Google's Third-Party Cookie Announcement: Why First-Party Data Is Still the Future

In a (not so) surprising turn of events, Google announced that it would not be deprecating third-party cookies as planned. This decision sent ripples through the digital advertising and marketing industries, leaving many advertisers wondering about the implications for their data strategies. Despite this unexpected move, here at Jellyfish, we still believe in the importance of investing in first-party data, and server-side tagging remains as critical as ever.

Unpacking Google's Decision

Google's decision to postpone the deprecation of third-party cookies indefinitely likely stems from a complex interplay of factors. Implementing viable alternatives through the Privacy Sandbox initiative has proven more complex than first anticipated. For instance, Google's proposed FLoC (Federated Learning of Cohorts) faced significant pushback due to privacy concerns, leading to its replacement - Topics API. This shift illustrates the technical hurdles in creating a solution that balances both privacy and advertising effectiveness. Advertisers and publishers, heavily reliant on third-party cookies, may have pushed back against the timeline. The UK's Competition and Markets Authority (CMA) reported in 2021 that many advertisers expressed concerns about the impact of cookie deprecation on their businesses. Google's reverse decision ultimately allows more time for the industry to adapt and for alternative solutions to mature.

Additionally, antitrust concerns and regulatory pressures have possibly influenced Google's approach. In June 2021, the European Commission opened an investigation into Google's Privacy Sandbox to assess whether it would unfairly advantage Google's own ad tech business. This regulatory attention likely contributed to Google's more cautious approach. More time may also be required to develop and test privacy-preserving alternatives that maintain advertising effectiveness. Google's own experiments with Privacy Sandbox technologies have shown mixed results. For example, early tests of the Topics API showed a significant drop in ad relevance compared to third-party cookie-based targeting, indicating that more refinement is needed.

While this reverse decision provides a reprieve for those still heavily dependent on third-party cookies, it should not be seen as a reason to slow down the transition to more privacy-centric data practices.

The Enduring Importance of First-Party Data and Server-Side Tagging

Despite Google's announcement, we’re still advising clients to continue their shift towards privacy-first digital experiences. Here's why focusing on first-party data and server-side tagging remains crucial:

An ever-evolving Privacy Landscape

Regulations like GDPR and CCPA, along with growing consumer privacy concerns, continue to shape the digital ecosystem. For instance, Apple's introduction of App Tracking Transparency (ATT) in iOS 14.5 led to a significant drop in the number of users allowing cross-app tracking. According to some reports, the global opt-in rate was only 24% as of December 2021, highlighting the increasing importance of first-party data strategies.

Data Accuracy and Value

First-party data provides more accurate, relevant, and valuable insights into customer behaviour and preferences. A 2021 Boston Consulting Group study found that companies using first-party data for key marketing functions achieved up to 2.9 times higher revenue increases and 1.5 times higher cost savings than companies relying on third-party data.

Enhanced Control

Server-side tagging, or sGTM, offers greater control over data collection, processing, and distribution, reducing reliance on client-side technologies. For example, when one world-leading sportswear company implemented server-side tracking, they reported a 33% increase in transaction data accuracy and a 13% boost in revenue attribution, demonstrating the tangible benefits of this approach.

Future-Proofing

Investing in these technologies now prepares businesses for eventual changes in third-party cookie policies and other privacy-related shifts. A popular cosmetics company focused on collecting first-party data through its loyalty program, which has over 25 million members, It created a robust dataset that allows for personalised marketing regardless of third-party cookie availability.

Moreover, as we explored in my recent article, the importance of first-party data extends beyond just adapting to a cookieless future. It's also crucial for powering the AI revolution in marketing. "Data is the lifeblood of AI. Without a solid data strategy, even the most advanced AI models will fall short.

This interconnection between privacy-centric data practices and AI readiness underscores why businesses must prioritise their data strategies now, regardless of Google's u-turn for third-party cookie deprecation.

The Importance of a Multi-Faceted Approach

A multi-faceted strategy remains important for several reasons. First, browser diversity is a key factor. Safari and Firefox, which together account for a significant portion of web traffic, have already implemented restrictions on third-party cookies. Relying solely on third-party cookies will leave gaps in reaching and understanding a substantial segment of the audience. Additionally, privacy regulations continue to evolve globally, meaning future regulatory changes could still impact the use or effectiveness of third-party cookies, regardless of Google's current stance.

Consumer expectations are also shifting as awareness of data privacy issues grows. Brands that adopt privacy-friendly practices proactively may gain a competitive advantage. Technological advancements in the digital advertising ecosystem necessitate exploring and adopting various strategies and technologies to stay ahead of the curve and be prepared for future changes. Moreover, diversifying strategies helps mitigate the risk of over-reliance on any single technology or platform, creating a more robust and adaptable marketing ecosystem. Lastly, the rapid advancement of AI in marketing makes robust first-party data strategies more critical than ever. Companies that invest in quality data foundations now will be better positioned to leverage AI for personalization, predictive analytics, and creative optimization in the future.

Embracing the Privacy-First Future

While Google's announcement may have postponed the inevitable deprecation of third-party cookies, the direction of travel remains clear. The future of digital marketing lies at the intersection of privacy respect, personalised experiences, and AI-powered insights. By investing in first-party data strategies and server-side tagging now, businesses can position themselves at the forefront of this shift.

As we've explored in our AI readiness article, these data foundations are crucial not just for navigating privacy changes, but for powering the next generation of AI-driven marketing solutions. Whether you're looking to implement off-the-shelf AI tools or develop custom solutions using platforms like Google Cloud, the quality of your data will be the determining factor in your success.

In summary - strategies for moving forward

The Jellyfish recommendations for all brands following Google’s announcement are as follows

1. Double Down on First-Party Data: Enhance methods for collecting and leveraging first-party data to build deeper customer relationships.
2. Implement Server-Side Tagging: This approach improves data quality, provides better control, and reduces reliance on client-side scripts.
3. Explore Privacy-Preserving Technologies: Familiarise yourself with and test emerging solutions like Google's Privacy Sandbox.
4. Build Direct Customer Relationships: Focus on creating value that encourages customers to willingly share their data.
5. Adopt a Cross-Browser Strategy: While Google may continue supporting third-party cookies, browsers like Safari and Firefox have already restricted them. Develop strategies that work across all major browsers to ensure consistent reach and performance.
6. Prepare for AI Integration: As you build your first-party data strategy, consider how it will support future AI initiatives. This includes ensuring data quality, implementing robust tracking frameworks, and creating unified customer profiles. As Brett Cella notes, "It's estimated that 75% - 90% of customer data comes from website and app interactions. That's why I encourage all my clients to implement robust web and app tracking frameworks.

Want to chat with us about your first-party data strategy? Or AI readiness? Fill out our contact us form and someone will be in touch.