By Vihan Sharma, Managing Director Europe, LiveRamp
While digital technology develops at a lightning pace, there is one fundamental part of the internet that hasn’t changed in the 25 years since its inception: the existence of third-party cookies.
2021 will be the final year that the internet relies on third-party cookies. While third-party cookies have traditionally helped marketers to reach and engage with consumers and measure campaign results, they have always been flawed. This is not just because of the way they function, but because the value exchange they facilitate is not easily understood by the consumer.
Brands will no longer be able to use third-party cookies to understand their customers’ behaviours and promote products they may prefer. Instead, they need to prepare for the new internet landscape. For those companies that are not already making changes to their marketing strategies, 2021 is a ticking clock.
What are third-party cookies, and why are they flawed?
Third-party cookies are currently used to collect data on almost every website individuals visit. There are different types of cookies; some are functional to the operation of the website, but the majority of cookies help brands understand online activity – such as sites visited and products viewed – in order to create personalized advertising.
In practice, this might mean that a clothing retailer might see that you’re looking for a new pair of boots for the winter. They can then develop a customised plan to show you adverts and deals for their best-selling boots, and tailor their content to what’s most useful for you. Once you’ve bought boots, the website can then advertise a coat, gloves or other items you might need.
Among other things, third-party cookies have been criticised due to privacy concerns and a lack of transparency because the majority of consumers simply aren’t informed about the type of data collected by third-party cookies and how that data is used, leading to increased distrust and unwillingness to share information in spite of having a poorer experience. This was the primary reason that Google decided to deprecate them in Chrome. Google isn’t unique in this decision; Mozilla’s Firefox and Apple’s Safari browsers, for example, blocked the use of third-party cookies over the past three years.
And although this may be the most discussed disadvantage of third-party cookies, it is by no means the only one. In a fast-paced and quickly changing digital marketing world, the fact that cookies are not omnichannel – consistently tracking across all devices a consumer uses – are not people-based, and cause massive data loss across the ecosystem, means it is high time we find a better solution to fit the current environment.
After 25 years, the end of third-party cookies has finally come. Now in a new digital age, it’s time for a better alternative.
What are the alternatives?
One proposed alternative pathway to third-party cookies is Google’s Privacy Sandbox. The technology relies on anonymised signals within Chrome – rather than cookies – to gather data from a user’s browsing habits.
From a privacy standpoint, this makes the solution more attractive than the third-party cookies it aims to replace, putting user anonymity first and protecting their information as they travel around the web. Targeting too, would remain highly accurate in a post-cookie world through using this solution, since Chrome would have access to a large amount of verified customer data which advertisers could use to develop their strategies and target consumers.
Not everyone supports the initiative though; there are concerns over its measurement abilities, since attribution is made more difficult by the fact that the data collected will be aggregated, rather than at the user level. This will also make it difficult for marketers to understand what touchpoints a consumer has had with a campaign or product before they made a purchase. In addition to these concerns are worries that Google’s ownership of the solution will increase the search engine’s dominance of the online advertising industry.
So while this solution solves many of the problems of third-party cookies, Privacy Sandbox alone cannot constitute its replacement. Instead, it is more likely we will see a future where a number of privacy-first, interoperable solutions that centre on the consumer co-exist.
So how can we move forward?
To create a post-cookie digital marketing world where the consumer is at the centre, we must use people-based advertising. This means by using brands’ own first-party data shared through both online and offline customer interactions, brands can personalize the consumer journey – showing the consumer the right ad, the right amount of ads, measuring the results of those ads and then optimizing future ad personalization for those consumers.
Importantly, businesses can also expand beyond the insights delivered by their own first-party data and develop deeper customer intelligence by collaborating with like-minded brands. In this way, they can provide their customers with better experiences and more relevant product recommendations, without compromising their privacy or data.
In practice, this might mean a tea brand partnering with a supermarket to measure the impact of a marketing campaign by connecting digital ad exposures to offline transaction data – all anonymously and securely. Through gaining deeper insights about their buyers – what creative performs best, what frequency of ad drives the most spend, and more – they can optimize their marketing strategy and better connect with their audience.
As the end of third-party cookies approaches fast, first-movers who adopt new and better methods of people-based targeting will be poised to succeed. And brands who do not act now, and instead wait for third-party cookies to disappear before adopting new strategies, will struggle in the fast-moving environment of the new internet.