Third-Party Cookies

Definition

Third-party cookies are small pieces of data that are stored on a user’s device by a domain other than the one they are actively visiting. These cookies are typically set by third-party services—such as advertisers, social media platforms, and analytics providers—embedded on a website. They are commonly used for tracking users across different websites, enabling functionalities like cross-site behavioral targeting, retargeting ads, and multi-site analytics.

Unlike first-party cookies, which are set by the website a user is currently visiting to store preferences and session information, third-party cookies are primarily used for advertising and user tracking purposes.

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How Third-Party Cookies Work

  1. Embedded Third-Party Content
    • A website integrates content or services from an external provider, such as ad banners, social sharing buttons, or analytics scripts.
  2. Setting the Cookie
    • When a user visits the site, the third-party service places a cookie on the user’s browser, even though the user isn’t directly interacting with that third party.
  3. Tracking Across Websites
    • As the user navigates to other sites that also include code from the same third-party provider, the cookie helps track the user’s behavior across those websites.
  4. Data Collection
    • The data collected through third-party cookies is used to build user profiles, track interests, and serve personalized ads.
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Common Uses of Third-Party Cookies

  1. Cross-Site Tracking
    • Enables advertisers and data brokers to track users’ browsing behavior across different websites.
  2. Behavioral Targeting
    • Facilitates personalized advertising by analyzing user behavior and preferences to deliver more relevant ads.
  3. Retargeting
    • Allows advertisers to show ads to users who have previously visited their website, often to re-engage potential customers.
  4. Ad Measurement and Attribution
    • Tracks ad impressions, clicks, and conversions across multiple sites, providing insight into campaign performance and return on ad spend (ROAS).
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Third-Party Cookies vs. First-Party Cookies

First-Party CookiesThird-Party Cookies
Set by the domain the user visits directly.Set by a different domain through embedded content.
Typically used to remember user settings and login sessions.Primarily used for tracking and advertising.
Data is only accessible by the domain that created the cookie.Data can be accessed by the third-party provider across multiple sites.
Less concern from privacy advocates.Greater privacy concerns due to cross-site tracking.
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Privacy Concerns and Regulatory Impact

  1. User Privacy
    • Third-party cookies have raised significant privacy concerns because they enable the tracking of individuals without their explicit consent or knowledge.
  2. Data Collection Without Transparency
    • Many users are unaware of how much data is being collected and how it is used, contributing to calls for greater transparency and control.
  3. Regulatory Frameworks
    • Regulations such as the General Data Protection Regulation (GDPR) in Europe and the California Consumer Privacy Act (CCPA) in the U.S. have introduced stricter rules on user consent and data collection practices.
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The End of Third-Party Cookies

  1. Browser Changes
    • Major web browsers are phasing out support for third-party cookies to enhance user privacy:
      • Apple Safari and Mozilla Firefox already block third-party cookies by default.
      • Google Chrome, the most widely used browser, has announced plans to deprecate third-party cookies by 2024, as part of its Privacy Sandbox initiative.
  2. Impact on Digital Marketing
    • The demise of third-party cookies is reshaping the digital advertising landscape, forcing marketers to seek alternative methods for tracking and personalization.
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Alternatives to Third-Party Cookies

  1. First-Party Data
    • Brands are prioritizing the collection and use of first-party data, such as email addresses, user behavior on owned properties, and customer preferences.
  2. Contextual Advertising
    • Instead of targeting users based on past behavior, contextual advertising displays ads based on the content of the current web page.
  3. Universal Identifiers
    • Industry solutions like Unified ID 2.0 aim to create standardized, privacy-compliant identifiers that replace third-party cookies.
  4. Google Privacy Sandbox
    • A collection of technologies and APIs designed to deliver targeted advertising and measurement without relying on third-party cookies.
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Implications for Marketers

  • Reduced Ability to Retarget
    • Marketers will have limited capacity to deliver retargeting campaigns across sites.
  • Shift to Consent-Driven Strategies
    • Brands need to build trust and obtain explicit consent from users to collect and use their data.
  • Greater Reliance on Walled Gardens
    • Platforms like Google, Facebook, and Amazon, which have vast amounts of first-party data, will become even more central to digital advertising strategies.

Third-party cookies have played a pivotal role in digital advertising, enabling cross-site tracking, personalized ads, and retargeting. However, growing privacy concerns, regulatory pressures, and browser restrictions are driving the phase-out of this technology. As third-party cookies disappear, marketers and advertisers are adapting by leveraging first-party data, contextual targeting, and emerging privacy-focused solutions to maintain effective and ethical customer engagement.

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Resources

Marketing Measurement and Analytics by Greg Kihlström (De Gruyter, 2024)

House of the Customer by Greg Kihlström
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