In response to user privacy concerns, leading tech companies including Apple, Google and Mozilla have all announced plans to phase out support for third-party cookies in their web browsers.

Following several shifts in Google’s deadline for the phase out, the transition is now expected to be completed in 2024.

Regardless of whether this timeline will be extended further, brands and website owners are acting now to accommodate the change and prepare themselves for a cookie-less world.

What are third-party cookies?

Third-party cookies are small text files that websites place on a user's device to track their browsing activity across different websites and devices. They enable brands and advertisers to share data about user behavior with each other. It is commonly used for: 

1. Targeting users with personalized ads

For example: A customer visits a website that sells sports equipment. The website tracks the browsing activity and understands the customer’s interested category. It creates a personalized profile of the customer and shares the information with sports brands. The customer then receives new advertisements from sports brands with the specific product category they are looking for. 

2. Cross-website retargeting, by knowing what other websites the user visited

For example: A customer browsed through a candle company's website and later, when they are online to pay a utility bill, they come across an advertisement for candles from the same website they previously visited.

The impact of the phase out of third-party cookies

Typically, ads are facilitated by third-party cookies that track a customer's internet activity, frequently without their consent or awareness of the monitoring.

Brands can effectively reach their target audience, provide personalized content and measure the success of campaigns with third-party cookies. Approximately three quarters of brands are still using third-party cookies for advertising and tracking purposes.

Therefore, the end of third-party cookies has had a significant impact on the digital advertising ecosystem — more than 75% of businesses anticipate negative effects from the discontinuation of third-party cookies and are urgently seeking alternatives.

It is now evident that brands must revise their strategies to adapt to the change and address consumer data privacy concerns.

How brands can leverage first-party data through direct-to-consumer

In light of the phasing out of third-party cookies, brands are aiming to exercise greater access to and control over customer data to minimize the impact.

Establishing a direct-to-consumer (DTC) approach that relies on first-party data has emerged as a viable solution: by utilizing first-party cookies, brands can continue to obtain customer information to support their growth, without reliance on third-party cookies.

The customer data that DTC gathers with first-party cookies is exclusively stored for the brand’s use. It can be used to provide a personalized on-site experience and further build engagement that can contribute to brand loyalty. For instance:

1. Remembering user preferences

Such as language, location, and currency settings, making subsequent visits more personalized and convenient. 

2. Personalized product recommendations

Tracking customer behavior on site and suggesting products that may be of interest based on the user’s browsing history.

3. Shopping cart

Items added to a user's shopping cart will be saved, even if the customer leaves the site. This can create a seamless checkout experience and reduce instances of cart abandonment.

4. User authentication

Sites can remember a user's login credentials, eliminating the need for customers to enter them repeatedly. 

5. Ad targeting

First-party cookies can be used to serve personalized ads to users based on their behavior on the site, making them more relevant and effective.

Top tips for DTC brands preparing for a cookie-less future

Despite the challenging transition period, the phase-out of third-party cookies also presents an opportunity for companies to adopt more privacy-focused approaches to digital advertising.

This shift of approach can ultimately benefit both consumers and brands by fostering a more transparent and trustworthy digital ecosystem.

Brands should start to focus on building and maintaining direct customer relationships while protecting their privacy. They should be transparent about data usage and obtain explicit consent from customers, as the first step to building brand trust and a long-lasting relationship.

The good news is, 76% of customers are willing to share their data if they can benefit from it, whether it be a personalized experience or perks. Brands can also create engaging surveys with incentives to supplement default-tracking first-party data.

For instance, fashion brands can create a style quiz that collects customers' preferences on size, color, and pattern preferences to conduct targeted marketing accordingly. This can also benefit the on-site experience by personalizing product recommendations based on survey answers.

Customers are increasingly comfortable sharing their data with businesses, however, they want to understand the value they can get in return and to have control over it.

Brands should utilize this desire and factor it into future strategies to emphasize and leverage the mutually beneficial relationship between brand and consumer that can be enhanced by such data.

At THG Ingenuity, we are specialists in leveraging first-party data gathered through DTC channels to build and grow brands at scale. We’ve done this successfully for 18 years, working with brands such as ELEMIS, Coca-Cola, Mondelēz and more to drive growth fueled by data.

Reach out to our experts to learn how we could do the same for you.