Prepare for a cookieless future
The death of the cookie has long been rumored and feared in the advertising world. Growing consumer demands for privacy are leading to browsers implementing bans on third-party cookies. And although the absence of third-party cookies will ultimately promote more privacy, digital marketers will soon be faced with the challenge of targeting users and measuring the success of campaigns without them.
Basis Founder and CEO Shawn Riegsecker says, “This is not the end. It’s not doomsday. I believe this is an opportunity. We are an industry filled with innovators, optimists, and consumer-centric problem-solvers. Advertising was around long before the cookie, and it will be here long after. There’s no need to panic. Instead, let’s focus on the two sides of the equation, our industry’s main stakeholders: marketers and consumers.”
No doubt about it, navigating the cookieless world will be a new challenge. However, there are things advertisers can do now to prepare and be equipped to tackle the issue. The cookieless world will also present the opportunity to better connect with consumers by providing more meaningful and personalized experiences.
Cookies collect user data that allows companies and organizations to track those users across websites, serve relevant ads and review advertising performance. Cookies can be helpful to website users by remembering things like preferred language or items in a shopping cart.
Just as there are a variety of Girl Scout cookies, there are also different types of internet cookies. First-party cookie data is data that is collected directly from an audience. This data is created by a website the user visits and generally enhances their experience. These are the cookies that recognize you at sign-in or remember what items you have in your shopping cart.
Third-party cookies are created by parties other than the website owner. Most of these cookies are created by advertising companies to help them track consumers across sites so they can see what you are interested in buying. Or to retarget products to you – perhaps you looked at an air fryer on Amazon, and suddenly you see an ad for an air fryer everywhere you go online – that’s retargeting.
There are two more lesser-known types of cookies – second-party and zero-party. Second-party cookies are purchased or traded from a first party. Zero-party cookies are lesser-known but are thought of as information a user volunteers to a brand in exchange for something that might improve their experience. For example, you share your zip code with Pandora while creating an account, but then you also tell Pandora you like jazz music so they can better curate lists for you. Some marketers call the jazz input zero-party data, and some still call it first-party.
Google has announced they will end their support of third-party cookies late in 2023. But in fact, cookies have already begun disappearing. 30% of advertising impressions are already unreachable due to privacy changes on Safari, Firefox, Apple iOS and others. But this will increase two to three times in the next year with Google’s upcoming changes because a majority of users prefer Chrome as their browser, according to TechAdvisor:
Changes in 2021 to Apple’s iOS also have impacted cookie tracking. Users now need to opt-in to app tracking, and so far, only about 18% have. And iOS devices account for 57.8% of mobile devices in the United States.
While the demise of the cookie may be celebrated on the consumer side, it has already begun presenting roadblocks on the advertising side. With the loss of third-party data, advertisers are losing the ability to target consumers based on information about their behaviors. This leads to less precision in social as well as programmatic advertising.
The social conversion lookback window has also been shortened. Facebook shortened its 28-day attribution window to seven. This will lower conversions that an advertiser can attribute to their campaign, thus raising the cost of conversion.
Retargeting with third-party data will become obsolete. And retargeting ads are effective and cost-efficient because they are relevant to users. Frequency capping will also be a thing of the past, so users could be under or overserved ads, leading to inefficiencies. Search cost per clicks are likely to increase as well since audience insights will not be able to be applied to campaigns to help with smart bidding.
The Internet Advertising Bureau (IAB) notes that industry leaders are already seeing increased CPMs on iOS and Android due to shrinking addressable audience inventory:
The rise of contextual targeting will continue as well. Contextual targeting is placing ads on websites that are directly relevant to the product being sold in the ad. For example, if you sold Caribbean cruises, you may want to advertise on a travel website that has a section discussing the Bahamas.
According to the IAB, the industry has a false sense of security, although, “Over 75% of the industry claims to be prepared for the loss of cookies and identifiers, most are not taking the necessary steps to adapt their data approaches and operations.”
Despite the end of third-party cookies drawing nearer, third-party cookie data expenditures actually increased 8.1% from 2020 to 2021. So clearly, most advertisers are taking a wait-and-see approach.
We recommend that advertisers take action now with four critical steps:
Do not panic, but do start to take steps now. Because third-party cookies have already been weakened, they are not the strongest marketing tool. The best thing to do is to stay up-to-date on news regarding third-party cookies and privacy changes. Start shifting your advertising strategies now, so you are prepared for the end of 2023. Sign up here to receive ongoing updates from KW2 on the cookieless world ahead as well as insights into all realms of marketing, media and research.