The World of Cookies: Understanding 1st and 3rd Party Data
Cookies are small text files stored in a user’s browser while they browse websites. They appear as a string of characters (letters and numbers) and are used for several purposes:
- Storing user settings, such as language preference, font size, or color contrast.
- Personalizing content, which involves tailoring displayed content and ads to match the user’s interests and demographic profile.
- Authentication – allowing users to stay logged into their accounts on repeat visits.
- Tracking website activity, which helps website owners analyze traffic, optimize functionality, and conduct effective marketing.
Cookies are categorized by their origin:
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First-party cookies (1st party data) – created and managed by the website the user is currently visiting. These cookies are usually employed to handle essential site functions, like user preferences and session management. Notably, GA4 also uses first-party cookies as it only operates within the website itself.
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Third-party cookies (3rd party data) – generated and managed by domains other than the one the user is visiting. Primarily used by advertising systems (e.g., Google Ads, Meta Ads) and external analytics tools (e.g., Quantcast, previously Adobe Analytics) to track user behavior across multiple websites, enabling personalized ad targeting.
Due to increasingly strict privacy regulations, many solutions have emerged that prevent the placement of third-party cookies, block scripts, or limit HTTP requests to ad systems, and even sometimes to Google Analytics. Cookie usage can be disabled in browser settings, or users can install browser extensions that block scripts creating cookies. Google has repeatedly announced plans to phase out cookies in Chrome, and some browsers have already done so or significantly reduced cookie lifespans.
It’s important to know that third-party cookies enable cross-website tracking, behavioral profiling, and highly targeted advertising. What are the consequences of cookie blocking for marketers and brands? These practices severely limit the ability to track users, understand their behavior and interests, and build segmented audiences. This makes reaching valuable audiences harder, leading to higher conversion costs.
One of the Most Popular Data Collection Methods: Client-Side GTM
With rising limitations on third-party data, one of the most widely-used tracking methods is beginning to fall short. How does client-side GTM work, and where does the issue lie?
Imagine you’re setting up a new website and want to conduct paid campaigns using Google Ads and Meta Ads. Besides configuring both ad systems, you must add scripts to the website’s code that enable data collection on users arriving from your ad campaigns. Analyzing this data allows you to optimize actions effectively without wasting budget.
To do this, you’ll need to implement the Google Tag Manager (GTM) script on your website. GTM is a tool that allows you to quickly and easily add code snippets (tags) to your website without direct code changes. In simple terms, GTM is a „container” where you place all necessary scripts – such as Google Ads and Meta Ads – and manage them centrally. Google Tag Manager operates client-side, meaning scripts run in the user’s browser. How does this work in practice? When a user visits the site, the GTM container activates, and tags/scripts associated with specific website actions load. For instance, if a user adds a product to the cart, and a tag is configured for this action, user data related to the event is sent from the browser to the relevant service, such as Meta – provided the user has consented to cookie usage.
Where’s the Problem? The scripts mentioned rely on third-party cookies. If the user has an ad-blocking extension or browser settings that block cookies, no data will reach the ad systems.
According to Surfshark’s 2023 report, about 33% of internet users in Poland – approximately 11 million people – use tools to block cookies, with the global average at around 37%. In December 2016, Poland set a record, with 42% of internet users searching for Adblock extensions, putting Poland at the top worldwide. Although growth in adblock use has since slowed, the numbers remain high and problematic.
Server-Side GTM: Complementing Existing Tag Configuration (Client-Side GTM)
As data gaps grow, more marketers are seeking alternatives. One such solution is server-side GTM, a response to cookie-blocking issues. Currently, it’s recommended as a supplement to the existing client-side setup. This tracking method uses two GTM containers:
- A web container in the site’s code (client-side), relying primarily on third-party cookies.
- A server container hosted in a cloud environment, relying primarily on first-party cookies.
How to Implement Server-Side GTM:
- Create a new GTM container in „server” mode.
- Set up a unique subdomain for the website.
- Create an account on Google Cloud Run or alternative platforms like TAGGRS or Stape that offer server hosting.
- Connect all three components above.
- Configure the new GTM container according to Google and service documentation, with minor reconfigurations in the web GTM.
- In the client-side GTM code, replace the URL
https://www.googletagmanager.comwith the URL of the unique subdomain set up for server-side tagging.
After this change, GTM loads using the site’s own servers, running in a first-party data context instead of third-party, bypassing certain browser or extension blocks on GTM.
How Does the Configuration Work? Imagine a user visits your site after clicking a Facebook ad. The web container activates, and through the browser, event data is sent directly to: Google Analytics 4, Meta, and your server. The server-side GTM container then forwards data to GA4 and Facebook. The tools deduplicate the data based on event IDs.
When a user consents to tracking via a website banner but has adblock enabled, third-party cookies and scripts for ad and analytics services are blocked. In this case, client-side GTM cannot send detailed data. However, with server-side GTM in place, the GA4 script runs as first-party data (see screenshot below) since GTM is hosted on a subdomain in the cloud. Then, first-party cookie data is sent to the server-side GTM and then on to the tools used for advertising and analytics.
Source: [yetiz.pl, accessed 09/13/2024]
Server-Side GTM: Key Benefits for Your Business
- Increased data quantity and accuracy (by bypassing cookie- and script-blocking technologies), leading to more effective paid campaign optimization and lower customer acquisition and retention costs.
- Reduced browser script load enhances page performance, improving user experience and encouraging website goal completion – ultimately leading to more transactions or leads.
- Controlled data transfer by first sending data to the server, then to advertising and analytics tools, allowing specific parameters (like user IP, email, or client ID) to be excluded. This helps with GDPR compliance, enhances user privacy, and prevents potential fines or loss of trust.
Key Takeaways:
- Stricter user privacy regulations and technologies blocking cookies are causing data loss, limiting effective paid action optimization, and increasing customer acquisition and retention costs.
- Client-side GTM, a popular user-tracking method, is losing effectiveness due to browser and plugin blocks on third-party cookies and even analytics or ad tool scripts and HTTP requests.
- Implementing server-side tagging (GTM server-side) alongside client-side tagging (GTM client-side) can reduce data loss issues.
- Server-side tagging works in a first-party data context, bypassing adblockers and increasing control over data. This results in better support for paid actions and reduced budget waste on non-valuable users.
- Key benefits for business include improved page performance, user satisfaction, increased transactions or contact data submissions, and enhanced data security and user privacy, which protect against losing user trust or facing hefty fines.
A case study on data growth post-server-side tagging implementation will be featured soon on the blog.
About the author
Katarzyna Góraj
Senior Digital Analyst
She began her career path in social listening, after which she completely immersed herself in the world of research. At Yetiz, she is involved in analytics as well as managing PPC campaigns. Personally, she is addicted to mountain hiking and can’t imagine life without Freddie Mercury’s vocals.
