Death of third-party cookies, the answer lies in a first-party approach

May 30, 2023

Over the past decade, the importance of data in business decision-making has increased significantly. Companies are now realising that the data they collect and analyse can be one of their greatest and most valuable assets.

It is certainly the most valuable asset for understanding their customers, improving their products and services, and ultimately driving growth. In the world of digital advertising, there has been a major shift away from relying on third-party data to using first-party data.

Difference between third-party and first-party data

First-party data refers to data that a company collects directly from its customers or individuals. This data is typically collected through interactions with the company’s website, mobile app, its CRM or other channels where customers or individuals have provided their information. First-party data can include information such as names, email addresses, purchase history, and demographic information. Companies use first-party data to better understand their customers, personalise their marketing efforts, and improve their products and services.

On the other hand, third-party data refers to data that is collected by a company or organisation that is not directly related to the customer or individual. This data is typically collected through other sources such as data brokers, social media platforms or other websites. Third-party data can include information such as behavioural data, purchase history and demographic information. Companies can use third-party data to augment their own first-party data, gain insights into their customers’ behaviour and target their advertising more effectively.

Why is the shift happening?

The shift from third-party to first-party data is driven by a number of factors. One of the driving factors globally is the constantly growing concern over privacy and security. With the rise of data breaches, consumers are becoming more aware of how their data is being used and are demanding more control over their personal information. By relying on first-party data, companies can assure customers that their collected data is being used ethically and transparently.

If you are anything like the average internet user, over the past couple of years freely you would have freely given or disclosed your personal information, such as your name, email, mobile phone number etc. You would have also accepted cookie pop-ups, never read a 4000-word privacy policy and freely used services from some of the biggest businesses, such as Google, Facebook etc. These businesses would have leveraged your data to target advertising at you and increase their revenue in doing so.

But many aren’t aware that a large number of businesses that you have never interacted with (third-parties) also collect and share your data with other companies. Typically, they do this to track your activities, target you with ads or on-sell your data to others.

Unregulated data sharing has required governments to step-in to protect individuals and businesses. The result of this is the implementation of new laws – such as those that apply within the offline world. As an example:

If you visited a retail shop and provided information to the clerk, and then the clerk provided a recommendation, this makes good sense. The clerk may use a third-party to help them provide this advice, however the third-party does not obtain ownership of your information, the information is only shared with the clerk for use within the context of the services/products they provide.  

Imagine going into a shop to discover that the clerk from the previous shop or a shop you have never visited is there trying to sell you something out of context, or that the clerk has taken the information you provided and then sold it to another party. This would simply not be acceptable and it is equally not acceptable for the shop owner to ask you to sign a consent form that would allow them to do so.

In this instance, the right approach should be where the clerk can freely use the information provided to enable them to better service the individual within the context of the products and services they provide, possibly gaining assistance from third-parties to achieve this. However, they should never be permitted to give or sell this information to a third-party to use for a purpose outside of the context in which the information was provided.

Consumers want this as well, in a recent Consumer Policy Research Centre (CPRC) paper – CPRC Paper – ‘Not a fair-trade. Consumer views on how businesses use their data.’, they interviewed 1000 Australians and found that ‘There’s a major mismatch with how the digital economy currently works and what consumers want’.

Whole industries currently exist to trade in consumer data, yet 79% of Australians agree that a company should not sell people’s data under any circumstances. Even though companies commonly monitor what we do online, on their own websites as well as across the internet, 70% of people are not comfortable with companies monitoring their online behaviour.

This is where privacy protection is paramount.

What can people do?

AdFixus is an organisation which is taking an active role in wider government policy discussions. AdFixus believes there is a better way to protect privacy whilst providing a seamless experience. Their AdFixus identity platform is decentralised, consumer-centric and frictionless. They utilise a privacy-centric, meaning that they manage identities solely within the first-party context and exclusively for your brands.

It allows you to match identities with other businesses (first-party to first-party) automatically, without ever sharing or exposing any information that would allow a third-party to identify one of your consumers. The company also provides a ubiquitous framework for consumers to ‘opt out’, empowering them to take control of their personal data. In turn, this builds trust in your business and brand.

The shift from third-party to first-party data is a positive development for companies and consumers alike. Companies that focus on building their first-party data, will improve the accuracy and relevancy of their marketing efforts, whilst also building stronger relationships with their customers. As data privacy concerns continue to grow, we can expect to see more companies embracing the use of first-party data in the years to come.

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