Over the course of time, cookies have become the bread and butter of the Internet. Most commonly used for identifying users online and providing a personalised browsing experience, cookies play an essential role in the machinery of digital marketing. However, not all cookies are created equally—for marketers, it is important to understand these differences in order to know how trustworthy your data is, and how relevant it is to your campaigns.

Since the dawn of digital advertising, data has played an increasingly pivotal part in realising the promise of reaching the right person with the relevant ad at the right time. However, amid ongoing developments in data privacy regulations, and with consumer tech giants such as Google slowly phasing out the use of third-party data, there is a growing need for a better understanding of data as well as its purpose in the broader advertising ecosystem.

Let’s take an in-depth look at cookies, what information they can contain, and what types of cookies exist—breaking them down for you into bite-sized pieces.

Want a cookie?

A cookie is a tiny snippet of data that gets added to a user’s web browser when they visit a particular website. The code is stored in the user’s browser over a period of time set by its creators (or until the user deletes it) and changes the way the browser interacts with certain pages. This technology is used to facilitate various functions, including:

• Recording user activity
• Storing stateful data (such as items you’ve added to your shopping cart on an e-commerce site)
• Retaining data previously entered into forms (used for autocomplete functions)
• Saving user preferences
• Activating retargeting ads

Two (or three) of a kind

Essentially, there are two kinds of cookies—first-party and third-party. From a technical perspective, there is no real difference between the two; both contain the same pieces of information and can perform the same functions. The real difference lies in how they were created, obtained, and subsequently used—which often depends on the context.

First-party cookies

First-party cookies are stored by the websites you visit directly, allowing them to collect analytics data, remember language settings, and perform other useful functions that help provide a better, more seamless user experience. First-party cookies contain the most powerful data of all because they’re collected directly from consumers, making them the most relevant and accurate.

Third-party cookies

Third-party cookies, on the other hand, are created by websites other than the ones you’re visiting—hence the name third-party—and are commonly used for cross-site tracking, retargeting, and ad-serving. Cross-site cookie tracking is a way of tracking that detects and follows users on their journey across different websites. With retargeting and ad-serving, users are then shown ads for the products or services they viewed or interacted with in a previous session. Retargeting works across different channels, including social media, display, and email.

The data from third-party cookies is often inferred data, which is based on past user behaviour and not on information that has been explicitly provided by the user. Third-party cookies can collect detailed behavioural profiles of users such as interests, patterns of browsing activities, hobbies, or preferences.

Second-party cookies

So what about second-party cookies? Well, their existence has been a subject of contention. Second-party cookies are cookies that are transferred from one company to another company via some sort of data partnership. For instance, an airline could sell its first-party cookies (along with other first-party data such as names, email addresses, etc.) to a trusted hotel chain to use for ad targeting. In theory, this enables brands to exchange data with each other in instances that mutually benefits both parties.

The third-party cookie is crumbling

While third-party cookies are an extremely common part of online advertising, there are more than a few problems associated with them—one of the main issues being the growing popularity of ad blockers and other methods that block third-party tracking. Many users are also deleting third-party cookies on a regular basis.

In the present context, advertisers and publishers are not only fighting the rejection of third-party cookies, but they now also have to deal with data privacy regulations and recent moves by tech giants to limit the use of third-party data. Apple’s Safari browser already blocks all third-party cookies by default, and likewise for Mozilla’s Firefox, which provides a feature to control the tracking blocking settings between ‘standard’ and ‘strict’. And after Google announced that support for third-party cookies on Google Chrome would be gradually phased out in the next two years, it is clear that third-party cookies are living on borrowed time.

So what?

With growing concerns surrounding third-party cookies and data privacy violations, the message here is clear: there’s a lot we can do to improve the way we use consumer data. For marketers who rely on third-party cookies, a pivot is sorely needed. They’ll need to build up their first-party data collection, organisation, and activation capabilities for desktop and mobile to serve consumers with relevant messages and ads.

As a whole, the way forward is to make the online advertising ecosystem more focused on openness, transparency, and communicating directly to users—rather than on obscure methods of collecting their data without their knowledge or consent. In a post-cookie world, marketers need to get smarter with content and context-based targeting in order to be sure that they’re striking the correct balance between relevance and privacy.

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