Over the past two decades, digital advertising’s rise to prominence has been swift and expansive, due in large part to the emergence of the cookie. Cookies – small packets of data stored on a user’s computer and the browser domain – have a wide range of use cases, from authenticating users to keeping track of items in a shopping cart.
Marketers and e-commerce companies have been leveraging the cookie and its insight for years, but after Google’s announcement that plans to make third-party cookies on browsers obsolete, marketers and online businesses were left struggling to determine what a cookie-less world looked like. As a company who leverages data to provide personalization and relevancy to consumers, our team has been discussing the impending industry shift since it was announced. We’ve outlined everything you need to know as the industry moves away from Cookie Based Attribution.
Cookie Tracking: A Brief History
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This access to data has propelled exponential growth in the digital advertising industry, driving over $129 billion in ad spend in 2019 within the United States alone. This number is expected to swell to $200 billion in 2023, making up over 66% of total media spend across the US.
The rise of the third-party cookie and extended access to consumer data has triggered widespread concern over lack of consumer privacy and control the individual has in the exchange of their personal information. Advertising platforms who place cookies on a webpage have the ability to track a consumer across all subsequent page visits over a potentially limitless (y) time period, developing a ‘footprint’ of an individual’s browsing habits. Many sites host cookies as a means of revenue, and can have dozens of third-party cookies running simultaneously from different clients. In response to this, both consumers and regulators have begun to demand change from the software companies ultimately responsible for the securitization of that data and its privacy.
Web browsers, the ‘first line of defense’ against third-party cookies, have come under scrutiny in recent years as not having done enough in the way of protecting consumer privacy. Historically, browsers have included options to disable third-party cookies, but the ability to do so sits behind a complicated path of settings that’s often difficult to navigate. As a result, in March 2020 Apple moved to block third-party cookies by default in Safari, becoming the first major browser to do so. Firefox was quick to follow suit, releasing a similar update in June 2020 to disallow third-party cookies as a default. As Safari (35.4%) and Firefox (4.3%) currently hold the second and third largest browser market share across all platforms, this marks a significant shift in the way that companies will be handling third-party data moving forward. Google (who originally called on the industry to make a change in a blog post from May 2019) and Microsoft are both in a unique position, as they continue to maintain advertising platforms that rely on the current system of third-party cookies for revenue. Even so, Google has announced plans to block third-party cookies on Chrome by 2022, while Microsoft has made increased efforts to simplify turning off third-party cookies on their Edge browser.
Bottom line, by 2022 90% of browser traffic will become un-trackable by third-party cookies, completely eliminating their effectiveness as a method of attribution.
What does this mean for marketers?
As close to 40% of total browser traffic (and 56% of mobile traffic) has become attribution-less in 2020 alone, digital marketers are struggling to account for billions of dollars in ad spend. Crucial marketing metrics like add to cart, purchases, cost per acquisition, and return on ad spend become unreliable due to the inability to tie conversions back to users. Stricter government regulations like the CCPA have given Californians further autonomy over their personal data, with the ability to know what personal data is being collected and the ability to deny its use. Similarly, the The General Data Protection Regulation(GDPR) regulates data protection and privacy in the European Union and the European Economic Area. As marketers have grown increasingly reliant on receiving this data to inform strategic business decisions, many are now needing to completely reevaluate how to identify and best serve their customers.
Does the death of the cookie mean the end of digital advertising? Hardly. This development simply means marketers will shift their tactics and find new, innovative solutions. Marketers can change the way they market, or ignore ad targeting all together. Of course, any good marketing professional will dismiss the latter. Without targeting, customers in Los Angeles would be shown ads for snow suits, teenagers would get ads for mortgage companies, etc. So, the solution is clear – it’s time to change the way marketers gather information, and ensure their messages are seen by appropriate demographics.
Without cookies, there are a few ways to continue targeted marketing. Contextual Advertising, where ads on the page directly relate to the content, is one solution that many marketers are turning to. However, contextual advertising has it drawbacks – too many ads on content can clutter the page and frustrated consumers, often times they will dismiss them or ignore them altogether. With the end of the data, marketers will also need to look into other data sources to enhance their acquisition strategies.
Ultimately, as the industry shifts away from third-party cookies, advertisers will have to continue to look for solutions that protect consumer privacy while also providing the data necessary for optimal customer experiences.
The Solution – Persistent Identity
Now more than ever, the market is hungry for a solution that unifies a single persistent identity in a controlled first-party environment. This solution would not only maintain consumer privacy (as data would only be collected after a consensual relationship with consumers had been established), but also deliver more customer data points to help marketing teams accurately segment, target, and attribute marketing spend – all while fostering deeper connections with their customers.
In order to keep up, brands should invest in technological solutions that have their foundation of persistent identity outside of cookies, like using email addresses for example. By starting with an email address as the main identifier, brands can utilize a persistent data point around which to construct a privacy-safe profile. Privacy compliant targeting paired with increased engagement is exactly the solution marketers are seeking as we navigate the industry shift away from third party cookie reliance and crave new acquisition channels.
Featured Image Credit: CentralITAlliance / iStock.