Decoding Data & AI: Cookies & User Tracking

What Are Cookies and What Is Their Purpose?

Cookies are small files stored on a user's device by a web server. Cookies store information, like the name of the browser on the user device, operating system, and device model, and when the browser communicates with the server, the server can retrieve information stored in the cookie.

Cookies have many applications, but in the digital marketing context, they help websites track user behavior, recording the timestamp of each visit, the number of visits, and the activity performed by the user on each visit - which is crucial for analytics, targeted advertising, and improving user experience.

Cookies can also improve the user experience, by serving several purposes, such as:

• Session Management: Cookies keep track of user sessions, enabling websites to remember user actions and preferences over a session. This is essential for functionalities like shopping carts on e-commerce sites.
• Personalization: By storing user preferences and settings, cookies allow websites to deliver a more personalized experience. For example, cookies can remember language preferences or display settings.
• Authentication: Cookies can store login credentials, enabling users to stay logged in across sessions without re-entering their credentials each time.
• Performance Tracking: Cookies help websites track user behavior, which can be used for performance analytics, product improvements, and personalized advertising.
   

Why Are Cookies Called "Cookies"?

The term "cookie" derives from the term "magic cookie," which was used in computing in the late 20th century to describe a packet of data a program receives and sends unchanged. Allegedly, they were a reference to the fortune cookies – which contain a piece of information inside of them.
 

First-Party vs. Third-Party Cookies

Cookies are set on specific domains. From the setup perspective, there are two different types of cookies. First-party cookies are set by the website the user is currently visiting. They are used primarily, but not exclusively, for user experience enhancements, such as remembering login information, language preferences, and items in a shopping cart.

Generally considered less intrusive, they are intended to improve site functionality and user experience. Still, they can be used for tracking user behavior on the site.

Third-party cookies, on the other hand, are set by a domain other than the one the user is visiting, typically through advertisements or embedded content like videos. They are mainly used for tracking users across different sites for targeted advertising.

In contrast to first-party cookies, third-party cookies are more intrusive as they can track user behavior across multiple websites, leading to significant privacy concerns. They can collect extensive data about users' browsing habits without their explicit consent.
 

Legal Considerations and GDPR Perspective

There have been discussions and regulatory considerations regarding the banning of third-party cookies due to privacy concerns. Major browsers like Google Chrome and Firefox have announced plans to phase out support for third-party cookies to enhance user privacy.

From a GDPR (General Data Protection Regulation) perspective:
 

• The use of third-party cookies requires explicit user consent, and users should be informed about the data being collected and its purpose. It is strongly discouraged to allow third-party cookies without proper consent mechanisms in place.
• While first-party cookies are less regulated than third-party cookies, transparency and consent are still important, especially if they track user behavior beyond essential functions.
   

Recommended Setup for Web Activity Tracking

How do you set up tracking so that you maintain user trust and compliance with privacy regulations while collecting the right amount of data for optimal user experience and for tracking your business performance?

Here is OMMAX’s advice:

1. Server-Side Tracking: Implement server-side tracking to manage and control data collection more securely. This approach can help overcome technical blocks, and enhance data quality and quantity while simultaneously remaining compliant and respectful by exercising stronger control of the data.
2. Use of First-Party Cookies: Rely primarily on first-party cookies for essential functions like session management, user authentication, and personalization. Ensure that users are informed about the use of these cookies and provide options to manage their preferences.
3. Minimize Third-Party Cookies: Avoid or minimize the use of third-party cookies. If their use is necessary, ensure that robust consent mechanisms are in place to comply with regulations like GDPR. Clearly inform users about the presence of third-party cookies, their purpose, and the data they collect.
4. Privacy and Consent Management: Implement a comprehensive consent management platform (CMP) that provides users with clear information about cookies, their purposes, and options to accept or reject them. Regularly review and update privacy policies to maintain transparency.
5. Regular Audits and Compliance Checks: Conduct regular audits of your cookie usage and tracking practices to ensure compliance with evolving privacy regulations and to maintain user trust.

By following these guidelines, you can effectively track web activity while respecting user privacy and adhering to legal requirements.

Want to learn more about OMMAX's expertise in data & AI? Get in touch with our experts through the form below, and sign up for our Decoding Data & AI series!