can pinpoint the exact source of conversions and leads and identify channels that provide ROI. Measure campaigns more accurately and diagnose broken tags in real-time to not hinder performance marketing. Additionally, first-party data allows for better retargeting and remarketing by increasing the longevity of customer lifetime value.

2. Privacy compliance –

Global marketing is still coming to terms with privacy compliance regarding several data privacy laws such as GDPR, CCPA, LGPD, PIPEDA, etc. However, these laws still allow first-party data collection using first-party cookies. Hence, you can run business seamlessly in global markets with compliance within hours with MagicPixel.
Another critical factor is managing and suppressing third-party vendors based on user preferences. Should they select the option of ‘do not sell’, you can comply with it using a tag management tool like MagicPixel and forget about legal hassles.

3. Ownership of richer data –

Third-party cookies benefit the top AdTech companies like Facebook and Google in the longer run. However, the real-time data you collect through first-party cookies is only yours to use as you can keep getting richer audience insights. Such data ends up helpful in creating optimized attribution models.

Businesses are better off making the switch sooner rather than later.

The grip is tightening around businesses when it comes to the compulsion of making the switch. Nonetheless, it is in their best interest to do so as soon as possible. Not only does a first-party data strategy future-proof your business from any potential developments regarding global data privacy, but it also gives you a way to boost your programmatic advertising approach.
Get started with a first-party data strategy today. Book a short demo with us at MagicPixel, and we will do the rest.