Commentary Addressing Risks and Opportunities Through the Life Cycle of Data, Technology, Advertising and Innovation

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<a href="https://www.bakerdatacounsel.com/data-privacy/a-digital-advertising-primer-on-preparing-for-the-post-cookie-world-part-one/">Part I: What Are Third-Party Cookies and Why They Are Important</a>

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<a href="https://www.bakerdatacounsel.com/data-privacy/a-digital-advertising-primer-on-preparing-for-the-post-cookie-world-part-two/">Part II: Privacy Laws and Third-Party Cookies</a>

<a href="https://www.bakerdatacounsel.com/cookies/a-digital-advertising-primer-on-preparing-for-the-post-cookie-world-part-three/">Part III: The Big Tech Phase-Out of the Third-Party Cookie and the Emerging Industry Landscape – Browsers and Mobile</a>

Part IV: The Big Tech Phase-Out of the Third-Party Cookie and the Emerging Industry Landscape – First-Party Data

Welcome to the fourth installment in our eight-part series preparing you for the post-cookie world. In our <a href="https://www.bakerdatacounsel.com/data-privacy/a-digital-advertising-primer-on-preparing-for-the-post-cookie-world-part-one/">first post</a>, we provided a deep dive into third-party cookies for a baseline understanding of the technology and the oversized impact of their phase-out on the adtech ecosystem. Our <a href="https://www.bakerdatacounsel.com/data-privacy/a-digital-advertising-primer-on-preparing-for-the-post-cookie-world-part-two/">second post</a> surveyed the current privacy legal landscape regulating the use of third-party cookies to collect, track, and share personal information. And in our <a href="https://www.bakerdatacounsel.com/cookies/a-digital-advertising-primer-on-preparing-for-the-post-cookie-world-part-three/">third post</a>, we discussed big tech’s – and, in particular, Google’s and Apple’s – role in ushering the phase-out of the third-party cookie and the potential post-cookie alternatives being developed by these two tech giants. In this post, we discuss the importance of first-party data and the related technology that is developing as the deprecation of the third-party cookie approaches, highlighting the ways in which publishers, brands, and platforms can partner to leverage the value of first-party data.

As discussed in our <a href="https://www.bakerdatacounsel.com/cookies/a-digital-advertising-primer-on-preparing-for-the-post-cookie-world-part-three/">last post</a>, Google and Apple are currently testing alternative identifier solutions that provide brands transparent access to users on the Chrome browser and the Apple iOS. As the phase-out of third-party cookies converges with an increase in privacy-related enforcement actions in the U.S. and Europe, as discussed in our <a href="https://www.bakerdatacounsel.com/data-privacy/a-digital-advertising-primer-on-preparing-for-the-post-cookie-world-part-two/">second post</a>, there is a renewed focus on first-party data and how it can be leveraged to provide advertisers with direct access to consumers. First-party data is data collected directly from audiences composed of customers, web visitors, and social media followers, presenting an opportunity for publishers and platforms to put trust and transparency at the forefront of their consumer relationships. However, relying on first-party data has left advertisers unsatisfied with campaign targeting and measurement, and as a result, players across the adtech ecosystem are partnering to reach addressable audiences at scale.

First-party data is data collected by companies directly from the consumer’s activities and browsing history, including information like intent to purchase, browsing behavior, transaction history, and loyalty and rewards programs, among other things. Certain players, such as trusted brands with extensive customer engagement and social media platforms, for years have had a head start on collecting, collating, and organizing first-party data. Premium publishers also hold an advantage with their robust (sometimes consent-based) combinations of first-party data with contextual advertising strategies. There is also the related concept of “zero party” data, explicitly provided by the consumer to a brand. Zero-party data is arguably more reliable and accurate than first-party data, as it is actively and willingly shared by users.

Many tout first-party data as the key to the post-cookie world, but it cannot be relied on as the sole replacement for third-party cookies. While the leveraging of first-party data is a key component of campaign success and greater personalization, it is not a media targeting cure-all. First-party data may address consumer privacy concerns, but it lacks the granularity of measurement, reach, and scale that third-party cookies made possible. Businesses investing in first-party data may use it instead to strengthen consumer relationships, innovate user experience design, and even improve customer acquisition or retention. What is clear about the post-cookie world is that it will focus on transparent and authentic digital relationships between brands and consumers, which first-party data can help facilitate.

Brands, publishers, and platforms collect first-party data by <a href="https://www.mparticle.com/blog/first-party-data-strategy">building direct relationships</a> with users, and the nature of those relationships and the technologies used differ depending on the specific value exchange with the customer. To ensure that users do not export data traveling to and from their sites, publishers may operate within <a href="https://medium.com/mediarithmics-what-is/what-is-a-walled-garden-and-why-it-is-the-strategy-of-google-facebook-and-amazon-ads-platform-296ddeb784b1">a walled garden</a>, a closed ecosystem in which first-party user data is shared directly with the publisher. Examples of walled gardens include the Apple App Store or Google Play Store, social media sites like Twitter, and collaboration platforms like Slack. Supplementing the walled garden approach is the rise of <a href="https://digiday.com/marketing/data-clean-room/">data clean rooms</a>, which are encrypted, secure locations where first-party data, anonymized of any personally identifiable information (PII), can be stored and analyzed. This tool can help businesses comply with regulations such as state privacy laws in California and more recently Colorado and Virginia, and the General Data Protection Regulation (GDPR) in Europe, which govern the collection, storage, and use of PII.

