If you are a consumer or advertiser, you’ve probably heard the terms first-party and third-party used to describe cookies and data. These terms are very relevant today, especially with recent announcements from Apple and Google that will change the way marketers use data to track consumers across the web for the purpose of advertising.

In short, there will be greater emphasis placed on using first-party data as well as enhanced consumer privacy protections including but not limited to: more transparency into tracking and explicit consent for when and what type of data is being collected. We will touch upon the specifics of the recent changes to the privacy landscape in a future blog post, but for now, let’s set the scene by helping you understand first-party and third-party cookies and data.

What are Tracking Cookies?

Tracking cookies are simple lines of codes that are stored in a user’s browser on their device for a set length of time and allow their activity to be tracked across websites and apps. Activity that can be tracked includes but is not limited to: website activity, browsing history, geographic location, purchase trends, type of device, browser information, and much more. In the world of marketing and advertising, first-party and third-party tracking cookies are especially important for measuring the customer journey across the web, enriching customer data using the information collected, making ads more relevant, attributing revenues and profits to specific marketing campaigns, and much more.

First-Party Cookies and Data

According to cookiepro.com, first-party cookies are directly stored by the websites (or domains) you visit. If you are a business, first-party cookies are stored by your own website. These cookies allow you to collect analytics data, remember language settings, and perform other useful functions that provide a good user experience.

An example of a first-party cookie is when a user signs into a website such as Squarespace.com. The web browser saves this information along with whatever else it was instructed to save by the line of code, on the user’s computer under the “squarespace.com” domain. If first-party cookies were blocked, the user would have to sign-in every time they visited. If the website was a Squarespace shop, the user would not be able to purchase multiple items while shopping because the cart would reset after each item was added. 

The data collected by these types of cookies can be referred to as first-party. But in general, first-party data is any online or offline data that you collect about your own consumers. Some examples are first-party cookie data, CRM data, social media data, customer feedback surveys, and etc. 

Third-Party Cookies and Data

On the other hand, third-party cookies are created by domains other than the website or domain you are visiting as a consumer, or your own website or domain if you are a business. These are usually used for advertising purposes and placed on a website through a javascript code or tag. 

An example of a third-party cookie is when you browse an item in an online shop but don’t purchase, and then navigate away from that website only to see ads for that particular item on a different website or in an app. This type of tracking has gotten a bad reputation due to its propensity to be abused by some companies and has contributed to an erosion in consumer trust. In fact, 72% of people feel that almost all of what they do online is being tracked by advertisers, technology firms or other companies, and 81% say that the potential risks they face because of data collection outweigh the benefits, according to a study by Pew Research Center.

The data collected by these types of cookies can be referred to as third-party. But in general, third-party data is any online or offline data that you did not collect about your own consumers. An example would be using an audience list that you did not create and perhaps consists of users from other websites. Typically, third-party data is used to enrich first-party data or to better understand consumer behaviour across domains that you don’t own. 

Why Is This Important?

Whether you’re a consumer or a business this is especially relevant as many browsers including Safari and Firefox now block third-party cookies by default. Google also recently announced that its Chrome browser would block third-party cookies by default eventually and they would not build alternate identifiers to track individuals as they browse across the web, nor use them in Google products.

As a consumer, this means less creepiness and more privacy controls but as an advertiser, this suddenly brings first-party data and cookies into heightened focus. Businesses everywhere will have to ensure they are prioritizing the collection and appropriate use of their first-party data while remaining compliant with laws and regulations such as GDPR and CCPA (which we explain in a future post).

But what was the catalyst for this privacy revolution, what is currently happening in the industry, and how can you prepare as a consumer or advertiser?

To get answers to these questions read my next article titled Internet Privacy Is Changing – Here’s What You Need To Know.