Your typical Chief Marketing Officer has a lot on their plate right now, so the third-party cookie loss may not be at the top of the list of concerns for all of them. But it probably should be.
Let’s start with the basics: third-party cookies are text files that store data about web experiences across different websites, and since the dawn of the modern internet they’ve helped inform companies about the people who visit their websites. While third-party cookies can provide significant boosts to the user experience, they have come under scrutiny lately as consumers become more concerned about privacy.
That’s one reason why browsers are doing away with them, with the largest browser (Google Chrome) set to be the last one to deprecate third-party cookies in 2022, which feels like a lifetime away but is basically tomorrow. But upwards of 1/3 of the data companies used to collect is already gone because other browsers like Mozilla’s Firefox have already squelched the cookie.
We’ll get into the consequence of this more below, but it’s important to take this fact in context of the world today. Consumers are more aware than ever of the importance of data privacy. On the other hand, personalization is crucial in the eyes of consumers. One study found 72% of consumers will only engage with personalized marketing messages, despite 86% being concerned about data privacy.
Layer on top of that the fact that the continued pandemic lockdowns have supercharged digital engagement this year. Companies are relying on digital advertising more than ever. Social media ad spend is up in Q3 27.6% globally compared to the same period last year, despite marketing budgets being cut at many companies.
The loss of third-party cookies from Firefox and other browsers today are the canary in the coal mine for the challenge CMOs will face in the future: a loss of data coupled with the need to increase digital advertising to remain competitive through a period of rapid digital transformation for many industries.
Let’s break down the direct effects of third-party cookie loss on the marketing team before we get into other considerations for CMOs. According to Digiday Germany, there is a direct trickle down effect tied to third-party cookie loss.
- Practitioners responsible for programmatic advertising that relies on third-party cookie data will see a 70% drop in attribution for ad spend as that data source dries up.
- For Managers, Return-on-Ad-Spending (RoAS) will drop 20% or more as KPIs deteriorate.
- For CMOs, up to 10% less will be spent on ads as the provable RoAS drops.
- CEOs will notice a top line revenue drop of 15% over time.
The picture painted here shows what will happen without any mitigating actions taken to address third-party cookie loss. You’re certainly not going to do nothing. But if you aren’t doing something now, this reality is already happening.
CMOs are already seeing budgets diminish as companies spend more conservatively through the uncertainty. But digital advertising is more important than ever to reach audiences, especially for brands that typically rely on in-person customer experiences. Let’s take a look at what CMOs can do at a high-level to create a meaningful change towards mitigating the impacts of third-party cookie loss.
As 2022 draws nearer, CMOs will need to address the evolution of digital advertising. The overarching change will be a strategy that relies on first-party data instead of third-party data. (We’ve talked about this at length in our ebook on shifting to a first-party data strategy here.)
For many companies, the change to a first-party data strategy will be driven by a Customer Data Platform, which makes it easier to aggregate a single view of the customer and take action on those insights. For CMOs, a Customer Data Platform will help them build a marketing strategy that starts with data they already know and have consent to use, which is doubly important as more privacy regulations kick into effect. While it can’t make up for the data that’s being lost as third-party cookies disappear, a first-party data strategy will be key towards transitioning to a world without third-party cookie data.
Here’s some things CMOs and marketing teams should consider now to set themselves up for success in the months and years to come.
1. Think About Authentication and Consent
The loss of third-party cookie data will need to be augmented by an increase in capturing first-party data with consent. First-party data will be a common basis through which to target (or retarget) advertising, and having the best possible historical data to work from can help provide insights in 2022 when it will form the backbone of your advertising strategy.
Set yourself up success by encouraging visitors to authenticate and give consent to first-party data collection. A trove of context-rich data will help your marketing team provide a better customer experience today and tomorrow.
2. Get Your Attribution Reporting Updated
As third-party cookies disappear, it’s time to reevaluate whether you’re still getting accurate attribution data. The inability to get cross-site data from third-party cookies is likely already impacting your ability to understand the impact of your ads, even if you’re not seeing the full scope of that data loss yet. Are they making an impression on viewers who may not take action in the moment? What percentage of your web traffic uses non-Chrome browsers? Is Apple’s ITP and other privacy changes limiting your cookie durations and causing you to overestimate traffic and influence?
Get the full picture of what’s happening with advertising KPIs and adjust to give the best sense of what’s really happening.
3. Re-evaluate Where Your Spending
If your advertising strategy relies heavily on third-party cookies to demonstrate efficacy and your not able to measure success, it may be time to re-evaluate how that money is being spent. Calculating RoAS may be difficult if you rely on impressions to determine behavioral ad performance, but contextual advertisements (i.e. tied to keywords and content) or advertisements focused on returning audiences (using first-party data) can provide a better picture today.
It will be a strange time for many marketing teams as the third-party cookies slowly fade away then disappear. CMOs need to be thinking about maintaining performance over the next 12 months while aiming towards a long-term solution that will carry the company through the next five years with a first-party data strategy.
Take the sting out of third-party cookie loss by shifting to a first-party data strategy. Get started today with our helpful guide!
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