Navigating a Cookieless Future
Over the last decade, the use of track and trace technology has exploded. As a result, marketers have been able to collect mountains of personal information on people, their habits, and interests. This information is used to target individuals with advertising and marketing to such a degree it has become somewhat disconcerting to the average person. Now with the cookie pipeline about to be turned off, brand marketers face some big changes.
The End of Third-Party Cookies
In the last couple of years, two key changes have effectively signed a death warrant for third-party cookies. Our impression is that going forward, marketers will face an increasing number of issues if they do not implement a strategy that addresses advertising without cookies.
Google Stops Tracking
Consumers seeking to protect their privacy found an unlikely ally in Google, who starting from 2023, will stop tracking cookies on its Chrome browser. Apple’s Safari and Mozilla’s Firefox have already done so, but with Google commanding over two-thirds of the web browser market, this move will really hurt advertisers. It will in effect result in cookieless advertising.
In 2018, two important legislative changes were made. The EU enacted the General Data Protection Regulation (GDPR), which created rules requiring companies to obtain consent when collecting and storing personal data. It also implemented procedures that needed to be followed to ensure the data is protected. The California Consumer Privacy Act (CCPA) was also passed, which gave consumers control over what was happening with their personal data.
Other countries and states are following suit; Japan, Brazil, and Canada have or are in the process of enacting similar legislation to the GDPR, while Virginia, New Hampshire, and Florida are looking at following California’s lead.
Even without Google’s stopping tracking, the impact of these changes meant the future was not looking bright for third-party cookies.
Marketers met with Google in March 2021 and proposed alternatives to cookies; however, Google refused to accept these proposals taking the position that the alternatives proposed failed to comply with the current legislation.
Google is proposing the use of a Federated Learning of Cohorts which has similarities to profiling, using groups of 1,000 people with common interests as a replacement for cookies.
It seems unlikely that Google’s solutions will be sufficient to replace the ad targeting and measurement tools we have lost.
Like all things, there will be winners and losers from these changes. In the last few years, a number of brands have taken note of the signaled move away from third-party cookies and started developing direct relationships with consumers. These relationships will provide a good foundation for future marketing activities. As a result, this may position brands as one of the marketing groups best equipped to handle the changes.
Relationship With Retail Partners
One of the potential difficulties for brands, especially the CPG brands, is their relationship is with a retail partner rather than the consumer themselves, which they will somehow need to overcome. There is potential for retail partners to leverage the information they have obtained due to their direct relationship with the consumers and on-sell it.
Some commentators have suggested this would be a cynical outcome, questioning where the sale of first-party falls within the privacy restrictions. The reality is that creating strong relationships between brands, retail partners, and consumers will be the best way forward.
That said, some of the CPG brands are some of the best-placed currently. The move away from third-party cookies had been signaled, and many CPG brands have placed an emphasis on developing their own first-party databases. Procter & Gamble Co., Unilever, and L’Oreal have all developed their own databases, each already with over one million consumers.
The need to implement clear solutions has become even more pertinent as data-driven personalization has highlighted the need for clear visualization of the consumer journey.
Brands will need to invest in the technical infrastructure to manage, enrich, and utilize consumer data. This will require a clear identity strategy so that brands can build their audience around specific identities or behavior types. The development of data partnerships will need to be investigated to present a way for brands to enrich their data while ensuring they meet compliance obligations.
With data collection, management, and utilization key, consumers will set the bar high for those taking on these responsibilities. Brands will need to not only be compliant with the regulatory requirements but show transparency as they do so.
Customer Data Platforms
There is potential to utilize customer data platforms (CDP) better to assist with audience segmentation strategies. CDP’s have the potential to help brands with product positioning as they look to optimize product performance.
The Role of Agencies
Agencies are increasingly being used by brands, especially smaller brands that don’t have the capacity to develop their own databases but still require access to this data. Agencies with strong first-party identity graphs are finding themselves in increasing demand.
It is becoming increasingly apparent that brands that remain focused on third-party data do so at their own peril. Brands need to act now to establish alternatives to third-party cookies, so they have these strategies in place before third-party cookies disappear from the landscape.
It is likely to be the smaller brands that bear a disproportionate burden. Without the resources of the larger players, partnerships will become key if they are to access the data they need to compete.
Some voices are notably missing from the dialogue around third-party cookies, with some of the biggest brands maintaining their silence as the debate continues. Larger brands have to a degree, been developing first-party databases, which they are already utilizing. Alongside the relationships they maintain with retailers, this will mean little change in their marketing approach. It is small to medium-sized brand marketers who don’t have the resources of the larger players who will feel the impact the most.
There has been a growing trend among brand marketers to develop relationships with their consumers directly for some time. Those that have gone down this route have laid a foundation for future marketing efforts. This is not universal, and there is an urgent need for those that have not taken the time to consider a world without third-party cookies to give it their urgent attention.