Data Strategy
April 18, 2024
The last few years have been littered with a slew of acronyms, each signaling doom for digital marketing in its own way: GDPR, ITP, ETP, CCPA, IDFA. But we’ve finally reached the ultimate acronym: RIP. When Google announced earlier this year that it would close the door on third-party cookies in its Chrome browser, the long-foretold death of cookies got a date: 2022.
Rather than treating the changes in Chrome like the tip of a far-off iceberg, marketers need to start looking at the bigger chunk of the iceberg under the water that’s much closer to the boat.
I spoke with Gunjan Aggarwal, Senior Director of Global Insights and Data Practice at Capgemini, and Ted Sfikas, Regional Vice President Solutions Consulting, NA & LATAM at Tealium, about the impact that the loss of third-party cookies will have on marketers, consumers, and what the future of digital marketing will look like.
Cookies have been around since 1994 and were created as a way to help early e-commerce sites have insights into the customer experience that they were missing out on. This gap in knowledge left them at a big disadvantage to the brick and mortar stores most people preferred at the time.
Third-party cookies, like their first-party counterparts, are simply text files that store data about your web experience on different websites. They allow data to persist between web pages. like whether you’re logged in or your privacy settings. They provide significant boosts to the user experience, but third-party cookies have come under scrutiny lately as consumers become more concerned about privacy.
“First-party cookies are created and controlled by the web domain you visit,” explained Ted Sfikas. “Website owners create first-party cookies to collect analytics data, remember site settings, and provide other technologies with fundamental user data. Critically, first-party cookies can only be read by the domain that set them, and cannot be read by other websites when the user navigates away to other sites.”
The reason we’re not also talking about the death of first-party cookies is that they don’t follow you around the web for the purpose of cross-site tracking; they’re critical for providing a smooth web experience on a specific domain for a specific brand or technology. Third-party cookies, on the other hand, enable cross-site data tracking for a technology solution that may have originated from one domain, but collects data from many.
“Third-party cookies are created and controlled by domains other than the one the user is currently visiting,” Sfikas continued. “Third-parties create third-party cookies so that their external technologies can access the user’s data within, while that user is on one or more brands’ websites. This is what has traditionally made cross-site tracking, retargeting, and ad-serving techniques possible.”
For marketers, these capabilities have made it easier to display more relevant advertisements to more relevant audiences, but with access to these cookies closing rapidly, the time to make changes is now. (Apple’s Safari and Mozilla’s Firefox browsers have already closed off access to third-party cookies, but they have much less traffic than Google’s Chrome.)
For the last few years, marketers have been playing whack-a-mole with the changes to how browsers handle first and third-party cookies. But 2022 marks a point-of-no-return.
“It’s certainly a big disruption for the marketing landscape to absorb, but the sense I’m getting is that it’s a natural step forward as part of a larger movement that has been taking place for years,” Sfikas explained. “Especially in light of privacy regulations which put a spotlight on the way data is captured, stored, and accessed by companies; the death of the third-party cookie represents the transfer of control from marketing technology to the customer.”
Just because third-party cookies were a big part of digital marketing’s history, that doesn’t mean they were the best part of it. As mentioned above, privacy regulations like the EU’s General Data Protection Regulation and the California Consumer Privacy Act have sought to limit cookies as a way to protect consumers. These protections gave rise to the omnipresent cookie banner on websites asking you to accept or deny the website’s use of cookies.
For all of their uses, third-party cookies have been an imperfect tool for marketers, leading to several recurring problems.
“Third-party cookies are time-bound and domain specific, so synchronizing them for effective tracking is complex,” Gunjan Aggarwal explained. “Advertisers should hope for a 60% cookie match rate between an advertising supply-side technology (Demand Side Platforms) and a data provider (Demand Management Platforms). Advertisers always have to adjust their expectations for the best targeting and dial-down their KPIs. Secondly, most ad servers are simply counting the number of cookies they can sense for impressions and clicks. As cookies are constantly deleted and there’s an inability to use cookies between devices, impressions are typically overstated and conversions undercounted.”
The effects of these problems, Aggarwal stated, include wasted ad spend and wasted time in incremental frequency capping and suppression activities.
Without third-party cookies to rely on, brands must look for new ways to tackle digital advertising. Rather than seeing this as an end, brands should look at this as an opportunity.
