A Future Beyond Cookies in Web3 -- Part I

Cookies were introduced in the early days of the Web as a way to enhance the capabilities of HTTP and make browsing the Internet more convenient. These early cookies allowed websites to store useful data such as log-in information and the contents of a shopping cart (first-party data), but quickly evolved into more intrusive cookies designed to track user behavior for retargeting (third-party data) and enable the sale of such data without the user's consent.

Popularized methods for developing personalized ads, measuring the efficacy of ads, and encouraging seamless customer engagement strongly rely on third-party data collection. Third-party data is sold or given to a site other than the one a user is currently visiting and thus is not limited to the page a user is currently browsing. Rather than improving UI, third-party data tracks users across the Web and helps companies profit off users' data, often without their knowledge or consent.

However, the digital advertising world has recently become more averse to third-party cookies in response to consumers’ growing privacy concerns: indeed, one study estimates that 42% of users globally have taken steps to reduce the amount of data they share online. Additionally, Apple and Google have begun to phase out third-party cookies and the GDPR and CCPA are leaving advertisers no choice but to adapt to a world where data practices are transparent.

Cookie alternatives have been proposed by big tech companies, but they have largely fallen short. Both Google’s Topics and Microsoft’s PARAKEET have the potential to maintain some of the functionalities of third-party cookies with added autonomy and anonymity for users, but people are hesitant about how transparent these tools will be.

Thankfully, many ad tech startups are actively working to create products that will allow brands to continue ad targeting and performance measurement without sacrificing transparency or privacy for their customers. Even without the impressive technology being created, a shift in the way we think about data collection caused by the rise of Web3 has the potential to make the cookieless world one that is beneficial for brands and users alike.

Web3, the successor to the current Web 2.0, presents unique solutions for brands adapting to the retirement of third-party cookies. Brands that want to leverage Web3 solutions will need to obtain explicit consent so that the users retain ownership of their data, incentivize users to provide consent, and build their own first party databases. Earning the full consent of an audience to share their data by offering something they value in return (discounts, convenience, cryptocurrency tokens, etc.) allows equal sharing in value creation, also known as opt in value exchange; 52% of consumers would share personal data in exchange for product recommendations. Collecting first-party data is a way for brands to remove the middleman and engage with their audience -- it is also easier than ever with the rise of customer data platforms (CDPs) which help businesses collect, unify and activate customer data.

So, what do brands stand to gain in the Web after cookies? Transparent and compensated first-party data collection is an opportunity for brands to build long-term relationships with their customers. When brands ask for permission to collect data from users, they are reimagining the way they engage with customers and putting that relationship first. The revolution of the brand-customer relationship beckons a new age of digital advertisements predicated on trust and consent. The cookieless future has the potential to be something much greater than the tool that we will lose.

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