Big tech experts sounded the alarm on the monster AI algorithms in the viral Netflix documentary “The Social Dilemma”. These experts made clear what many people already knew: If you’re using something for free on the internet, YOU are the product. But, until recently, this value exchange was never clearly explained. Newer data privacy laws aim to change that by exposing how companies are using personal data and empowering internet users to protect their own. In early 2020, Google announced its plans to block all third-party cookies, text files that help to identify internet users, by 2022. This leaves major online advertising systems and advertisers scrambling for an alternative.
What’s the Big Data Deal?
User data drives relevant online marketing. Advertisers demand relevancy in their messaging to increase the efficiency and efficacy of their campaigns. In other words, advertisers want to target ads to the people most likely to buy their products, using all data available to them. Likewise, websites want to maximize revenue on the content they’re producing by having the highest paying ads on their site. Since advertisers pay more for views that align with their target audience, websites offer data targeting those impressions.
Let’s be honest, when visiting a website that notifies us it has cookies – we all blindly hit the ‘accept’ button and move on – having no idea what we just agreed to or even just what a “cookie” is. We’ll start first by breaking down first-party cookies (like your favorite sweet snack, there are multiple kinds).
When people use a browser to visit a brand’s website, a tiny text file is saved on that user’s computer. This text file is called a “cookie” and can be referenced during future site visits to manage and personalize a user’s experience. The cookie contains information like language settings, things you put in your shopping cart, login info etc. Because the website itself put the cookie on your computer from its domain, it is called a first-party cookie.
Since first-party cookies are purposefully private and only shared with a site’s owner, website creators share their cookie data across the web in an effort to learn more about their visitors. These owners work out a deal with data providers that allows a pixel (a tiny graphic) to be requested from a separate, third party, web server. Hence the name, third-party cookies.
The Power of Third-Party
Third-party cookies benefit site owners by allowing them to better target ads and display content based on data gathered by the third-party web server as a visitor spends time on other sites.
Third-party cookies are currently the primary solution for driving relevancy in browser-based online advertising, but they are often created without a user’s full acknowledgement.
A Cookieless Future
As the federal government has been slow to enforce privacy regulations, individual companies have taken the lead.
Apple started the effort in 2017 with the release of Safari 11 which included their Intelligent Tracking Prevention (ITP) privacy feature. Other major browsers like FireFox followed suit in following years, blocking third-party pixels by default.
While these moves made an impact, Safari and Firefox combined represent just over 20% of browser utilization. Google’s Chrome represents closer to 65%. If Google successfully removes third-party cookies by 2022, a major shift in the advertising ecosystem will be needed
in order to both maintain identity and deliver the relevancy that websites and advertisers have come to depend on.
In 2020, Apple announced that its upcoming operating system iOS 14 would prompt users using apps to confirm whether they would allow apps to track them. It’s a simple choice for an internet user, but a choice that delivers a direct blow to ‘free’ apps like Facebook and Google that make their revenue by selling location and other data.
Big Tech has been increasingly in the crosshairs of the federal government. A move by Google to block third-party cookies will directly benefit the company’s advertising business because Google has first-party data that can still be used.
As Apple blocks apps monetized by data incentives, those apps begin to charge, which generates fees for Apple. Strong cases can be made on both sides that they are anti-competitive at a time when appearing anti-competitive is seen as a disadvantage for companies. Only time can tell.
In any case, it’s important for advertisers to begin considering what the future looks like in a post cookie world.
Things to Consider:
- First-party data will continue to be important and ownership of it can create a competitive advantage. Maintaining a persistent identifier, like email, that customers (consent to and) use when they interact with your business will help you better navigate the transition.
- Consider tactics that are effective without significant third-party data. For example, instead of behaviorally targeting prospective buyers, try contextually targeting sites with content that delivers insights into buyer intent.
- Choose media partners that are not limited to single platforms for their delivery. There will likely be significant differences in capabilities and data targeting as these changes roll out.
- Be prepared to iterate on measurement methodologies and insights. There will be increasing attribution loss in the coming year and successful brands will not overcorrect on the signals they are getting during this transition.
- Choose an agency that understands this complex and dynamic environment. The right advisors through this transition could result in significant advantage.