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Digital marketing depends on a logical, yet complicated reciprocity between advertisers and consumers: in exchange for being served far more relevant ads for products and services, consumers part with behavioural data as they browse websites, social media, emails and more.
- Are both parties mutually benefiting from this exchange? The thought amongst many consumers is no. In fact, in a survey by Pew Research Center, 81% of people say that the potential risks they face because of data collection outweigh the benefits. As consumers, marketers and tech companies continue to try and balance the convenience of targeted advertising with the importance of data privacy, the inevitable eradication of third-party cookies is an issue that’s top of mind. Continue reading below to see how this major change may affect your marketing efforts, and what you and your team can do about it.
The Situation: Google’s (Eventual) Removal of Third-Party Cookies
In 2021, Google reaffirmed their plans to phase out the use of third-party cookies on their ad networks and Chrome browser. While other web browsers such as Firefox and Safari have already done away with third-party cookies, Google’s move represents the most significant development due to the significant influence of Google’s browser and ad network. As of 2021, Chrome for Android and Chrome 91.0 account for approximately 57% of the world’s web browser market share.
Google first announced that it intended to phase out third-party cookies by 2022 back in January of 2020. The initiative has since been delayed until mid-2023 to, in Google’s words, “allow sufficient time for public discussion on the right solutions, continued engagement with regulators, and for publishers and the advertising industry to migrate their services.”
In other words? They want to allow time for online advertisers, publishers, and other stakeholders to adjust to the pivot away from this fundamental means of ad targeting. So, what does the removal of third-party cookies mean for your marketing efforts? And how can you adjust? Before answering these questions, here is a refresher on cookies without getting too technical.
- • A small text file that is stored on your web browser.
- • Upon visiting a particular website, the website will send a cookie to your computer where it’s stored on your web browser (Google Chrome, Internet Explorer, Safari, Firefox, etc.).
- • From keeping track of items in your shopping cart to remembering user login information, not all uses of cookies are bad.
- • First-party cookies create a direct link between the website you are visiting and your web browser to create a more seamless, convenient browsing experience.
- • Issues arise when cookies are created and used in a third-party context.
- • Third-party cookies are created by web domains other than the one you are currently browsing.
- • These types of cookies are sent to a user’s web browser from external content published on sites you visit on a day-to-day basis, most notably in the form of advertisements.
- • As you visit websites and engage with the content, third-party cookies will accrue, tracking your online behaviour, allowing third-parties such as advertisers and social media platforms to serve more targeted advertisements.
- • Ad targeting capabilities and performance attribution models are often dependent on these bits of code to deliver funnel-specific messaging to users and tie ad spend back to marketing dollars.
In This Context, What Does Google’s Announcement Mean?
The shift away from third-party cookies is a good thing: it is a major step towards building a more trustworthy digital ecosystem that prioritizes advertiser accountability and data transparency.
Nevertheless, the move to remove third-party cookies from an advertising ecosystem as large as Google’s is highly disruptive for marketers. It ultimately means that Google will no longer sell ad space targeted to the browsing habits of individual users and that the Chrome browser will no longer allow third-party cookies to collect this targeting data. For businesses and advertisers who rely on this third-party data, the shift requires them to change their approach.
While Google has no intentions of phasing out the use of its first-party cookies, advertisers who rely heavily on third-party data must work to future-proof their data strategy and better utilize the first-party data that they themselves have access to.
In a Cookieless World, Personalized Online Experiences Still Matter
In an era of enhanced consumer privacy and security, creating a convenient, personalized experience for your customers is still paramount. According to Segment’s State of Personalization report, “48% of consumers appreciate the convenience of personalization, so long as their data is secure”. The key here is trust between the customer and the brand. In their report, Segment also asked consumers what the most important factor was when deciding whether to shop with a particular brand. The results are telling:
- • The brand is trustworthy and transparent – 55%
- • The brand is socially and environmentally responsible – 16%
- • The brand offers a smooth digital experience – 14%
- • The brand offers a high level of personalization to me – 10%
- • The brand is well known and popular among my peer group – 6%
The question for marketers becomes how can they offer this level of personalization, understand their audiences, and market efficiently, all while operating in a digital ecosystem that is becoming more private for consumers. While no solution is perfect and foolproof, having a first-party data strategy is an essential step to work towards.
