The Decline of Third-Party Tracking

Company

How Third-Party Tracking Works 

Digital marketing involves three parties: the online vendor, digital advertiser, and customer. 

Online vendors work with digital advertisers to market their product to customers. Both vendors and digital advertisers use third-party trackers to target ads. 

Third-party tracking tools originate from external sites and run quietly in the background of websites and apps. They use tools like cookies to track behavioral data that can be packaged and resold. This data is used by companies to understand their users and customize marketing outreach. 

Privacy concerns about these tracking tools have led tech leaders like Apple and Google to block third-party tracking, dramatically affecting digital advertising.

Apple and Google Block Third-Party Tracking

On March 23rd, 2021, Apple updated its anti-tracking technology and blocked third-party cookies from its Safari browser. The latest iOS 14.5 update included App Tracking Transparency (ATT), a feature that prevents third-party user tracking without consent. 

Apple’s market dominance makes this move particularly impactful. iPhone holds about 47% of device market share and represents the majority of mobile spending, accounting for about 66% of app revenue. Google also announced a similar plan for Chrome, the most popular browser globally, and for all Google products. 

With two of the biggest players in tech visibly prioritizing customer privacy, other companies are likely to follow suit.

Loss of Valuable Customer Insight 

Digital advertising is a $330 billion dollar industry. Google and Facebook are the top players in the space. Google is the largest, receiving about 50% of global digital advertising spend in 2019. 

Social media and search companies are significantly affected by these privacy updates because their primary revenue generator is targeted advertising based on user data. For example, through third-party data, Facebook can tell when a user makes an online purchase related to an ad seen weeks earlier on their platform. These new guidelines hinder Facebook’s ability to link ads to sales conversions. Facebook is now adapting to the updated standards by taking steps such as the rollback of the Facebook Analytics tool.

Companies that once relied on third-party tracking for insights into their audience will now have to find an alternative solution for tailoring ads. For many of them, this solution will be to rely on their internal data. 


Importance of First-Party Data

New limitations on third-party tracking make internal, first-party data more important than ever. First-party data comes from direct interactions between a customer and company, which can entail existing user profiles, in-app engagement, purchase history, website visits, and social media following. This first-party data is rich with insights from the behaviors of an engaged audience. 

Polytomic unlocks this internal data. Companies use Polytomic to tap into information that already lives in their systems, and use that data on Google and Facebook’s marketing platforms for more specific targeting. At a time when third-party tracking is in decline, the best performing companies will be the ones who act on their internal data.

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