Consumer privacy is disrupting the digital advertising ecosystem, namely, it is accelerating the end of third-party cookies. To address the increasing demand from users for providing transparency and control on how their data is used, major browsers are doing away with third-party cookies, which have been the bedrock of digital advertising for more than two decades.
What are cookies and how they are used in advertising?
Cookies are small pieces of code that are placed in your browser whenever you visit a specific website. They usually contain information, such as website name, unique user id, language preferences, login details, or shopping cart details.
First-party cookies
First-party cookies are dropped by the host domain or the website domain that a user visits. These allow website owners to collect analytical data, remember preferences, and provide a personalized experience to the users.
Third-party cookies
Third-party cookies are created and stored by a domain other than the one the user is visiting. They track online user activity, such as browsing behavior & interests.
Third-party cookies are used for cross-site tracking, customer profiling, retargeting, and personalization.
How will the sunset of third-party cookies impact digital advertising?
Third-party cookies have been the backbone of digital advertising. They have proven very effective for businesses in building an in-depth understanding of customers, targeting them with personalized advertising, and measuring the performance of their advertising efforts.
Deprecating third-party cookies will significantly impact the programmatic adverting in the following ways:
- Audience Reach: Marketers who rely on third-party cookies to reach the audience have to find a new way for prospecting and reaching customers.
- Retargeting and Personalization: Third-party cookies are heavily used to understand online customer behavior and engage them with a personalized advertisement based on their browsing history. Without these, behavioral retargeting will be difficult.
- Performance Measurement & Attribution: Without third-party cookies, view-through and conversion attribution will not be possible, resulting in ineffective and inaccurate performance measurement of campaigns.
Strategies to prepare for the cookieless future
Although Google has delayed the phasing out of third-party cookies until second half of 2024, the road ahead is paved with uncertainty. Marketers need to embrace the change and devise new ways to be better prepared when the complete shift happens.
Surviving in a totally different marketing ecosystem will require prudent planning and a trusted advisor. Milestone has outlined six strategies that can help you to mitigate the risk.
1. Increased focus on first-party data collection
First-party data is the information businesses collect directly from customers. Examples of first-party data include –
- Website interactions – form submissions, product views
- Data from social media profiles
- CRM data
- Data from surveys/feedbacks
- Purchase history
- Data collected from loyalty programs
First-party data is one of the most valuable assets for marketers today. It is cost-effective, privacy-centric, ensures compliance with data protection regulations – GDPR & CCPA – and helps build trust & long-lasting relationships with customers. As this data is derived from actual customers, this is more accurate and provides better intelligence into real customer behavior. This makes personalization easier and targeted, resulting in enhanced user experience, trust, and customer loyalty. This data can also be used to build buyer personas and segments more effectively.
How can marketers collect first-party data?
In today’s privacy focussed world consumers are concerned about their personal data and getting them to provide any information can be a challenging task. Marketers need to carefully evaluate the value of the offers exchanged for this data and make it easier for the audience to provide consent for the data collection on the website.
Some of the ways brands can collect first-party data –
- Special offers/discounts for email sign-ups
- Online surveys on the website asking for travel preferences in lieu of discounts/vouchers
- Allowing users to create an account online
- Loyalty programs for repeat visitors
- Meeting/Events modules on the hotel website
How first-party data can be leveraged
Email Marketing
The email has always been in the channel mix for marketers and is going to be more important in the cookieless world. First-party data collected can be segmented based on users’ demographic & psychographic attributes and then used to send relevant email offers.
Retargeting Ads
One of the most important use cases of first-party data is increasing targeting accuracy and relevancy. Leading platforms, such as Google Ads & Facebook allow creating custom audience lists based on email addresses. Hashed email addresses can be sent to these platforms where they will be matched with the email address of the users signing in on the platform. This is an effective way of reaching your audience in a privacy-safe way.
First-party data can also be used to run Google Discovery Ads on Gmail and YouTube.
2. Cookieless identity solutions
Identity solutions provide recognition of individual customers across channels and devices without using cookies. A unique ID is created for each user based on identifiers, such as email address and device. This ID is interoperable and can be shared with advertising platforms and publishers for serving relevant ads.
Milestone solutions can integrate with identity solutions and help you bridge the data gap created with the deprecation of third-party cookies.
3. Shift to contextual targeting
Contextual targeting is a way to target relevant audiences using keywords and topics derived from the content around ad inventory. It is like placing an ad for a hotel on an article related to travel. The primary advantages of contextual targeting are relevancy and privacy safe. It does not require any third-party cookies or identifiers.
Though contextual advertising is not a new strategy, it has been overlooked in favor of privacy-intrusive alternatives. With the introduction of advanced technologies – Artificial Intelligence and NLP to predict users’ intent in real-time, it will become a game-changer in a world without cookies.
4. Migrate to GA 4
Earlier this year, Google announced that the current version of Google Analytics will stop processing data from July 1, 2023 and will be replaced with GA 4. GA 4 does not rely exclusively on cookies and uses event-based data model to deliver user-centric measurement. It is designed with privacy at its core to help business meet the evolving needs of consumers around data collection and usage.
GA 4 is built for the future to operate without cookies and applies machine learning to fill the data gaps. This will ensure marketers can rely on Google Analytics for measurement in a cookie-less world.
GA 4 does not have backword data compatibility. To ensure you have one year of benchmark data for comparison after July 2023, you need to migrate to GA 4 now.
5. Customer Data Platform (CDP)
A Customer Data Platform integrates data across all touchpoints to create a unified view of each customer. It helps in gaining better insights about customers and engaging them with personalized 1:1 messages and offers. When you know how and where your customers are interacting with your brand, it would be easier to design content that resonates well with their interest and intent.
Marketers today continue to include more channels in their marketing mix, resulting in data silos. CDPs address this by unifying data from all channels – website, app, CRM, point of sale, customer helpdesk, email platforms, and creating a single profile for individual customers in the database. Data residing in a CDP is first-party data gathered directly from customers without any third-party cookies.
If you have a good first-party data collection strategy, then CDP can be an appealing alternative to achieve better targeting and personalization. Data collected from Milestone websites can be tied with robust CDPs to enhance ROI & data effectiveness.
6. Get a data clean room & develop second-party relationships that help you augment and improve your customer data
A data clean room is a secure, isolated platform that links anonymized marketing and advertising data from multiple parties. Clean rooms offer second-party-data partnerships where brands can combine their firstparty data with a vendor’s data in a privacy-compliant way. This data can be leveraged to define better strategies for segmentation, targeting, and measurement.
Milestone Point of View
The most significant impact of eliminating third-party cookies is on programs and campaigns that rely on cookie-based data sharing across networks. The largest networks, Google Display Network and Apple networks stand to benefit while smaller networks and demand side platforms (DSPs) will lose visibility and inventory. Brands need to explore other user id and tracking methods, including universal hardware and software mapping. Further they will need likely need to shift budget directly to larger first-party networks or expand their first-party data collection and personalization on site and through email to replace what could be lost without third-party cookies.
Final Thoughts
No doubt, this shift in the advertising ecosystem is disruptive, but it provides an opportunity for businesses to build trust with consumers and provide human experience by considering them as ‘people’ not just ‘devices’. Respecting consumers’ privacy and compliance with data protection regulations will go a long way in improving customer experience – and that’s what every business strives for.
Contact Milestone at [email protected] to learn more.
