Has the omnipresent ‘death of the third-party cookie’ narrative stirred modern marketers into action and entailed a data strategy to address future targeting needs? What’s the best approach to build for reach and scale without compromising on privacy and compliance? How do emerging alternatives to third-party cookies – such as Universal IDs – stack up? We check in with industry experts.
If you are in marketing, you will have read about the ‘death of the third’-party cookie by now. The third-party cookie has been the dominant way for advertisers to target their best prospects and measure advertising performance, for several years now. But with Firefox and Apple Safari already having phased out third-party cookies, and Chrome ready to follow suit shortly, all stakeholders of the adtech and wider marketing ecosystem are searching for the optimal way to continue tracking digital behavior of their prospects. As customer experience (CX) grows as the single most important differentiator for brands to engage and retain their customers, the need for such insights is unquestionable when it comes to both acquisition and retention. It is the only way for marketers to ensure their messages or offers are relevant and timely across channels. It also ensures that advertising dollars are spent optimally, without irrelevance or repetition across customers and channels.
As a result, modern marketers need to consider three key pillars as they develop new data and targeting strategies to thrive in a cookie-less world.
1.Doubling down on first party data: Consent-based gathering of visitor data on owned properties – first-party data – is the most foolproof way to gather customer and prospect behavioral data. However, while first-party data is absolutely critical for retention and optimizing the CLV of existing customers, it seldom provides the scale needed for prospecting and new customer acquisition. While finding ways to scale first party data would be an important long-term strategy, in the short and mid-term, marketers still need ways to drive reach outside of their own ecosystem. With third-party cookies no longer an option, marketers need to look at a wider net of options.
2.Finding the optimal combination of solutions for targeting and acquisition across channels, devices and platforms. Aside from walled gardens (Facebook, Twitter), and large publishers with a high-volume of traffic (Amazon, TripAdvisor) who are only going to see advertising revenues increase, some viable alternatives to third-party cookies are emerging. These include the much touted Universal IDs, second-party data, zero-party data, private marketplaces, and in the B2B context, superior intent data at the individual and account levelOpens a new window , provided by specialist service providers. Conor Ryan, Co-Founder & CIO at StitcherAdsOpens a new window tells Toolbox that even though it’s no secret that we are entering a cookie-less world, the current methodologies are very fragmented and siloed. Picking Universal IDs as a safe investment bet, he says, “Customer Data Platforms are leveraging Universal IDs for deeper enrichment through first-party and offline data. For omnichannel marketing platforms like StitcherAds, the vast adoption of Universal IDs will not just fill the void of traditional cookies but serve to unify tracking across the multiple paid media platforms we engage in such as Facebook, Snapchat, and Pinterest – making targeting and measurement more seamless.â€
3.Building for a privacy first world: Both consumer awareness and governmental regulation around data privacy are rising fast globally. While customers want delightful experiences from brands, they are very selective about sharing data and getting increasingly critical of companies and brands that do not show a healthy respect for their data. Regulations are putting an increasing amount of curbs on what is even possible with data collection and its subsequent usage. Marketers need to build their data and identity strategies around a core of privacy and compliance right from the start. Unfortunately, according to this 2021 customer engagement study by Merkle, just over half of marketers (59%) claim to have a very clear understanding of the impact of privacy-related restrictions on their systems and operations. Executive growth advisor and serial entrepreneur Anand Thaker, considered by many as the Midas of Martech, cautions, “Leveraging deterministic data takes UID owners even closer to collectively owning identifiable customer data.While breaches are always a concern, ensuring data integrity and accuracy, regularly audit procedures, and security procedures for access will be needed.â€
While the next steps are clear, the path is challenging as there are no proven ways to do what the third-party cookie used to allow marketers to do. Even though that method too was often riddled with inaccuracies and challenges of its own, it worked quite well to address targeting and reach at scale. Matthew Kenyon, VP, Brand Strategy, Stirista reminds us, in this opinion piece, that ‘outside the walled gardens, advertisers and publishers who utilized third-party cookies to expand their customer base have been largely shooting in the dark. These cookies make probabilistic assumptions about user profiles based on behavior and demographics, with tentative linkages between different datasets. The result: often inaccurate profiles, dirty data analytics, and annoying ads that follow you around the web. It is almost an act of mercy that browser makers and privacy laws are now signaling that third-party cookies are heading for oblivion.’ As an alternative, he suggests hashed email IDs and good old IP addresses will make a triumphant return to the spotlight in the cookie-less world.
