GUIDES
by Roman Vrublivskyi
Posted on Apr 1, 2024
First-Party vs. Third-Party Cookies: What Marketers Need to Know
by Roman Vrublivskyi
by Roman Vrublivskyi
Both first-party and third-party cookies are used for tracking user behavior on the Internet and allow for refining advertising strategies and delivering a more personalized user experience. However, due to the growing privacy concerns, as well as privacy-related regulations, advertisers and publishers need to review their data collection and usage methods.
In this guide, we will explain the difference between first-party and third-party cookies, explore relevant regulations, and more.
You might also be interested in how cookieless advertising is reshaping the industry.
Cookies were first introduced in 1994, so this year, 2024, they have an anniversary. The initial idea behind them was simple — to benefit commercial use and allow customers to shop in online stores conveniently. Third-party trackers entered the stage in the early 2000s, which enabled marketers to perform online tracking and launch targeted campaigns.
This contributed to the already existing privacy concerns, so the first directives regarding the usage of cookies started to appear. The process has not stopped since those times. Now, we have multiple regulations regarding cookie management, consent requests, privacy policy, and other aspects. Even though many marketers still leverage third-party trackers for effective advertising, more and more browsers are blocking them by default or preparing to do so. Therefore, while first-party cookies are still widely used, advertisers need to find alternative ways to target their audiences.
First-party cookies are created and stored directly by a domain or website a user is visiting. The browser remembers key information to deliver a better user experience. For instance, these can be language preferences, login credentials, products added to the cart, viewed pages, etc.
For example, a user visits an ecommerce website for the first time, agrees to the use of cookies, and provides personal information to make an order. The next time they visit this website to make a purchase, the login data is entered automatically, and the order web form suggests previously entered details (first and last name, address, phone number, and so on). This is possible thanks to first-party cookies, and the user experience improves since there is no need to enter the same information again. The order is completed faster. Alternatively, if a user blocks cookies, every new item added to the cart will reset it, meaning that it would be impossible to purchase multiple products.
For website operators, this type of cookies is helpful as well. Since the website is more convenient to interact with, users are more likely to return. Besides, the obtained data provides insights about user behavior that can be then leveraged to improve the website.
In comparison with third-party cookies, first-party ones have a higher level of user trust and are supported by all browsers.
Third-party trackers, which is obvious from their name, are created by third parties, not the website a user is visiting. Placed through scripts or tags, they are usually used for advertising. Here is an example: a user visits a digital shop selling suitcases and checks out the large ones. However, they do not make a purchase and move to another website to read some news. Suddenly, on the news website, they start seeing ads promoting large suitcases, even though the website itself is not related to ecommerce at all. This happens because third-party cookies placed on the user’s device track their online behavior.
At the same time, third-party trackers are used not only for marketing. Let’s summarize the most common use cases:
While enabling more relevant and effective advertising, third-party cookies come with certain risks. They can collect loads of personal information and can be used for malicious purposes. That is why more and more users are getting concerned about their privacy; they disable cookies in browser settings or use cookie management software to block them when needed.
Third-party cookies allow for effective targeting but also make many users feel being watched and demand greater privacy. However, user tracking and precisely targeted ads are not the only reasons for growing privacy concerns. Third-party trackers accumulate and transfer data, and from the users’ point of view, there is no guarantee that this personal information will not be misused. To keep cookies under control, a set of regulations was developed. Here are some of the privacy compliant and secured data processing standards that are available on SmartHub:
For any business operating in the advertising industry, it is important to monitor the updates of the applicable regulations to stay compliant.
Major browsers are taking measures to address the concerns and enhance user privacy. For instance, in January 2024, Google started restricting third-party cookies (by default) for 1% of Chrome browsers and is supposed to eliminate them completely by the end of the year. However, this does not imply a total end of tracking, so it will still be essential to obtain user consent for processing personal data.
Safari already blocks third-party cookies (by default as well) and accepts website data and cookies only from websites a user visits. Firefox also blocks trackers by default and creates a digital “jar” for every visited website. Third-party cookies are confined to specific websites, meaning that users cannot be tracked across different sites.
The current restrictions and steady elimination of cookies affect the digital advertising ecosystem — for instance, performing cross-site tracking and retargeting gets more complicated. Advertisers should rely on first-party data while still obtaining consent on data collection and usage. A CDP (customer data platform) can then be used to structure the data gathered from all the sources and create a clear customer view. This way, it will be possible to launch targeted ads without affecting user privacy. Utilizing contextual targeting and dynamic creative optimization will be helpful, too.
To respect customer privacy, advertisers should start fine-tuning their strategies even while third-party cookies are still in use.
To summarize the difference between first and third-party cookies, let’s compare them by the following parameters:
| First-Party Cookies | Third-Party Cookies | |
| Origin | Created directly by a domain or website a user is visiting. | Created by a third party, not the website a user is interacting with. |
| Main purpose | Managing browsing sessions. | Targeted and personalized advertising. |
| Accessibility | Available only to the domain that created cookies. | Available to any website that loads the server’s code of the third party. |
| Browser support | Supported by all browsers. | Were supported by all browsers initially, but now many of them block third-party cookies by default due to privacy concerns. |
| Blocking | Can be blocked by a user, but this is not a popular scenario since first-party cookies enhance user experience without being intrusive. | Can be blocked by a browser or user (via browser settings or software like ad blockers). |
| Deletion | Can be deleted by a user, but many of them still prefer to keep first-party cookies. | Many users delete third-party cookies regularly because of privacy concerns. |
| Consent requirement | Yes, unless they are mandatory for the website functionality. | Yes (in most cases). |
First-party cookies and third-party cookies play a significant role in the Internet ecosystem. However, to address privacy-related concerns, it is important for all the parties involved in the advertising process to follow the data processing regulations. For ad exchange owners, this is crucial as well.
Ensuring compliance can be a rather time-consuming process, but SmartHub, a white-label ad exchange, has already solved this challenge for you. The platform is fully compliant with GDPR, CCPA, TCF 2.0, and COPPA standards. Besides, SmartHub supports the generation of ads.txt and sellers.json files, which allows for enhanced transparency and prevents ad fraud and unauthorized activities.
First-party cookies are not going anywhere, but third-party ones are steadily fading away. Advertisers, publishers, and vendors like ad exchanges and servers need to be compliant with privacy regulations and monitor their potential updates, as well as industry news and the latest privacy-related practices.
Note that privacy-compliant white-label solutions like SmartHub are a great way for ad exchange owners to enter the stage. Instead of investing loads of time and money in developing a platform from scratch, you get your exchange to the market within a week.
Does SmartHub seem to be the right choice? Contact us!
You May Also Like
Want to Learn More?
Want to Learn More?
We'll get back to you very soon.
