The Death of Third-Party Cookies? How FLoCs Affect HubSpot

The internet has lost focus on the user experience.

Advertising has reached a fulcrum, if not a full-blown conflict. Invasive ads and tracking require permissions on nearly every site we visit! Each page visit morphs into a constant back and forth of permission forms and pop-ups. The current browsing experience is distracting, annoying, and drives users away from pages or websites altogether. That is bad for users and downright devastating to businesses.

Why is this happening? What changed over the last few years?

Changes to privacy law. In 2018, the European Union enacted the General Data Protection Regulation, or GDPR. The law expands personal data definitions and offers more protection to consumer data rights. In the U.S., this law does not apply. But it does affect American companies operating in the EU. Since Europeans are visiting American websites as well, companies must comply with the law. 

GDPR compliance arrived with some growing pains. It was supposed to clarify our privacy and present choice. In reality, the privacy permissions on almost every single website appear as bold requirements. Language, color, and page placement communicate to visitors if they do not agree to third-party tracking terms, the website is inaccessible. 

People prefer to walk down the path of least resistance. The current state of average browsing? Messy, murky, and frustrating. For advertising to function as intended, users need to have a smooth, helpful experience. That is why Google, Apple, and all of our big tech saviors are attempting to solve our privacy issues. An outdated tracking system with the need for data creates confusion. Confusion means lost sales. 

Something needs to change.

In this blog, I will highlight the difference between first and third-party cookies, how big tech is responding to the privacy crisis, and how changes to privacy policy affect the marketing industry.

The difference between first and third-party cookies

Cookies of all flavors and purposes are often tied together. But there are key differences between cookies, and it’s why one of them is on the way out. 

First-party cookies:

• Code that gets automatically generated and stored on a user’s computer by default when they visit a website 
• Responsible for remembering passwords and basic data about visitors 
• If you use a CMS, like HubSpot, you’ll have access to analytics dashboards that track first-party cookie data

Third-party cookies:

• Tracking codes placed on a site visitor's computer and generated by a website other than your own
• Track digital body language and behaviors
• Requires consent
• Offer cross-site tracking, retargeting, ad-serving

Remember: The GDPR is a law primarily focused on providing users permissions and clarification about their data. Third-party cookies, by definition, are much more invasive than first-party cookies. This is the primary reason we experience constant pop-ups and cookie permissions on every website we visit. 

The problem? Lax consumer privacy laws on the internet. The symptoms? Poor user experience and profiting off our data. The solution? Well, from Google’s perspective, FLoCs.

What the FLoC, Google?

The Federated Learning of Cohorts, or FLoCs, is an interest-based system that aims to protect your unique user data. It’s Google’s answer to the privacy crisis! Let’s break it down:

• Federated Learning is algorithmic learning
• Cohorts are groups of users organized by interests for advertising purposes. Each user is assigned a FLoC ID, then assigned to a FLoC if the cohort is large enough to provide anonymity. Advertisers then use that data to advertise and infer how to target cohorts. 
• FLoCs are part of what Google’s coining as the Privacy Sandbox, an ecosystem Google claims cuts down on invasive targeting and tracking 

By 2022, Google is phasing out all third-party cookies. They’ve already started as of this writing! About .5% of Google Chrome browsers are testing this new FLoC system of tracking. The future is here, folks.

Is it possible to make money with FloCs?

Short answer: Yep. 

Long answer: Your Google Chrome browser churns through data locally, assigns users unique FLoC IDs, and sites can request those ID’s—grouped with thousands of other users based on shared interest—and use it for targeted advertising. Basically, FLoCs are a summary of recent web activity. Google wouldn’t be completely phasing out a primary way advertisers earn money if they didn’t have an alternative, lucrative method to replace it. We need to advertise and Google needs to make money off that. This is the primary reason for creating FLoCs.

What’s Apple doing?

