Third-party cookies have become the cornerstone of online advertising, allowing marketers access to user data and behavior information for cross-site tracking, retargeting, and other purposes.
However, the growing awareness around consumer data and privacy has led to profound changes in the advertising ecosystem. As internet users become wary of their online security, Google announced the gradual phasing out of third-party cookies by 2022.
Apple and Mozilla Firefox have already blocked third-party cookies, but since Google has the lion share in the search engine and browser market, its announcement will have broader implications worldwide. Google Chrome is a popular search engine and is used by 69% of internet users worldwide. And with an advertising stream revenue of 146.92 billion US dollars, Google is walking a tight line to meet their revenue demand while also fulfilling consumer privacy needs.
Let’s figure out the implications of this third-party cookie ban on marketers and the evolving advertising ecosystem.
What Does It All Mean?
It is undeniable that cookies are a great way to use search history data for consumers, offering suggestions for products you’ve recently searched or purchased. This is especially useful for direct-to-consumer (D2C) and e-commerce websites where cookies can help remember the products that consumers added to their shopping cart even after the website is closed.
As such, cookies function as a kind of muscle memory for the internet that helps browsers remember information through data flow protocols.
However, since cookies use information like a user’s login information and search history, concerns are raised about how much of this information is compromised to provide personalized content. Almost 81% of consumers feel that the potential risks of data tracking outweigh its benefits, and if these concerns are left unaddressed, it could end the free and open web as we know it.
To address these concerns, earlier in March 2021, Google announced how they’ll be changing the way cookies are used by marketers for targeted advertising. It reassured marketers that they can still use cookie-less targeted advertising to personalize customer journeys as long as they can balance consumer privacy.
The Google post also stated that they’ve been working with the broader tech industry to find ways to protect consumer anonymity while still delivering personalized content.
So, what initiatives is Google taking to make advertisements more secure and relevant on the web?
Technologies such as Federated Learning of Cohorts (FLoC) and innovative measures such as fraud protection, AI technology, and anti-fingerprinting are all poised to become the new future of web advertising. FLoC can enable businesses to reach consumers in new ways with relevant content by grouping people with similar interests. This approach complies with keeping up with privacy mode as individual identity gets hidden in the crowd.
Google’s ads team tested the FLoC approach. Results showed that it can be an adequate replacement for third-party cookies. Marketers can expect to see a 95% conversion rate per dollar as compared to cookie-based advertising. However, this high rate of conversion depends on FLOC’s algorithms and the type of audience that is being targeted.
How Will It Affect Marketers and Advertisers?
Given the efficacy and dependency on third-party cookies, marketers have to look for innovative ways to personalize user journeys in their absence. Let’s take a look at some of the ways the marketing landscape will be impacted:
Increased Consumer Confidence
The universal ban on third-party cookies will give consumers more confidence in sharing information. They will be better able to manage which companies can hold or monitor their behavioral information. Since consumers will now be asked to consent before cookies can store information, this will eliminate all instances of “hidden data collection”.
Therefore, internet users will have more clarity and confidence regarding the information that they share with websites.
Increased Reliance On First-Party Cookies
Using third-party cookies has long been the core of nearly every advertising company. However, with the cookie ban, advertisers and marketing companies will have to rely solely on first-party cookies generated by their websites and related applications.
Knowing and understanding your customer base has always been the mission of any digital business. In the aftermath of the third-party cookie ban, advertisers should establish a robust system of collecting first-party data. It might be tedious to gather, organize and analyze your first-party data, and the process may even take years. Still, it is precisely the thing that will bear fruitful results for you in a post-cookie-less ecosystem.
Decrease In Relevance Of Consumer Data
Since there will be no third-party cookies to rely on, advertisers cannot just get away with chasing down consumers’ behavioral information to create ads.
They will have to try different ways to approach consumer data and make ads more relevant and high-quality. This will also be an opportunity for marketers to engage with their audiences in compelling ways and create a more trust-based relationship.
Decline In Digital Publisher Revenue
Since large digital publishers generate a significant amount of their revenue by partnering with third-party data providers, the ban will lose revenue for these publishers. Google estimates that this would mean a loss of 52% on average for publishers.
With a loss as much as 50%, there is no doubt that the quality of content and the relevance of ads published by digital publishers will also be impacted negatively. This will also ultimately force publishers to use a paywall for compensating for the loss of revenue left by the ban of third-party cookies.
Alternatively, digital publishers will have to come up with other ways of generating revenue from large audiences.
Change In Scope For DSPs (demand-side platforms)
Until now, advertisers could manage which retargeted ads were delivered to customers through a cross-domain user ID which is only available via a third-party cookie. This cookie is then read by a demand-side platform to determine which ad should be delivered. However, following the ban, media executives and marketers predict returning to the primitive method of last-click attribution.
Simultaneously, this would mean that DSP vendors will have to change their strategies and adapt their tactics to collect users’ data from websites directly.
