3 reasons that third-party data is past its prime
By Webtrekk CEO Christian Sauer
Third-party cookies are understandably popular among online marketers. That popularity, however, has peaked.
We see three major developments that are going to change the way that third-party tools – and the companies that use them – collect data.
1. AD BLOCKING
Ad blocking is getting more common, more effective and more problematic for cookies. Although some publishers deny access to their sites if a visitor has an ad blocker activated, the usage of ad blockers continues to surge.
If you look at European markets, the share of users with web ad blockers has reached a level that marketers can no longer ignore. About 25% of Internet users in Germany rely on ad blockers; same for France.
Ad blocking is not a European phenomenon, and it's not a PC phenomenon.
What's more, Millennials – those in the 18-34 range – have the highest share of ad blocker usage. Today's digital natives are starting young with these extensions, which means this trend will likely go on for years to come.
So, however big of a challenge this is for today's marketers, it figures to be an even bigger one for tomorrow's marketers.
Apple stands for high security standards. Apple has never owned a digital marketing platform and never sold user data to third parties. CEO Tim Cook even refused to grant security agencies access to the iPhone of a known terrorist – and went out of his way to publicize the decision.
So it’s no surprise that Safari, the preinstalled browser on all Apple devices, rejects third-party cookies by default. From a user perspective, this is the expectation: If you enter a website, only that company is allowed to store information about you, and other third parties are not.
What did marketers do to continue targeting users across websites in Safari, even though no data storage is allowed on a third-party domain? Well, some companies redirect every first click in your visit to a first-party domain, e.g., if you go to a website and you click on a link in a Safari browser, you might be redirected to another domain, where a first-party cookie is being set. We believe this practice to be harmful and totally out of step with user expectations.
At any rate, a sizeable chunk of the world's internet traffic will be on Safari for years to come. When coupled with the continued growth of non-Safari browsers that are also blocking cookies via extensions and default settings, the percentage of cookie-free browsers is only heading north.
3. DATA PRIVACY REGULATIONS
In Q2 2018, Europe's new data privacy regulation will officially take effect. It’s not always easy to wade through EU regulations, but basically every personally identifiable piece of data collected by a third party will require a user opt-in.
That means every third-party data collection tool designed to profile users and target advertising needs the OK of a user.
The privacy regulation offers two ways to process information for marketing purposes: opt-in and legitimate interest. The opt-in requires companies to get explicit approval. But as most marketing technologies do not have a direct customer relationship, they will either rely on the website or app to collect an opt-in, or base their data processing on legitimate interest.
Whether a company will be allowed to use personal or anonymous information collected from a user based on legitimate interest will depend on the "reasonable expectation of an individual." In other words, does the user expect the owner of the visited app/website to collect and process the information the way they do?
In our own research, user expectations vary depending of the usage of the collected information. Is it used to store anonymous information only by the visited website (widely accepted)? Or is it used to build an interest profile across different domains to optimize advertising (not so much)?
As third-party data collection is under pressure, you will have to stop relying solely on third-party tools to build your data foundation. The industry will eventually reach a point where 30% or 50% of third-party data is lost because of blockers, browser default settings and regulation. In preparation of this development, you will have to follow a different data-driven strategy than today.
What do you need to do? Amazon is your role model. Customize the user experience onsite, but control the data being sent to third parties. Being first-party-data-driven is your goal. For this you need to optimize tracking that does not rely on third-party data.