What Industry Solutions Are in the Works?
There are a number of potential industry-wide alternatives to third-party cookies currently under development, including:
Google’s Privacy Sandbox: An initiative led by Google that “aims to create technologies that both protect people’s privacy online and give companies and developers tools to build thriving digital businesses” without relying on or resorting to invasive tracking and data collection practices.
Universal IDs: A single identifier composed of first-party information provided by the user that allows them to be recognized in the digital ecosystem. Unlike third-party cookies, users will consent to the creation of the identifier, set their own preferences and provide permissions for how their data may be shared.
And while these potential solutions are compelling, they are still very much in development and present issues of their own. Rather than waiting for their implementation, there are a number of tactics marketers can begin testing right now.
Guidance: What Can Marketers Do Going Forward?
Lean Into First-Party Data
As third-party cookies become more and more taboo, it is incumbent upon marketers to understand how to collect, understand, and utilize first-party data for the purposes of effective, transparent advertising. First-party data is any customer information that your business collects directly from consumers without any intermediaries. These data sources commonly include (but aren’t limited to):
- Offline CRM
- Email programs
- Call centre data
- Mobile app usage
- Customer surveys
Rather than being viewed as an emerging trend, the value of first-party data is not lost on marketing firms with their sights set on the future. According to a survey of over 300 senior marketers conducted by customer intelligence firm Signal, first-party data is here to stay:
- • First-party data garners the highest return on investment of any data type, with the potential to do more.
- • Two-thirds of marketers (or more) believe that first-party data provides the best path to true customer understanding and therefore to better performance.
- • Direct customer information is clearly more powerful for campaign lift, with 92% choosing first or second-party data.
- • Taking a longer view, marketers also look to first and second-party data (95%) to increase customer lifetime value.
For many marketing teams, establishing a first-party data strategy can seem daunting when compared to the relative ease of using an overabundance of third-party data. Ultimately, however, the value and potential ROI of a solid first-party data strategy should not be underestimated. Aside from ROI, it can lead to a more robust, personalized understanding of consumers without sacrificing their privacy and security online.
Return to Contextual Advertising
Outside of leaning into owned, first-party data, developing a strong contextual advertising strategy offers the strongest alternative to cookies. Instead of serving ads based on user behaviour, contextual advertising targets ad placements based on the environment in which the ad appears (eg. placing an ad for a cookware set on a recipe site; an ad for high-end camera equipment on a travel site). Modern contextual advertising leverages machine learning and artificial intelligence (AI), making this method more effective than ever before. Contextual advertising also has benefits for the user: rather than seeing the same ad on every site, they are exposed to a breadth of contextually relevant ads that align with their interests.
Leverage Partnerships of Influence
This strategy involves creating partnerships with publishers and influencers that your audience is most likely to be interested in, engaged with or exposed to. In many ways, this represents a return to “old school” advertising tactics. Success here will ultimately come down to a thorough understanding of audiences — an initiative that can be aided by a strong first-party data strategy. Collecting, managing and utilizing first-party data points can help marketers make better decisions when it comes to creating media partnerships and investing ad dollars.
Preparing for a Cookieless Future Starts Today
The removal of third-party cookies from Google’s ecosystem by 2023 represents a seismic shift for brands and businesses across industries. At this point, there is no catch-all solution and there will inevitably be a learning curve as marketers find new ways to create value, leverage context and serve ads effectively. In order to find an approach that works and pivot effectively when the time comes, marketers should start committing to rigorous testing across a wide range of tactics.
At Other., we are committed to playing offense for our clients. Instead of sitting back and waiting for industry-wide changes to be made, we are working to develop customized recommendations for each and every client to ensure that they are prepared for a cookieless future.
The future of marketing is being forged today. Don’t get left behind.
From quickly switching partners to carefully assessing needs, we’ve been through many change scenarios and are ready to discuss your unique situation.