However, at this point, it is unclear what other indirect ways DSP’s can adopt to use first-party cookie data to create targeted ads.
Looking Forward – How Can Marketers Adapt to the Evolving Advertising Ecosystem?
Third-party cookies are a legacy technology and have been a source of concern for consumer privacy. They are non-transparent and highly fragmented. Marketers should welcome the shift to an identity-based advertising system.
Here are some ways they can be ready for what lies ahead:
Build Your Own Database
First-party cookies are good for storing your visitor’s vital information on your website, such as primary data about visitors, passwords, etc. First-party cookies let marketers create their own customer information database by learning what a consumer did when visiting the website, noticing the times of visit, and saving other basic analytic information to develop an effective marketing strategy.
Furthermore, as long as a website visitor stays logged-in on your website to access additional features, they keep leaving tracks and other information that publishers and marketers can leverage to collect and create behavioral profiles. Marketers can also offer memberships, newsletters, and loyalty benefits to users while they’re logged in to benefit both parties.
Suppose you run an e-commerce store on a platform such as Shopify or WooCommerce. In that case, access the analytics dashboard to trace first-party cookie data for more detailed insights, such as which marketing campaigns bring in the most leads and conversions or determine the geographical demographics of your best customers.
Upgrade Your Advertising Tech-Stack
As privacy laws continue to evolve, it is an excellent opportunity for marketers to re-evaluate their strategies and develop less-vulnerable advertising alternatives. For example, they can leverage data management platforms to help advertisers learn about relevant audiences and research their behavioral skills without being intrusive.
First-party data will now hold more importance and relevance, and owning all of your consumers’ data will prove valuable if you want to change your marketing strategies or tools.
Additionally, advertisers can also revitalize older strategies such as contextual advertising to place PPC ads on websites that rank similar content and keywords. For instance, if you’re a book-selling brand, your PPC can be placed on book-selling websites such as Amazon or Book Depository.
Leverage an AI-powered Growth Platform for Increased Customer Engagement
The cookie ban is particularly bad for marketers that relied on personalized marketing techniques to understand consumer preferences. However, as technology evolves and Artificial Intelligence makes a breakthrough, marketers can leverage an AI platform such as the Genus AI Growth Platform to understand consumer intent.
AI allows advertisers to engage with customers in an emotionally intelligent way to generate more value and enhance customer experience. For example, chat-bots can provide data that websites save in their database to use for audiences with similar preferences.
AI platforms like Genus AI can also help marketers retain their customers by re-engaging with them through personalized content. These platforms can tell brands which customers have not yet reached the end of their customer journey, helping them create better content.
In fact, it’s possible to use content scoring capabilities to develop content that results in the development of social content that resonates with the audiences on a personal level.
The key is to understand what behaviors drive the most sales and use them to optimize customer acquisition.
Leverage Data Clean Rooms
A data cleanroom is a shared environment where two applications can share and match their data sets based on a shared variable. For example, Google or Facebook can check their audience’s data with a brand’s first-party data through strict privacy and protection controls. These matched data sets can then generate marketing campaigns, enhancing cross-channel customer experience and attribution modeling.
Data clean rooms are necessary for log-level analyses and can help marketers deliver insights on an individual level.
An example of a data cleanroom is Ads Data Hub launched by Google that allows marketers to match their event campaign data with customer data. Amazon is also testing a cleanroom that would enable marketers to improve campaign performance measurement.
Currently, multinational corporations like Proctor & Gamble are leveraging data clean rooms with Google and Facebook. They have the most clout and biggest data sets on the web.
Mobile Advertising ID (MAID)
Studies show that US adults spend 87% of their time on smartphones making mobile in-app usage one of the greatest customer channels. This provides digital marketers with an alternative opportunity to develop mobile-focused technologies to overcome the cookie ban’s barriers.
And these strategies must be in accordance with the growing concern of protecting consumer data through safe onboarding practices that enhance customer data with demographic and other attributes anonymously.
One of these marketing-optimized solutions is the usage of Mobile Advertising ID (MAID).
MAIDs are user-resettable mobile Ad managers that help marketers and publishers identify which consumers are using their app. Although many people refer to MAID as a cookie for mobile phones, the reality is that MAIDS are unique and anonymous identifiers that are different for every device. This makes them helpful in combatting privacy issues.
Additionally, while cookies cannot be transferred from one data platform to another, MAIDs are the same for all applications. There is no need for an extensive onboarding process to link a MAID to an identity.
In fact, there are already safety policies set around MAID users such as:
- If a MAID is deleted, all of its corresponding data must also be deleted
- Companies are not allowed to make permanent connections between users and MAIDs
- Users can reset their MAIDs whenever they want
The ban of third-party cookie data may sound like a bummer for most advertisers; however, this can also be advantageous. Marketers can build creative mechanisms and develop support implementations to make your brand safe while also improving customer engagement.
Use the strategies mentioned above to optimize your first-party data and brainstorm even more tactics to reach a wider audience without cookies, hyper-targeted ads, or large amounts of information.