By Katherine Burns, The University of Texas at Austin
For years now cookies have been used to track visitors and collect data in order to improve their online experience. However, in recent years users have become more aware of how companies are tracking their online activity and have pushed back on intrusive data collection.
This practice originally began as a way to save login information and site preferences but has since grown into a massive data-gathering industry that can lead to inaccurate profiles and over-serving ads to consumers.
In an effort to make a change to this process, Google has announced they want to phase out third party cookies on Chrome by 2022. Chrome is not the first to announce the phasing out of cookies, but it is certainly the largest. Other tech giants such as Apple and Facebook have also stated they are changing how users are tracked online to increase the protection of users privacy.
According to Google, “Users are demanding greater privacy –– including transparency, choice and control over how their data is used –– and it’s clear the web ecosystem needs to evolve to meet these increasing demands. Some browsers have reacted to these concerns by blocking third-party cookies, but we believe this has unintended consequences that can negatively impact both users and the web ecosystem.”
In addition to this, the rise of mobile activity has replaced web browsing cookies and marketers are at an important turning point in considering the best way to move forward.
Digital marketing is the majority of ad spending and is set to have a greater increase in 2021 due to rising vaccination rates. Companies have shown that personalization in marketing tactics are effective.
They have proven this by creating data ecosystems, investing in machine learning and measuring the success of their programs and campaigns. Over the last 20 years marketers have re-imaged customer journeys and tailored their strategies with this behavior in mind. In return, consumers now have a better experience because they receive relevant advertisements for products and more personalized offers which has built trust and increased brand loyalty.
The good news is first party data will be staying, so it is important to learn the differences between the two types of data and how to best utilize them.
An Introduction to Cookies, not the edible kind
Cookies are small blocks of data on web servers that track users’ activity and store it for better personalization and for future use.
They come in two different types, first party and third party. First party data is what is owned by that individual website or domain and collects information about users preferences, habits, their activity on your site and how often they visit.
Cookies remember this information for future visits to create a smooth process. A few of the things first party information helps with is enhancing the customer experience by saving items in their cart and remembering account login information.
Since first-party cookies are more accepted by users, only 5% are blocked so the majority of those online value them in exchange for a better online experience. First party data is the most powerful type of data and also the most valuable to marketers.
Third party data collects similar information to first party but tracks this across other websites and is not just data from that one company’s site.
Third party data also helps to retarget users across sites, target similar users from their online behavior, and links activity across multiple databases to improve customized targeting.
The problem is third party data can collect a lot of information about users without any opt-in disclosures or agreement from consumers.
Because of this, consumers have started using ad blockers and more privacy-oriented browsers. Fortunately, Big Tech is making a move in the right direction with Apple’s Safari and Mozilla Firefox also blocking third party cookies.
Since third parties fuel much of the digital advertising system and advertisers have been reliant on them for personalization and measurement, it is important that we are prepared and can adjust marketing strategies accordingly. There is a fairly equal split of first and third party data usage when it comes to what is driving personalization efforts.
We can all agree this move toward more choice and control over how our data is used is positive and could potentially help phase out intrusive ads that can be annoying to the user experience. However, if you rely heavily on third party data you may be wondering, how big of an effect will this have on advertising tactics? Luckily, you don’t have to make extreme changes in order to adapt.
What to Know Now
Google is not creating an alternative for browsing tracking in an effort to protect users, instead, they have introduced their Privacy Sandbox, which Google states can “deliver results nearly as effective as cookie-based approaches. Technology advancements such as FLoC, along with similar promising efforts in areas like measurement, fraud protection and anti-fingerprinting, are the future of web advertising — and the Privacy Sandbox will power our web products in a post-third-party cookie world.”
Their goal is for the privacy sandbox to sustain advertisements so third party cookies can be obsolete, but they need support from the online ecosystem in order to fully make this transition.
According to the Privacy Sandbox, cookies are replaced by five application programming interfaces (API) and marketers can use these APIs to receive data about conversions and attribution on their advertisements.
Chrome understands users are demanding more privacy with their data and feel if they block third party cookies without an alternative for businesses who rely on advertisements for their website, it can have unintended consequences.
This could result in workaround techniques to gather information which could further reduce user control. One of these techniques is fingerprinting which is a way for developers to use bits of information such as devices a user has or fonts they have downloaded to then create a unique profile to match users across websites.
Users are able to clear cookies but are not able to clear fingerprinting, so this could potentially decrease the amount of choice and control users have over their information. The introduction of the Privacy Sandbox and efforts to block fingerprinting are moving forward in giving users more transparency and power.
Strategies for Marketers
Since third party data can be helpful to build robust customer profiles for retargeting, marketers need to consider strategies for utilizing first party data and follow this topic closely.
The first step is to take control of your first party data and lessen the reliance on third party data. Think carefully about how your website is set up and how you can best collect visitor information. In addition to email addresses and tracking behavior, consider what will give you the best customer insights in order to create segments you can best target.
Some ways to accomplish this include collecting information from customers and prospects at login to authenticate the data, such as an email address or password.
Continuing to understand individual’s interests, preferences and behaviors will be crucial and result in better customer experiences, but it should not be the only step toward a path without third party cookies. Working to create a unified view of each customer and having the information accessible to cross-functional teams will also benefit their experience and help drive growth.
Because we spent so much time inside in 2020, outdoor advertising has been shown to now stand out more. Out of home (OOH) alternatives are more successful with younger consumers and will help drive conversions.
Advertising is about getting the consumers attention and the way to do this is by catching their eye when they are outside and not expecting it. This includes billboards, interactive ads such as QR codes or another call to action that results in impressions and engagements. This type of advertising will be key for entertainment and live music venues.
You may also consider contextual advertising and targeting which is “a form of personalized advertising that enables your Google PPC ads to appear on relevant sites.”
By matching keywords and topics, your ads will only show up to those in certain areas looking for relevant information such as restaurants or coffee shops nearby.
When you are setting up your PPC ads in Google, select specific, targeted keywords so your ad will show up on relevant sites. It is important to not get too reliant on one technology or platform so you can easily adjust when changes or updates are made, so use this as an opportunity to look at less vulnerable advertising tactics.
Moving forward in a Cookie-less future
Users now have more control over which information is shared online and advertising and marketing needs to adapt to meet this rising expectation for consumer privacy. As Chrome begins to sunset cookies and other large companies follow, marketers will be encouraged to use different mechanisms for targeting such as SSO (single sign on) and additional options that will be developed. Staying on top of cookie trends will help ensure your budget is being utilized properly.
About the Author: Katherine Burns is a communications enthusiast and Masters of Advertising student at the University of Texas at Austin. She has a diverse background in events, marketing and relationship management and is interested in social media trends and strategic communication. Connect with Katherine via LinkedIn.