How will the third party cookie ban affect eCommerce businesses?

There’s been a lot of chatter about the third party cookie ban in the eCommerce space lately… Why are third party cookies going away? When will third party cookies be blocked? How will the third party cookie ban affect my eCommerce advertising?

We know this is a key topic for many eCommerce merchants – many of whom rely on third party cookies to run successful marketing and advertising campaigns. And with Google finally putting a deadline on their browser Chrome blocking third party cookies, it’s more important than ever to know where you stand.

So we’ve written this post to help – covering what third party cookies are (and why so many browsers seem hell-bent on banning them), and how your advertising will likely be affected when they are blocked. We’re also sharing our advice on exactly what you can do to reduce reliance on them now, but still deliver effective ROI against your marketing budget.

How will the third party cookie ban affect eCommerce businesses?

A cookie is a small Javascript file, usually containing a piece of data, that is deposited into your browser when you visit a website. Websites use cookies to remember a user’s action – like visiting websites, logging in, and adding products to their cart – so they aren’t asked to perform the same actions over and over again, delivering a smoother and more personalised experience.

There are three different types of internet cookies on the web:

Session cookies

These temporary cookies memorise your actions on a website and expire as soon as you close the website – for example, tracking products a user had added to their shopping cart, and enabling them to checkout at any time.

First party (or persistent) cookies

First party cookies originate on the host domain you are visiting, and collect data that help to track your actions on a specific website. They’re responsible for things like storing login information for returning customers; and for the host domain, they also collect first party data on behaviours, including pages browsed, dwell time, purchases and downloads.

Third party (or tracking) cookies

A third party cookie lands on your computer via an intermediary website – like a news website, a blog, or a social network. Generally, these types of cookies collect data to be used for things like cross-site tracking, retargeting, serving personalised ads, and building cohorts of prospective customers to show ads to.

What is zero party data?

Unlike data collected by the cookies detailed above, zero party data is anything a customer or visitor intentionally chooses to share with a business. This might include purchase intention data, answers to customer surveys, or their language and currency preferences. This data is the most powerful of all, and can be used to deliver brilliant personalised experiences to your customers.

Why are third party cookies controversial?

Third party cookies aren’t all bad – they can be used in all sorts of helpful ways: to help businesses remind customers of products they previously browsed as they navigate around the web; serve personalised advertising relevant to the viewer; and collect data to report back on ROI and effectiveness of marketing campaigns.

The problem is that the data a third-party cookie collects can be highly personal – and many users feel that companies tracking their movements and interactions across the web (especially those whose websites they have never even visited) are invading their privacy.

Who is blocking use of third party cookies?

Some browsers have already taken action against third party cookies. Apple have long been vocal about their commitment to user privacy, so it’s no surprise their browser Safari limited tracking in 2017, and open-source competitor Firefox, who have built much of their brand around privacy for users, blocked them completely in 2019. But now Google’s Chrome, the most widely used browser on the planet, is set to remove them too.

Why is Google’s stance important?

While the true market split is hard to calculate accurately, around two thirds of web traffic worldwide comes through Chrome’s desktop or mobile browsers – the next most popular is Safari, but lags considerably behind, with only around 15% of traffic. In addition to Chrome being the most popular browser used globally, Google are already at the centre of ad tech and their tools are widely used as benchmarks and measurements across the web – so if you want to show up in customers’ search results, or for your ad campaigns to bring in ROI, ignore their recommendations at your peril!

How do Google plan to still deliver conversion tracking on ads without cookies?

The impact on Google’s ad ecosystem – which at present relies heavily on cookies – may be the reason they have lagged behind other browsers in actually blocking third party cookies, despite first stating they would do so as far back as January 2020. However, it seems Google have now come up with a workable replacement for third party cookies – known as Federated Learning of Cohorts (FLoC) – so the ban is full steam ahead.

The new Google FLoC system is based on an AI algorithm – which targets anonymised users based on general interest groups, generated through machine learning and based on your browsing history. While Google have not shared what these groups are yet – and they may never share the full information – it’s not surprising they are using AI to power this new system, as machine learning is widely used on social media – and across the web – to serve us organic and sponsored content.

