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· Third-party cookies track how we browse websites providing data that shapes programmatic marketing and advertising strategies.
· Mozilla and Apple have addressed privacy issues already, now Google will follow, phasing out support for cookies at some point in 2022.
· Marketers that lean heavily on cookies for their go to market need to source privacy-conscious paths for accessing customer data. It’s the chance to ‘rewrite the rulebook and start again.’
Reading time: 4 mins
When a 23-year-old software engineer called Lou Montulli came up with a clever little text string around three decades ago, he wasn’t being evil. He was innocently trying to solve a problem about how to get websites to remember visitors - a basic tenet of the way websites work today and something we all take for granted. The path he chose - ‘first party cookies’ - was actually meant to prevent people being tracked online. But within a couple of years, advertisers had worked out how to hack his invention and the intrusive ad targeting phenomenon we’ve all been enduring for years got rolling thanks to ‘Third-party cookies’ which allowed companies to track user behavior across websites and measure the impact of an “impression.”
That cookies can be matched to the profile of a user’s interests and browsing habits means that they’re the perfect tool for targeting ads to us. We’ve all been creeped out when that Bali holiday or those pair of jeans we ‘Googled’ start following us around the internet serving us ads. For online advertisers, what was a utopian ad environment with highly measurable KPIs and statistics will crumble sometime in 2022 when Google walks away from 3rd party cookies, following the lead set by Apple and Mozilla.
But before you and your marketing team panic, know that Google isn’t turning the lights off and leaving the building entirely. They’re replacing 3rd party cookies with a group of APIs that live in what Google calls the Privacy Sandbox. Its mission: “Create a thriving web ecosystem that is respectful of users and private by default.” As 2022 approaches rather rapidly, there are many questions still unanswered and the ears of regulators have pricked up as hitherto unseen Google plans have begun to slowly emerge. What these regulators fear is that what appears to be ‘honourable’ privacy driven Google changes may actually be part of a broader strategy that strengthens Google’s position in the digital advertising landscape. Time will tell.
For Marketers without access to third party data to fuel their programmatic marketing, the impact is likely to be considerable. According to McKinsey “The loss of third-party data will leave marketers, ad agencies, and the publishing and media vehicles where advertising appears with little or no first-party data (data directly from consumers who consent to sharing it) in the dark about behavioral and demographic insights that currently help them create target audiences and segments.”
How big will the impact be? Well, that’s not completely clear. As McKinsey points out, estimates on the value of third-party data on ad revenue vary anywhere between 4 percent and 50-60 percent – while their forecast is nearer $10b ad revenue at risk in the US alone. Either way, the number is big on global scale.
Is it a disaster? That depends on the actions you take from here. As all marketers know, being lateral and nimble pays dividends.
As Glenn Thomas, former CMO of GE Healthcare, has said, marketers should be shifting away from the“‘Google Analytics’ mindset” to building custom dashboards linked to business outcomes. “Specialist marketers can geek out and optimise for their tactic, but ultimately, we need to connect the dots across the customer journey to revenue and loyalty connected metrics. Trust, auditability and speed are key so that we can experiment to drive and demonstrate impact.”
In the short term, McKinsey expects advertisers to rely more on ‘walled gardens’ (like their social networks) to drive audience targeting. And over the longer term, they expect advertisers to invest more heavily in deeper consumer experiences that enrich their first party data resources. But that isn’t going to work for advertisers that are a step or two away from retail transactions – for example, traditional consumer goods companies.For them, life will be trickier. What we do know is that all advertisers will face the challenges of having to combine data from several sources to power their programmatic campaigns while simultaneously shoring up their strategies in building better first party data.
Marketers have known for some time that cookies are on the way out and there is a sense of optimism about improving the approach to data, privacy and measurement. As the feedback suggests in Figure 1 below, there are a number of ways they are likely to recalibrate.
Adopting any or all of these approaches requires considerable proactivity for marketers in the coming months. Teams need to familiarise themselves with what the 3rd party cookie crackdown means and analyse alternatives that align with their businesses.
McKinsey sees proactive marketers engaged in the following to build strategies in the future:
1. Create consumer trust with compelling consumer experiences
Value driven experiences will pay dividends for advertisers because it will encourage their audiences to consent to sharing their data. Obviously, the kind of ‘experiences’ we’re talking about will vary from industry to industry, and for high-consideration products and services, it’s all about relationship building. For those without direct consumer connections, the answer may lie in lifestyle content.
2. Share data in partnerships
Cultivating and operating in your own ‘walled garden’ will yield valuable data, but marketers need to consider shifting budgets to new addressable media like connected TV and retail media networks. Such data partnerships will become key drivers of your marketing strategy.
3. Overhaul Data Management
Marketers need to come to terms with the need to experiment with combinations of first-party data, look closely at the tech they use to dissect the data and work on their data partnerships. Combining analysis of first-party data with aggregate data from data platforms will help project ad attribution, while contextual marketing can help marketers target audiences based on the content they’re consuming.
The last 12 months has been among the most challenging times for marketers in generations. You’ve learnt to survive, to pivot and to adapt. The 3rd party cookie challenge is not insurmountable –it should be seen as the chance to start afresh. Remember that everyone’s facing the same issue, so it’s a level playing field among competitors. As long as you focus on leaving behind old processes and look to reinvent your strategies, it’s likely that the way forward may uncover some exciting new opportunities.
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