Google is set to phase out third-party cookies by late 2023. Apple has already blocked many third-party cookies with updates to its Intelligent Tracking Prevention feature (ITP). This has advertisers that rely on third-party data shaking in their boots.
83% of advertisers believe the end of third-party cookies and Identifier for Advertisers (IDFA) will have a moderate to significant impact on their marketing efforts. 69% believe it will have a greater impact than the California Consumer Privacy Act (CCPA) and General Data Protection Regulation (GDPR) legislations even.
But is it all doom and gloom? Does the demise of third-party cookies really mean that widely-used advertising strategies will be rendered ineffective?
We believe the solution lies in the better utilization of first-party data. But, first, let’s take a look at what these recent developments are all about.
Apple ITP, Third-Party Cookies, Retargeting, and the Shift Towards Greater User Privacy
Modern consumers are smart. They’ve been wise to the wily ways of advertisers for some time now. At first, they may have been flabbergasted that a product they were looking at recently on the web popped up in an ad on Facebook. Now, they understand that advertisers collect their data and track them across the web.
Consumer’s distaste for this kind of practice led to data privacy legislation, such as GDPR in Europe, PIPEDA in Canada, and California’s CCPA. These legislations aim to protect consumers’ personal data and require businesses to ask for permission to gather their information. In the case of GDPR, they must explicitly explain what will be done with that information, too.
As “big tech” is under ever-more scrutiny by legislators in the United States and around the world, it is only a matter of time before this sort of legislation becomes the norm in every market. It is no longer practical to skirt compliance simply because you don’t operate in a certain regulated jurisdiction.
In other words, legislation forced companies to place cookie notices and disclaimers on their sites. As a result, consumers can and do choose not to share their information with websites. This has an effect on marketers who utilize data to map the customer journey and employ data-driven tactics to increase conversions or improve other key performance indicators (KPIs).
Now, the tech giants have decided to take things a step further and get rid of tracking third-party cookies altogether. Here’s a brief timeline of the developments:
- January 2020 – Google announces they’ll phase out third-party cookies in the next two years to create “a more privacy-first web”.
- March 2020 – Apple’s ITP enhancements to iOS and iPadOS 13.4 and Safari 13.1 blocks the use of third-party cookies across the board.
- September 2021 – With the iOS 14 update, apps must ask permission to track users. If they opt out, Apple won’t share their IDFA (an anonymous identifier used by advertisers to identify a user’s device and track behaviors).
A Potential Future without Third-Party Cookies
In this scenario, attribution is made impossible. Previously, you’d be able to view how ads were performing using native tools from ad partners. Now, there’s no data, so no way to track performance across marketing channels. Therefore you’ll be unable to optimize your ad spend. In fact, without third-party cookies, 44% of marketers predict they’ll need to increase their ad spend by 20% in 2022 to achieve the same goals as in 2021.
The end of third-party cookies could also reduce the reach of ads. In particular, marketers won’t have the data they previously used to personalize and create hyper-targeted ads. In this instance, marketers return to the dark ages. They’re back to the “Half my advertising spend is wasted; the trouble is, I don’t know which half” world of traditional media.
With all of this in mind, the worst worst-case scenario is the death of digital marketing.
The Imperfect Ways the Industry Is Trying to Stick to Traditional Remarketing
Google is developing alternative tech to enable audience-based targeting at least. So far, these initiatives have been met with skepticism, forcing Google to give up their first attempt at an ad audience alternative (Federated Learning of Cohorts or FLoC) and come up with new ideas. These systems are unlikely to be used universally, and will end up being specific to certain web browsers and devices, and significantly less robust for audience targeting.
Other data management providers, such as Permutive, are also in the process of creating similar tools that’ll eventually provide an alternative to Google’s tech. But these have some way to go before they become a viable alternative.
First-Party Data as the Solution to Third-Party Cookie Deprecation
The future is first-party data. If third-party data isn’t available, you’ll need to leverage what you have to gain a better understanding of site visitors and customer behaviors.
First-party cookies differ from third-party cookies in that they allow you to gather and use information about your visitors within your own systems.
Third-party cookie data is sent to other servers which allows for retargeting via ads. First-party cookie data, however, is used to create a smooth user experience on your own site. These cookies remember certain pieces of information, such as logins, so that users don’t have to keep entering it every time they visit the site.
First-party cookies also let you collect data on the visitor, their preferences, how often they visit, and what they do during a visit. You can still use this basic analytics data and information on user behavior to make improvements to the on-site user experience and even optimize for conversions.
There’s also the possibility to use first-party data for contextual mapping. This means that, although you don’t have data on specific users, you can create anonymous segments of users and build up a picture of these groups for ad targeting.
You’ll also need to use a better infrastructure to capture first-party data. With third parties out of the picture, all scripts will be loaded from your own domain and will be sent to your own data warehouses. For data that isn’t generated on your site, like your ad spend information, this is done through an ETL tool (Extract, Transform, and Load) – data is extracted from the source, cleaned up, and loaded into one centralized database.
Along with using your own database, UTM links are an important means of collecting your own first-party data. They feed more precise data to your analytics as they are unaffected by changes to third-party cookies or the Facebook pixel. UTM tags help you gather information on traffic sources and conversions. As such they allow you to measure the value of ad campaigns and their ROI. This, in conjunction with ETL’ing data in your own database, will help you tie ad spend to campaigns and therefore is a workaround for the attribution issue.
Is the “Death of Cookies” Actually a Good Thing?
The death of cookies is a good thing for the increasingly privacy-conscious consumer. And, as it turns out, it can be a good thing for marketers, too.
First, companies will be able to better respect user privacy by having full control over what data they collect from users. By collecting first-party data you’ll be able to make thoughtful product recommendations for instance, without being too intrusive. And if you’ll want to remarket to your audience, you’ll first make sure you have their trust, which is something that always improves conversions and retention, too.
This is what customers prefer. Studies show that customers want personalized recommendations; they just don’t want you following them all over the web.
Furthermore, you’ll be using better processes to capture and store data, such as adding UTM codes. This means you can do attribution without sending personally identifiable information (PII) to third parties like Facebook.
This reduces the likelihood of cybersecurity issues as there are fewer parties involved that could have a data leak. Moreover, you own your data. There’s no chance of competitors utilizing it, for example, when Facebook takes data to profile customers.
It isn’t all doom and gloom. The end of third-party cookies and the rise of ITP will only be detrimental to advertisers that fail to embrace first-party data within their own systems, adopt alternative tech, or implement new strategies.