Not only are publishers evaluating the existing technological framework of first-party data targeting, but they are also doing more to build trust with users. Similar to Apple’s App Transparency Tracking, discussed in <a href="https://www.bakerdatacounsel.com/cookies/a-digital-advertising-primer-on-preparing-for-the-post-cookie-world-part-three/">our last post</a>, publishers and brands are increasingly testing direct communication with consumers to comply with privacy regulations, personalizing a user’s browsing experience, and optimizing contextual targeting for advertisers. Similarly, <a href="https://techcrunch.com/2021/11/10/collect-and-leverage-zero-party-data-to-personalize-marketing-and-drive-growth/">zero-party data</a> is the latest tool in the hands of publishers looking to strengthen their relationships with users, as it provides insight into consumer preferences while providing seamless and well-tailored browsing experiences to users through personalization. Google has also created its own <a href="https://support.google.com/admanager/answer/2880055?hl=en#:~:text=The%20Publisher%20provided%20identifier%20(PPID,ad%20delivery%20controls%20across%20devices.">publisher-provided IDs</a> which it assigns to authenticated users to better track these consumers across a publisher’s online properties or devices. We will be discussing alternative identifiers in our next blog post, so more on that later.

At the center of all first-party data strategies are transactions in which companies provide products or services that in turn give them direct access to consumers. In the past decade, the media industry has launched a variety of streaming services and platforms to cater to the explosion of demand for online content. These historically “cookieless” relationships established by connected TV providers (such as Roku and Google Chromecast) and streaming platforms (like Netflix, Hulu, and Spotify) provide a wealth of first-party data that now can be leveraged in the post-cookie ecosystem. As evidenced by the flurry of investments in cross-platform measurement explained below, these companies plan to leverage their data at a premium across all devices to minimize duplicated reach and provide more meaningful ad experiences to subscribers.

Key first-party data strategies for publishers and platforms not only provide cross-platform insights to advertisers but also build stronger relationships by obtaining consent. The <a href="https://www.bakerdatacounsel.com/enforcement/cookies-and-consent-under-the-eu-gdpr/">GDPR requires</a> a legal basis (one of which is consent) to gather any data, while adult consumers under <a href="https://www.bakerdatacounsel.com/ccpa/ccpa-final-regulations-with-a-few-unexpected-changes/">California</a>, <a href="https://www.bakerlaw.com/webfiles/Privacy/2021/Alerts/Colorados-Privacy-Act-A-Curve-Ball-on-Consent-and-Targeted-Ads.pdf">Colorado</a> and <a href="https://www.bakerdatacounsel.com/cdpa/virginia-becomes-the-second-state-with-a-comprehensive-privacy-law/">Virginia</a> state laws have the right to opt out of data collection. As the adtech industry embraces targeting through first-party data, companies must be mindful of these consent requirements when upgrading their user experiences. Asking for consent from all consumers, from California to Croatia, can simplify the process for publishers and platforms, but it may also limit the addressable audience pool. Companies can utilize consent management platforms to gather and organize consumer consent for various use cases to achieve user experience personalization, whether it’s built in-house or through a third-party vendor. Having a clear strategy on consent will help ensure customer preferences as well as compliance with the global patchwork of data privacy regulations.

For publishers, brands, and platforms alike, the loss of third-party cookies means finding new ways to target users and measure campaign performance without tracking consumers across multiple sites. Emerging priorities of consent and transparency in the adtech industry and beyond also mean that those organizations with strong consumer relationships have troves of existing first-party data to leverage in the post-cookie world. For brands to stay afloat in these shifting tides, advertisers and platforms in the ecosystem should consider building relationships and possible partnerships with publishers or other data holders to promote maximum scale and efficiency of their ad campaigns relying on first-party data. Examples of the new potential partnerships in the fast-growing, post-cookie adtech space include:

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No matter how these current or future initiatives take shape, the industry will require cooperation from all players – publishers, brands, and adtech vendors – to move toward innovative and compliant first-party data solutions. Those developing or reformulating their first-party data strategy should develop detailed inventories of relevant first-party data, a thorough understanding of any gaps in its addressable audience, and a knowledge of how data flows through their organization’s online presence. If considering partnering with other companies, companies should also be mindful of exactly how consumer data is shared in order to ensure privacy law compliance, particularly where PII is involved. Stay tuned for the next blog post, where we will be discussing the various alternative identifiers emerging in the post-cookie landscape. Publishers and platforms are beginning to deploy their own advertising strategies, and a flurry of alternative identifiers have entered the market and are currently being tested. The identifiers that are eventually widely adopted will shape the future of the adtech industry, as advertisers currently struggle to reach consensus on how to best replace the third-party cookie. Our next post will provide a survey of these tools and a summary of the emerging alternative identifier landscape.

A Digital Advertising Primer on Preparing for the Post-Cookie World: Part Four