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What are cookies?

Cookies are small text files that a website delivers to your device via a web browser like Chrome, Firefox, or Internet Explorer. When you visit a website, the server where the website lives may place a cookie on your browser so it recognizes your device in the future. When you revisit the website, the server scans that cookie to remember you and track your activity over time. Items remaining in a shopping cart on an e-commerce site or a website automatically producing your username from a previous login are examples of cookies in action.

There are two subcategories that further describe cookies and how website owners and advertisers use them. The categories distinguish between how long cookies stay on a device (session vs persistent) and who places the cookie on a device (first party vs third party). Third-party cookies are considered the most invasive to consumer privacy.

What is the difference between first-party and third-party cookies?

Website owners create first-party cookies to track user behavior on their own sites. Web developers and marketers typically use first-party cookies to learn how visitors travel across their website to improve the quality of their website or the ads they serve to visitors. By contrast, advertising platforms that do not own the particular website, like Google, place third-party cookies on a user's device. Both first- and third-party cookies can either automatically vanish when the user leaves the website or at the end of a user's session, or the cookies may live (or persist) on the user's computer until it is cleared by the user.

Third-party cookies often are persistent, meaning they live on a user's device, and they collect information to track website user behavior across multiple websites. Think of how your Google search for last-minute flights miraculously appears in the form of an advertisement for cheap flights on the website you visit after the search. That is how advertising platforms use third-party cookies to get in front of audiences.

What is cookieless tracking?

Cookieless (or anonymous) tracking uses scripts that run when a user visits a website. Once the script captures streaming information and data, it instructs the browser to send the information to another server for analytics and storage instead of in a cookie on the user's device.

Some people who use the term cookieless tracking may be referring to tracking that prohibits third-party cookies. With the proper Privacy Policies and user consent, first-party cookies will remain viable for website owners to collect and store user data.

How does cookieless advertising work?

Removing cookies and using scripts allows advertisers and website owners to continue collecting and storing what activity occurs during a visitor's user session without knowing the demographics and specifics of who visits the website. Cookieless advertising also reduces the tracking of user activity across multiple websites.

Cookieless advertising means that website owners and ad buyers will no longer have access to the personal user data collected through third-party cookies. Instead, advertisers will make decisions with more limited information while getting visitors to agree to first-party collection of specific data.

What does a cookieless world mean for advertisers?

For advertisers, a cookieless world means rethinking audience segmentation, user retargeting, and sales attribution without reliance on user data.

Audience segmentation

Advertisers will likely move away from strategies built solely on data-driven customer segments and towards contextual advertising. Although it doesn't offer the same opportunity for personalization and optimization, contextual advertising takes a more traditional approach that predates high-tech tracking. It places ads on websites with closely related content. An example would be an advertiser who sells high-end bakeware buying ad placements on a baking blogger's website.

User targeting

One of the most significant changes for advertisers will be their inability to use third-party cookies for 1:1 retargeting. Retargeting is where ads for specific products and services can follow a user across website properties. Without third-party cookies, advertisers can't employ retargeting to get in front of the same user on another website.

Sales attribution

Website visitors may engage with a brand several times before making a purchase. Third-party cookies facilitated the tracking to attribute website activity to user purchases. Marketers will lose sales conversion data.

What does cookieless tracking mean for consumers?

Overall, cookieless tracking grants consumers more insight into — and control over — their data, rather than brands having complete control. As such, consumers will more actively protect their own personal data.

Without cookies, consumers may expect an increasing number of website requests asking them to allow tracking cookies on devices. This empowers consumers to select the specific purposes for which they'll allow websites to deploy browser cookies (e.g. improved website performance, greater personalization, as well as advertising and promotions).

Finally, website owners will attempt to interact with consumers to collect data across more first-party touchpoints like email, SMS, and push notifications. While first-party data collection is still allowed, GDPR, CCPA, and other laws regulate its use.

Do you have questions about how new online consumer privacy regulations may impact your business? Reach out to a Rocket Lawyer On Call® attorney.

This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.

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