The advertising tech industry was predominantly built on the foundation of third-party cookies and media strategies have long relied on third-party data. Data that was, and still is, used for use-cases such as refining targeting, personalization, and look-alike modelling around consumer profiles.
Third-party data, according to a Google definition, refers to any information collected by an entity that does not have a direct relationship with the user the data is being collected on. Third-party data has historically been collected by capturing browsing behaviour from websites, apps and other connected devices, only to be aggregated and re-sold by third-party data marketplaces within DMPs, DSPs, and other related platforms.
Although third-party cookies and data are the foundations of marketing, the industry knows (and hates to admit) that there are fundamental flaws around third-party cookies & third-party data. Here are just a few challenges that come to mind:
- Third-party data was used because there was no other option to personalize marketing experiences if a user hadn’t already visited a brand’s website;
- Third-party data is tied to device IDs or cookie IDs often without explicit consent, and therefore goes against compliance laws such as GDPR and CCPA;
- Third-party data is not necessarily attributed to the right person. According to the definition it does not have a direct relationship to the user;
- Third-party data is often collected & aggregated from a variety of websites, making it extremely difficult to accurately tie back all touch points and IDs to a single user;
- There are hundreds of third-party data providers available leaving marketers confused with who they can trust;
- Moreover, there are no industry standards for third-party data quality and verification, each provider has their own version of a standard, forcing everyone to operate in silo and leaving marketers at a loss;
- The quality of third-party data is low and since this data typically has a 90 day recency period, there is no way to accurately capture what happens during this time span;
- Millions upon millions of advertising dollars are spent on ads that are not relevant.
In the last decade, third-party data has always tried to be a proxy for behavioral targeting, but never lived up to the expectation. If you consider this in the application of what has been said, third-party data has limited the accuracy of retargeting, limited personalization and limited accurate audience profiling.
Whereas first-party data continues to be unquestionably crucial for marketers, third-party data has never been the ‘gold standard’. The poor quality, lack of industry standards and minimal data protection for consumers are just some concerns to name a few. As we move towards a new era where third-party cookies will be no more (phew!), we can look to a more reliable, hopeful, and deterministic layer of data in contextual.