What the end of third-party cookies means for advertisers
Advertisers have two years to adjust to a future without third-party cookies. For those that do it right, this marks a once-in-a-generation opportunity to deepen customer relationships and drive growth. We talked with Deloitte Digital’s Alex Kelleher and Ken Nelson to understand why.
Why is the ad industry buzzing about the impending end of third-party cookies?
This is a big deal for many brands because third-party cookies have long been a key enabler of the commercial internet and of fine-grained digital ad targeting specifically.
Third-party cookies are bits of information that adtech companies can place on a user’s device and then access over time across various websites. They allow those companies to see what a user is looking at and interacting with—providing insights into the interests, demographics, geographical location, and other information about the user.
The massive growth in online ad revenues over the past 20 years is due, in large part, to the fine-grained targeting that third-party cookies enable. For digital advertising, they have helped achieve unprecedented audience segmentation and attribution—helping to connect marketing tactics with results in ways that were virtually impossible in more traditional forms of media.
So why are third-party cookies going away?
Consumers and privacy advocates have grown increasingly troubled by the ways that some companies are using third-party cookies for user tracking without transparency or explicit consent. In particular, the advent of retargeting—the ability for advertisers to send targeted ads that show you an item that you previously looked at on the advertiser’s website—has made this kind of tracking more visible and has frustrated many users.
All of this is leading to more people using ad blockers, which ultimately threatens both the success of online advertising and the economic model of publishers who depend on ad revenue to fund their content.
So browser developers are ending support of third-party cookies in order to usher the industry forward toward solutions that provide users greater transparency and consent management.
What will replace third-party cookies?
There is no consensus—yet—on what the exact replacement technology or technologies will be. Some companies have tried techniques such as digital fingerprinting; but again, without affirmatively obtaining the user’s consent, those techniques only serve to amplify distrust rather than deepen connections.
Ultimately, I believe that the answer isn’t simply to find new ways to do the same things. It’s time for brands to collaborate with end users and consumers to create a more personalized, human online experience combined with greater control, transparency and respect for privacy.
What should brands do to adjust to the “cookieless” reality?
First, there’s no reason to panic. In fact, we see this as a huge opportunity for smart brands to deepen their relationships with customers.
Our research on emotion-driven engagement shows that consumers generally welcome contextually sensitive, coherent brand experiences. In order to create those experiences in a privacy-sensitive way, we recommend that brands should focus on three initiatives: mastering the first-party customer data that they already own, leaning in to “walled-garden” media ecosystems and bringing key data-driven functions in-house.
Let’s piece those recommendations apart. Most brands already own a wealth of customer data. What should they be doing that they’re not doing already?
Customer trust is one of the most powerful business assets that a company can own. So investing in and effectively deploying the right consent management solutions will be increasingly important in order to get more value out of first-party customer data while respecting the privacy and listening to the preferences of customers.
The other big hurdle that many companies face in fostering genuine connections with customers is the ability to understand and connect customer data across touchpoints. This means investing in an advanced customer data platform that can give you a full picture of the customer across sales and marketing, customer service, and other touchpoints.
By deploying these tools along with first-party cookies and other customer (consented) identifiers, you can elevate the human experience for customers while also earning their trust and loyalty, long-term.
You mentioned walled gardens. What are those—and why do they matter?
I’m talking about environments such as social media apps and large search and ecommerce platforms, and 360 media networks (TV/digital/radio/print/social). For the most part, those ecosystems are well ahead of other adtech platforms and publishers when it comes to consumer consent regarding the data being tracked and used for marketing, and also in terms of the machine learning they can apply to the data that they own.
We find that many brands are not taking fully advantage of the capabilities that those platforms and ecosystems can provide. And those platforms also will not be as impacted by the move away from third-party cookies as will the rest of the programmatic universe. So now may be a good time to get to know them better.
What do you mean when you talk about bringing more functions in-house?
Outside agencies and martech platforms have often been a bit of a black box for brands, in terms of providing full visibility into marketing data and analytics. As brands work to develop greater trust and stronger relationships with customers, it is becoming increasingly important to have full transparency into how marketing decisions are made and the impact that they have.
For that reason we believe it’s a good time for companies to invest into their own expert staffing, and consider bringing some functions such as media strategy and/or buying in-house. That’s definitely a process; you need the right talent and partners to be effective.
The brands that do this well can be rewarded with a more direct and clear understanding of who their customers are; what they need and prefer; and how to connect with them in respectful, genuine ways to elevate their experience and build long-term preference and loyalty.