Google’s new FLoC system doesn’t mean users won’t be tracked – just that the tracking is done by the browser, and the data is held by Google, rather than third parties. This could mean that some or all of the data is only available within Google’s ad products; or that there are more or fewer possible cohorts to target with ad campaigns. While Google have stated that their new system is 95% as effective at targeting customers as third party cookie-based models are – the truth is, until more information is released, or advertisers start using the new system, we don’t really know the full implications.

Some people worry that this new system, which puts even more power in the hands of Google, is a blow for competition in the digital ads space. While some may feel that there are flaws in this system, for users at least, it has all the signs of being a significant improvement than sending the same personal data out into unknown destinations via third-party cookies.

When will third party cookies stop working?

The new FLoC system Google is working on to replace third party cookies enters a public testing phase in March, but initially only on websites that have tracking enabled or are already serving display advertising.

Google originally stated they would block third party cookies in Chrome by 2022, so if they are still planning to hit their self-imposed deadline, they only have a matter of months left to do so. Safari and Firefox already block third party cookies by default, and many of the other browsers available offer users cookie-blocking controls.

How will the end of third party cookies affect eCommerce?

Third party cookies being blocked by the most popular browsers will affect different merchants in different ways – much of which depends on how your current marketing mix is set up. However, if your business relies on accurate data for online advertising, pop-up ads, or a hyper-targeted personalisation strategy, you’ll need to consider alternative strategies.

What does this mean for first party cookies?

Google don’t have plans to block first party cookies – in fact they have previously stated they are “vital” – great news for websites that collect lots of data on their customers via first party cookies. These will remain unaffected, so the longer users interact with your site, the more data you will collect on their interests and interactions, and the more personalised you can get with the ads and products you show them.

This news is brilliant for companies with huge ecosystems like Facebook and Google, because they can use both first and zero party data collected from users across multiple products – but it’s also great news for brands who host more than just eCommerce shopping on their sites. Businesses can use data gathered from visits to marketing content, use of interactive features, and community forums to help personalise experiences for their customers.

It’s always been the case that building something great on your own domain gives you control and ownership – rather than building a community on a social media platform, where your access could be changed with a moment’s notice. The changes to third-party cookies can be likened to changes in a social media algorithm, so those who have invested in first and zero party data, and making it accessible and usable, will be the real winners here.

How can you still execute on your eCommerce marketing without third party cookies?

The eCommerce brands and businesses that come out of the third party cookie ban on top will be those who were already questioning the status quo. Innovative marketers are constantly checking their reliance on specific technologies and tools, and avoiding putting all their marketing eggs in one basket.

So what specific actions can your eCommerce business take to mitigate the effects of the third party cookies ban?

Invest in accessible zero and first party data

Even without third party cookies, there are plenty of ways you can collect information about your customers that can be useful in your marketing. Some of these data points might include:

Data from behaviours or actions taken across your eCommerce website
Shopping and purchase data
Customer data in your CRM
Insights from your social media platforms and email marketing
Market research and customer focus panel results
Data from surveys and customer feedback

As you can see from the list above, most eCommerce brands will have zero and first party data from multiple sources – and one of the biggest problems with this is that it makes that data difficult to collate, organise and leverage that data.

If inaccessible, inaccurate or conflicting data is a problem for your business, it’s worth investing in the processes and systems with which you collect and organise this data. You’ll then be able to base your marketing and advertising campaigns on robust, accurate data, and use this data for targeting – which will likely increase your ROI.

We’ve already explored how correctly using first and zero party data in your eCommerce strategy could be your most powerful alternative after the third party cookie ban. Of course, this means that you need your users to login to your site at the earliest opportunity so you can be sure you’re tracking this data and matching it to their customer profiles.

Customers are already likely to login when they want to access something only available in their account – to update their personal details, or check the status of an order. But to get the full benefit of first and zero party data, you should aim for your customers to login every time they visit your website.