As Google positions itself as a friendly company toward users and advertisers, Apple is demanding invasive advertisers go away. This big FLoC announcement isn’t anything new for Apple; the company’s own browser, Safari, already blocked third-party cookies in early 2020. It’s clear that Apple is committed to the privacy arms race based on both actionable policy and rhetoric. Their primary goal? Limit all methods of individualized, intelligent tracking and create an internet that is as user-friendly as it is safe and private.

Intelligent tracking prevention

Intelligent tracking prevention (ITP) is an automated security system implemented by default on all Safari browsers across all devices. Think of this as Apple’s attempt to limit an advertiser’s ability to track users from one place to another. Websites that use scripts across domains are considered intelligent and therefore blocked for 24 hours. For marketers, this might skew new or returning visitor data on your CRM. 

For an exhaustive overview of Safari’s ITP, please visit this whitepaper from Apple.

iOS 14.5

An April 2021 update to iOS offers a disabled tracking toggle through every application on iPhone, including browsers like Google Chrome. Upon installing iOS 14.5, users receive an actionable notification to allow or deny tracking across apps for advertising purposes. This is the first offering of its kind across mobile platforms, and so far, it seems to be pretty popular. On average, just 4% of iPhone users opted-in to tracking out of a sample size of 2.5 million American users. That means 96% of iPhone users opted to disable tracking altogether.

How do FLoC and privacy changes affect HubSpot?

Our team at Sauce uses HubSpot to inform and delight our clients—we’re certified Gold for a reason! HubSpot primarily relies on cookies to track, provide valuable data, and inform inbound marketing strategies. Do the incoming changes to cookies and privacy affect HubSpot’s tools? 

Short answer: Nah. You're good—for now. 

Long answer: HubSpot does not use third-party cookies to track users. The best CRM around uses first-party cookies for all methods of tracking. Even with Google’s new FLoC system, HubSpot functions and reports normally with one caveat: Google may flag the third-party scripts responsible for setting HubSpot cookies. Flagging does not impact HubSpot functionality.

How does HubSpot use first-party cookies?

HubSpot uses first-party cookies to gather contextual information from on-site visits. It does not provide any information that specifies a unique visitor identity. HubSpot stores which page a user has visited before visiting a HubSpot-powered website. When visitors engage with a form or live chat, their browsing data records and saves to the HubSpot contact database. This information powers advertising and marketing efforts.

Right now, HubSpot is safe, secure, and the best way to grow your digital footprint. Learn why HubSpot is right for you here.

Is digital advertising dead?

Nope! FLoCs and ITPs are big tech building an inbound-friendly user experience. Priority number one is always and forever our customers. Remember: as long as there is an opportunity to capitalize on consumers, big tech is there—12 steps ahead of the curve. 

FLoCs make marketing more difficult—there’s no way around that. But that’s alright. The marketing and advertising industry seems to be pretty good at innovating. As time ticks toward 2022, we will learn more about Google’s FLoCs, the privacy sandbox, and whether the industry adopts it on a wide scale. 

A question to keep in mind as digital marketing changes: Who draws the line? And more importantly, where is the line drawn? This might be an opportunity for new players to enter the market and capitalize. Or, as per usual, big tech companies fill the vacuum and dominate. Time will tell.

What are the next steps for the marketing industry?

We know FLoCs are coming, we know competitors hate them, and we know the change affects third-party cookies the most. 

Digital marketing didn’t shut down when Apple or Firefox introduced sweeping changes to tracking years ago. It’s safe to assume, barring a digital meteor, that digital marketing will weather the dawn of this new age. Like any change, it’ll have growing pains. We’ll be ready for it. Here’s what you can do to be ready too:

• Shift focus from third-party cookie tracking to first-party cookie tracking CRM
• If your marketing strategy or business relies on third-party tracking, consult a lawyer to identify the safest legal way to continue doing business within Google’s ecosystem 
• Bolster existing first-party tracking strategy and services. Invest in products that lend to strong, ethical first-party tracking initiatives, like HubSpot! 
• Always keep the customer in mind. Right now, the internet is messy. This is Google’s attempt to clean it up. A cleaner user experience means an opportunity for better technology. We’re in the innovation industry!. We’ll be just fine.

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