In recent years, with the introduction of laws such as General Data Protection Regulation (GDPR) and ePrivacy, there has been a growing desire from people to understand how their personal information is collected, exactly what information is being collected and why companies are collecting it.
Why is personal data collected?
Companies collect personal data to, predominantly, improve their customer experience. By having a deeper understanding of customer profiles through this collation of personal data, businesses can make informed decisions to better meet customers' needs and improve customer relationships.
Whilst the 'what' can vary broadly dependent on the companies set up and objectives, online the 'how' is, more often than not, done by using HTTP cookies.
What are HTTP Cookies?
Cookies are small files present on websites which save information to a user's internet browser about their visit to that website. These cookie files enable websites to identify the user and provide a personalised browsing experience by remembering user information such as usernames and passwords and that user's browsing history, to track products and pages a user has viewed, and even what items a shopper has saved in their cart.
There are three different types of cookie; first-party, second-party and third-party.
First-party cookies which enable the personalisation of a user's website experience, through remembering information such as language preferences and sign-in details, are most often viewed positively as they improve usability. As such, they are rarely blocked or deleted by the user.
Second-party cookies - one company passing on personal data to another - took something of a hit with the introduction of GDPR, where companies didn't want to risk breaking data protection laws by passing on personal data to secondary companies if they couldn't guarantee how that data would be used.
Third-party cookies are often referred to as tracking cookies. They track a specific user's behaviour to determine as much as possible about their interests. This enables targeted advertising, for example, a user looks at a trip to a theme park and then gets adverts on their browser which show trips to theme parks.
Understanding the value of third-party cookies
Since their introduction, businesses have built their advertising around, and leaned heavily on the use of, third-party cookies. The ability to track and profile a specific online user enables marketers to target a specific person.
Although this can be argued to be beneficial to the user, the use of third-party data in this way is often deemed open to abuse and, as such, controversial. Which is why popular web browsers have started to make changes blocking these third-party tracking cookies.
What's changing?
In May 2018, the introduction of EU GDPR set out seven principles for the lawful processing of personal data. This, along with other privacy laws and regulations, led to a surge in consumers and regulators denouncing tracking cookies and demanding an end to them. Following this some web browsers, like Firefox, Tor and Safari, added the additional user privacy setting of blocking third-party cookies by default.
In early 2020 Google announced that it would also be making changes to its privacy settings and doing the same for its Chrome web browser, in a phased two year plan. This delayed change to blocking third-party cookies is more than likely down to Google's high stake interest in tracking users with nearly 90% of the company's revenue allegedly being generated through third-party enabled advertising. Google's plan to 'phase out' third party cookies from Chrome over a two year span gives them time to work on a viable replacement technology.
What does all this mean for the future of online marketing?
By blocking cookies from tracking users across sites marketers will no longer be able to create adverts inline with an individuals interests, based on third-party data. If your business is reliant on third-party information, now is the time to consider other options.
Online advertising will perhaps revert back to contextual advertising, targeting a user based on the context of what that user is looking at, much like print-based advertisements do.
Or perhaps, businesses will see a renewed value in collating their own first-party data.
Fortunately, the death of the third-party cookie was predicted and there are many marketing technology systems that collect and manage customer first-party data available to marketers. Like Customer Data Platforms and Customer Relationship Management software like HubSpot - which will not be affected by these changes.
Customer Data Platforms (CDPs) are a type of database software that consolidate and store data from numerous sources into a single, unique location. This information helps to build an individual customer profile accessible to marketers for analysis.
Customer Relationship Management systems (CRMs) are systems for managing relationships with your customers. Like CDPs, they assemble first-party data in a central database to enable better managed customer and internal business interactions.
Marketers can also devise strategies that don't rely on individually-targeted adverts or cookies, to overcome technology reliant vulnerability.
Whatever plan decided upon to overcome the 'death of the third-party cookie', it is important that marketers stay current with all data privacy changes that could impact their business. Not only the laws and regulations put into place but also the updates on how internet businesses evolve and adapt to these changes.
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