Internet Third Party Cookie calamity: the danger of doing nothing

Before clearing their Chrome cache and cookies, marketers will need to get a clear understanding of the third party cookie apocalypse and how to put a solid marketing action plan in place before 2022.

Learn more about Internet cookie changes and how to manage them at ADMA Internet Cookies Masterclass.

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Most marketers know the third party cookie is on its way out.

If you don’t have more than a vague plan to tackle the third party cookie apocalypse, then it’s time to act now before 2022 rolls around and you’re left with crumbs of data and potentially a dead business model.

The data-driven marketing industry has thrived on the advantages that third party cookies have offered for:

• Audience segmentation

• Personalised digital campaigns

• Tracking online consumer behaviour

• Retargeting via social media advertising

• Building lookalike audiences

• Buying highly targeted ad inventory in real time

Google and Apple’s end to third party cookies will limit the flow of users’ browsing data used by ad agencies and brokers - a trend ADMA members are referring “the cookie apocalypse” - and we are urging all our members to have an action plan in place before 2022 rolls around.

What will the end of third party cookies really mean?

At an individual user level, it’s unlikely there will be much to see as third party cookies disappear. The cookie usage updates go-live date is not specified yet but the changes are expected to be in place by 2022.

Apple’s  operating systems for iPhones – iOS 14 - disables third party cookies by default. This means that users will need to explicitly opt in to allow the third party cookies usage.

Most likely, many Apple users will not opt in therefore blocking their browsing information that the digital advertising industry currently relies on for their campaigns’ targeting and measurement .

Another tech giant Google has announced that it will block the third party cookies replacing them with the new technology developed through  the Privacy Sandbox. This technology is referred to as FLoC Federated learning of cohorts -  and it can be described as Google’s replacement for third party cookies.

More companies could clash as the cookie crumbles

The Google proposal to banish third party cookies while replacing them with its own first party “cohorts” (also called FLoC), could collect more data than third party cookies ever did.

Some groups like the Electronic Frontier Foundation say FLoC “will avoid the privacy risks of third party cookies, but it will create new ones in the process” and potentially inflame the so-called ‘black box algorithm problems’ of discrimination or predatory targeting.

Large vendors like Oracle have slammed Google’s move in the same way Facebook slammed Apple’s iOS14 changes with full page newspaper ads.

These corporate-against-corporate clashes could also unfold further down the marketing and technology food chain as the third party cookie changes disrupt existing business relationships. As parties navigate their way through change and look to find both their place and preferred model moving forward, there is potential for clashes. Publishers with their technology stack providers,  marketing agencies with their software providers and if advertisers don’t get it right, consumers may - ultimately - break up with the businesses who do not treat their data as a valuable asset.

Starved of data

The erosion of user tracking could leave some brands and businesses with no opportunity to market to their customers.

The effective and highly segmented campaigns of today - with good conversion rates and low costs per click or acquisition - may not work as third party cookies are banned from the digital ecosystem.

The American Association of Advertising Agencies and Association of National Advertisers have published an open letter urging tech companies to reconsider the third party cookie stance until there are alternative technologies available.

What will marketing be like beyond the third party cookie?

Marketers who want to continue to take advantage of personalised marketing after 2022 will need to have a new strategic approach for:

1. Obtaining data about  users’  browsing behaviour

2. Creating systems for building target audiences used in ads, campaigns and other marketing material that would not rely on third party cookies

3. Exploring their own technology stack and its reliance upon the third party cookie to continue functioning

Blocking third party cookies will widen the gap between the so-called ‘walled gardens’ and an open web.
More advertisers and marketers will need to rely on users’ explicit opt-ins and customer loyalty to collect data  using their own first party cookies.

OPPORTUNITY: Do you have a Customer Data Platform?

First party data collected directly by brands from their consumers is likely to be the first big change businesses will pivot towards.
Many agencies, data brokers, vendors and consultants will tweak their service offerings as more businesses will move to a direct data relationship with their consumers.

The rise of Customer Data Platforms (CDPs)  - technology that goes beyond a traditional Customer Relationship Management (CRMs) system - is likely to continue so that businesses can take a holistic view of their customers and target them directly with more personalised communications, marketing or discounts.

OPPORTUNITY: Customer loyalty programs to offer value for data exchange

Businesses and brands will want to invest more deeply in their direct relationship with customers - giving rise to more loyalty programs.
While frequent flyers and supermarket loyalty schemes have been the best examples of these loyalty programs, more brands and businesses will start their own versions.

Indeed, plenty of large eCommerce players - think of Mecca or Catch - already track and personalise their customer communications, offering clubs or discounts.

It’s likely smaller brands and publishers will also start loyalty programs to:

1. Deepen their relationship

2. Encourage more targeted offers and deals

3. Offer more value in exchange for customers’ data

OPPORTUNITY: Closed digital ecosystems like publishers and social platforms could offer higher value targeting

In the interim at least, advertising money may flow to platforms like Facebook, YouTube or large publishers, where it is easy to target within a closed ecosystem rather than rely on tracking.

This could leave publishers with younger audiences, who are not used to paying for content, out in the cold.

Ultimately, marketers can keep making money for their clients in closed digital ecosystems - or walled gardens - as long as the cost per acquisition or cost per click rates stack up. Digital Publishers and platforms that don’t deliver effective conversion rates may struggle.

The cost of doing nothing may be high

ADMA has examined the issues and believes the marketing and advertising industry must prepare to lose their reliance on personalised cookie targeting capabilities.

This could create attribution and measurement challenges within the digital ecosystem, disrupting existing practices and pricing.

It’s vital for the digital industry to continue educating its members and updating its practices to  manage the broader changes in data privacy.

Learn more about Internet cookie changes and how to manage them at ADMA Internet Cookies Masterclass.

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