One smart way to do this could be to offer exclusive content or discounts only to users who are logged in. Our clients Crafter’s Companion use a tiered loyalty program that is connected to customers’ online accounts, and once they have logged into the website, the prices on every page automatically update to include the discount that corresponds to their current tier in the loyalty program. This encourages users to log in as soon as they visit the site, to make sure they are viewing the correct prices based on their loyalty level, and helps Crafter’s Companion to match the browsing activity to individual customer accounts.

Another simple idea, that also helps collect zero party data, is to offer customers a wishlist feature. One wishlist is great, but the option to create multiple wishlists is even better – customers can then organise their future purchases based on specific projects, events, or even keep track of possible gift ideas. The more time and effort a customer puts into a feature like this, the more likely they’ll come back – they won’t want to start all over again on a competitor’s site, for example.

Customers are wary of sharing personal information with brands, so if you’re collecting this data explicitly, it’s key to get the messaging right. Think about it from the customer’s point of view – what exactly are they getting out of sharing this information with you? How is it improving their experience? Can you go one step further?

It could be as simple as adding more humanised messaging for personalised features, like, “Because you bought [product X], we think you’ll like [product Y]”. Other brands turn data collection into something more fun – as well as collecting listening data to help recommend new music to listeners, Spotify serves users with a summary of their listening tastes once a year in their Spotify Wrapped campaign. This feature takes data and turns it into a highly personalised, unique piece of content that many users share with their friends on social media, generating millions of pieces of organic promotional content for the Spotify brand.

Check your eCommerce site’s personalisation systems will still work without third party cookies

Many eCommerce brands deliver personalised experiences to their customers based on a multitude of data points – some may use zero party data, collected from interactive features or customer surveys, but some may also use data gleaned from third party cookies.

If personalisation is key for your eCommerce business, it’s a good idea to audit your data collection touchpoints and campaigns in this vertical to spot any weak points, before the third party cookie ban comes into effect.

Diversify your digital ad campaigns

If your eCommerce ad campaigns rely heavily on data collected from third party cookies, then it’s time to have a serious rethink before the ban comes into effect. Could you replace some or all of this information with your own first or zero party data, collected from your own sources? Or perhaps it’s time to try other channels beyond digital display advertising – you could consider shifting some of your digital ads budget to influencer campaigns, social media advertising, or digital PR.

Additionally, you could look back to strategies from the past, like contextual advertising. Instead of using third-party data to show ads to people who match selected user profiles, contextual advertising circulates PPC ads on websites that rank for similar keywords as your ad does. Your product ads could show up on news, blogs or community websites in the same niche as your brand, which likely also attract similar audiences.

Beyond this, it’s worth brainstorming other strategies you can use – because both big tech companies and governments can change, remove or completely bulldoze the goalposts at any time. What would you do if you had to reach your target audience without cookies, targeted advertising, or large amounts of data? The less vulnerable you are to technology, the more agile and flexible your business can be.

Encourage users to engage via other channels you can reach them on

Over-reliance on digital ads (especially when they’re working well for us) can make us forget about the importance of other channels. Perhaps it’s time for an audit of your customer conversion points beyond ‘add to cart’ or ‘checkout’ – when was the last time you tweaked your email newsletter signup copy? And how do you encourage customers on your website to follow you on your social media platforms?

Depending on your tech stack, there may be other opportunities too. Progressive Web Apps (PWAs) offer the capability to send users push notifications – and this feature has recently become available on iOS as well as the Android operating system, meaning you can reach most mobile device shoppers with this channel. If your site is already on PWA, are you fully maximising this opportunity? And if not – this could be another reason to make the switch to PWA.

How will a ban on third party cookies affect your eCommerce business?

Changes like this are tough for eCommerce brands who use a reactive business model. Here at JH, we work with our clients to build agile, proactive strategic roadmaps to ensure their futures look bright – not scary! If you’d like to find out what switching to a strategic, innovative agency looks like – get in touch with us on thrive@wearejh.com or +44(0)115 7940060.