“It’s an exciting time for this paradigm shift,” Sfikas argued, “because people have been expecting brands to respond to their concerns about data privacy for many years. Brands have finally connected their Privacy and Customer Experience initiatives through new innovations in governance and automation, combined with existing security techniques that meet the requirements of digital advertising today.”
The new paradigm of marketing customer experience will require companies to have total ownership of their data, from collection to activation. Marketers need to step up their diligence when it comes to privacy and governance, which will require closer collaboration with technical and legal teams. The result will be not only a more privacy-focused approach, but also a closer relationship to the consumer because first-party data will be the currency of the realm.
The move towards first-party data will mean marketers have to reimagine parts of the customer experience. Authentication and privacy preferences will be critical steps towards capturing the data necessary to create lasting relationships with consumers.
In a world where individuals can sue companies for mishandling data, companies will want to ensure that the data they’re using is tied to individual profiles and their privacy permissions, which will make identity resolution more important than ever.
“In the new marketing landscape,” Aggarwal said, “marketers and advertisers need to link and activate their customer data to more persistent IDs such as email, phone numbers, and customer IDs.” With the right technology, Aggarwal argues that companies will need the following strategies to stay relevant in a cookieless online environment:
The way forward for most companies will be primarily a deterministic attribution model: tying activity to a definitive identifier like an email. Probabilistic modeling, which creates attribution through fuzzier data points like IP addresses, will continue to drive value for brands, and continue to expose likely marketing attribution metrics, although third-party cookies will not be involved in those algorithms after their extinction.
“There will be no single replacement for third-party cookies,” Aggarwal continued. “Customer Data Platforms (CDPs) are an alternative, but they have to be supplemented with the right technologies. CDPs will empower marketers to handle customer information, meeting privacy compliance as well as promoting cross-channel personalization. That’s because CDPs have identity resolution technology that enables marketers and advertisers to unify these first-party data across identities and devices, whether online or offline.”
There are many CDP vendors today, with myriad approaches to solve the problem of customer data. But when it comes to valuing privacy and enabling marketers to pivot as cookies disappear, CDPs that place a premium on unifying data will be an invaluable asset to marketers.
“Today’s CDPs that put data first can overcome the loss of third-party cookies if the technologies that require third-party data acquire it with compliance in mind, while at the same time, effectively take advantage of modern techniques, like server-side data collection, to maintain signal resiliency,” Sfikas explained.
In other words, a technology that relies on third-party cookie data can continue to work. However, brands need to use new data collection approaches to encourage consumers to provide their information with a value exchange that can be maintained. Customers need to understand why they’re giving marketers their data. And that convincing will take a diverse group within organizations.
“It does require new ways of working with each other,” Sfikas said, “and that’s the exciting part. It’s the first time in our history that we have emphasized such a diverse group of professionals across Legal, Marketing, IT and Infosec to partner like this, and the beneficiary is the customer.”
“The process of consent management is a new engagement journey which runs in parallel with other regular engagements with consumers,” Aggarwal explained.
Tying consent data to customer data— using technologies like Consent Management Platforms and Customer Data Platforms— will be the key to unlocking the marketing of the future; a future where marketers see advertising and personalization together under the joint purview of customer experience and privacy initiatives.
Without joining these two initiatives together, marketing attribution will become more difficult. The loss of demonstrable ROI will lead to a loss in marketing budget— even if what marketers are doing is working.
The fruit of this labor— pivoting to a first-party data strategy and using a new set of tools to replace the functionality of third-party cookies— will ultimately lead to consumers trusting your brand more.
“Third-party cookies gave the impression that the decision was being made for consumers— nobody could really quite remember giving the brand the permission to show ads to them while on news sites and social platforms,” Sfikas said. “Major data breaches in the last decade led customers to demand more from brands.”
Brands focused on building trust with their customers are looking at data as a strategic asset; if you can show that you’re responsible with customer data and using it to improve their experience, rather than just your bottom line, customers will be more likely to trust you and remain loyal to your brand.
“The customer experience undoubtedly improved for brands who could present the choice of data profiling and usage genuinely and articulately,” Sfikas continued. “Consumers now see why their data is important and that will lead to implicit motivation to share it.”
The time for marketers to address the loss of third-party cookies is now. Learn more about a first-party data strategy in our ebook, “It’s Time to Change Your Data Strategy: Shifting to First-Party Data for a Better Customer Experience.”
