It starts with a slight headache, sluggish thoughts and a feeling of lethargy possibly even leading to mild depression, ... It’s the cookie craving. The withdrawal effects you experience when your favorite cookies are taken out of the racks. Forever. Who’s at risk? Not just the blue monster on Sesame Street, but also digital marketers who’ve benefited and grown fat on third-party cookies for years.
The digital advertising industry has successfully weathered the covid-19 pandemic and its global revenue is expected to grow to $608.8 billion by 2026. But while a virus did not slow down digital advertising for long, could the disappearance of the third-party cookie potentially do more damage?
In this article, we'll discuss how the loss of the third-party cookie might impact marketing efforts. We'll also explore the alternatives available to brands to thrive in a cookieless era.
Let’s say you were looking to buy some sports equipment and you’re browsing the web to gather information. The next day, you open your browser and wherever you surf, you’re now inundated by wave after wave of sports equipment ads. Sound familiar? This slightly eerie experience flows from the third-party cookie.
What is a third-party cookie? It’s essentially a text file, a code, that’s placed in your browser by a domain other than the one you’re visiting, for a defined period of time. It functions as some sort of identifier that tracks your movements and collects data about you so that marketers can send you tailored advertisements based on your past behavior.
For a rather small string of text, the third-party cookie has had a far reaching impact. They take the guesswork out of marketing efforts by allowing users to be identified and (re) targeted with the right ads, in the right place, at the right time.
Successful targeting is the backbone of any marketing campaign. After all, consumers aren’t the only ones who care about “getting the most bang for their buck”. Marketers aim for the highest possible return on investment and they need to be able to validate their ad spend.
As third-party cookies enable marketers to collect user information, concerns have arisen that these digital delicacies may be too privacy invasive. It’s been more than three years since GDPR (General Data Protection Regulation) was implemented by the European Union. However, to this day, headlines about privacy concerns and security scandals continue to flood the news networks and social media platforms.
In response to increasing regulatory restrictions (like the California Consumer Privacy Act or CCPA) and users demanding greater privacy, Google made the executive decision to phase out third-party cookies on the Chrome browser by 2023. Why is this significant? Google is not the first browser to kill the cookie, but Chrome is the largest web browser with nearly 70% market share.
This year, Apple followed suit by including a special feature in its iOS 14.5 software update for iPhone users. The feature, called App Tracking Transparency, requires any apps downloaded from the App Store to ask for user permission to track their online activities across third-party apps.
The new privacy features rolled out by these two tech giants will undoubtedly affect the marketing landscape. 41% of marketers expect their biggest challenge in a cookieless world will be the ability to track the right data and 44% believe they will need to increase ad spending by 5-25% to achieve the goals of 2021.
Having said that, the cookie slaughter does not intend to annihilate all types of cookies. As the third-party cookie falls, the first-party cookie will rise.
Let’s face it, third-party cookies did not always come in flawless batches anyway:
Improved targeting is great but that doesn’t guarantee your prospects will actually convert or buy from you.
Cookies may give a good indication of where your prospects will go next, but these are hardly accurate predictions.
Due to privacy laws, users were already being presented with the power to accept or reject tracking cookies.
Synchronizing large volumes of data is not always successful and if cookies are not correctly matched, your audience could be bombarded with ads that are irrelevant to them.
As the third-party cookie falls, the first-party cookie will rise.
The death of the third-party cookie need not be all doom and gloom for the digital advertising industry. Not all marketing efforts rely on third-party cookies and there are alternatives marketers can gradually begin to incorporate in their strategies. For one, not all cookies must die. As third-party cookies melt away, first-party data will become increasingly more important.
First-party data skips the middle man. A first-party cookie is a piece of code dropped by the website the visitor is currently viewing. It improves the user experience by storing visitor preferences and it also tracks the visitor’s movements throughout the website. This is all about the relationship consumers have with a brand. By entering the brand’s domain, they're essentially giving the brand direct access to their information.
By investing heavily in their owned channels and linking them all to their website - their primary content hub - brands can start to build a large database of first-party information and deepen their relationship with the customer.
Classics are classics because they work. They’ve been tried and tested and we know their unique flavor pairings appeal to the target audience. Contextual advertising, for instance, is successful because it displays ads that match the content the user is viewing at that precise moment.
Going back to the example of searching for sports equipment. If you’re browsing websites that sell sports gear, you might see gym ads or ads for protein shakes. The benefit of contextual advertising is that it targets prospects with ads that are relevant to them and what they’re already interested in buying. As such, they’ll be more receptive to the ad. Furthermore, this technique doesn’t rely on first or third-party cookies so it’s privacy compliant.
Google has deliberately postponed the killing of the third-party cookie until 2023 so that brands can prepare for the transition. They could take advantage of this opportunity to combine different tactics. In cookieless environments, brands can target prospects with contextual marketing and then use behavioral tactics to build an audience list which can be retargeted using cookies.
Capturing attention with original content will become crucial.
Ironically, in an era that’s marked by big data and exciting new technological advances like AI, VR, AR and quantum computing, the distinct human ability to get creative might just gain in importance.
After all, if you don’t know what your prospects are after because you can no longer track them with cookies, capturing their attention with original content will become crucial. Marketers will therefore need to infuse their marketing mix with some powerful creative juices.
Does the need to get creative fill your heart with fear? Not to worry, we’ve written a blog post on creativity with some practical tips, just for you!
It’s undeniable that content & context pair together beautifully in the marketing mix of the post-cookie digital world. Additionally, over 100 other solutions have already been put forward with some gaining more traction than others. And of course Google was not going to simply discard its advertising revenue.
While the tech giant has declared it won’t invest in any alternative tracking methods that target users at an individual level, it’s developed the Privacy Sandbox initiative which includes Federated Learning of Cohorts or FloC. A key principle is that the browser would keep control over user privacy and thus act as a sandbox.
FloC’s concept consists of algorithms which segment users into cohorts or interest groups based on a user’s browsing history. By ‘hiding’ users in groups that could contain thousands of people, it’s intended to be a more privacy friendly way of targeting visitors. Cohorts also change as they are linked to user browsing behavior.
These efforts are still in their infancy and Google has disclosed it might end up replacing these cohorts with a much shorter list of topics, such as ‘beauty and fitness’.
In conclusion, the demise of the third-party cookie need not spell the onslaught of a digital advertising apocalypse. Inevitably, marketers will need to experiment with first-party data and alternative solutions to see what works best. But it’s never a bad idea to keep innovating and to have marketing tools available that are less vulnerable to policy or technology changes.
Whichever way the cookie crumbles, make sure your company is ready to take on a new era in digital marketing!