The power of the email ID is echoed by Kerel Cooper, CMO at LiveIntent, who adds that “the first party data strategies that publishers and marketers adopt to thrive in an era without third-party cookies will be a combination of many different solutions: Universal IDs, Identity Frameworks, proprietary IDs – and at the heart of each of these will lay the email address. Any first party data solution will require teams to work across their organization. The foundational data may sit in the marketing department but that marketing department will have to work with the content team, advertising department, operations and others to build a holistic strategy.â€
Despite the urgency of the fact that the death of the third-party cookie will severely impact aspects such as personalization, frequency capping, behavioral targeting, retargeting and overall customer acquisition, this study by Aroscop and Brand Equity released in late 2020 found that only 8% of the respondents have deployed alternate solutions to prepare for the shift. We checked in with identity and privacy expert, and Founder of the CDP Institute, David Raab, on which alternative user identification data mechanisms (to replace traditional cookie tracking) he is excited about. His response confirms that marketers need to develop a combination of approaches to bridge the third-party cookie gap. “I can’t say I’m excited about any of them, in the sense of providing an adequate replacement for third-party cookies and device IDs†says Mr. Raab. “Most alternatives are based on an email address, which some identity graph vendors connect to device IDs for broader coverage. The problem is you’re out of luck if you lack an email address to start with, so coverage is inherently limited. The only real alternative is ‘browser fingerprinting’ but that violates privacy regulations in most circumstances. We’re seeing other approaches such as Google FLoC, which enable fairly precise segmentation without revealing individual identifiers. That’s probably the best bet for broad coverage so long as you don’t really need to know the exact identity. There are also panel-based solutions that will give information about samples of consumers; those are good for some things like performance measurement.†When it comes to the privacy and security concerns that remain for any significant adoption to these emerging solutions, he highlights, like the Merkle survey, the lack of consensus and awareness among marketers themselves. “There’s substantial uncertainty about what the regulators will in fact determine is permitted. At one extreme, the European Data Protection Supervisor has argued all targeted advertising should be bannedOpens a new window . Less dramatic, the GDPR regulators have already determined that cookies and IP addresses are personal identifiers and, thus, need consent to collect and use. The main issue is coverage (reach), which will diminish as consent requirements are more fully enforced. Similarly, the GDPR regulators haven’t really begun to challenge proper legal justification for many uses of collected personal data and many companies are using dubious justifications that would likely be rejected. Of course, some people just don’t want to be tracked at all, and they’re likely to be upset if they get personalized advertising regardless of whether the underlying data was collected legally.†he concludes.
The Outlook for Mobile-First Marketers
For mobile-first marketers, the challenges are no different. Device IDs, the mobile equivalent of third-party cookies, are also facing a similar phase out. Itai Cohen, VP Marketing and Corporate Strategy, Fyber, the monetization platform for mobile publishers tells us that the ‘current climate around privacy is clear – users have more awareness and regulation is evolving rapidly. With this trend, any type of persistent identifier is inherently under risk of further regulatory scrutiny and privacy policy changes by companies. Changes in the underlying technology, like those implemented these days with SKAdNetwork and the IDFA, will hinder the effectiveness of a persistent identifier. This is why CMOs should acknowledge the benefits, but also the limitations of universal IDs, and at the same time explore non-personalized alternatives for mobile advertising, such as contextual targeting. Unlike contextual targeting on the web, which is content-focused, mobile apps offer contextual targeting that leverages a wide array of parameters to evaluate the likelihood of an ad to perform well without revealing any personal information about the user. These parameters do not enable advertisers to identify a specific user or device, but only the context provided from a user’s engagement – understand a user’s propensity to engage based on various signals.â€
Either way, as Mr. Ryan from StitcherAdsOpens a new window reminds us, “Privacy will remain at the forefront of consideration when it comes to alternative identification mechanisms.†Advertisers need to be sure that whatever solutions they’re utilizing – whether for Universal IDs or even first, second or zero-party data – align with consent management systems for GDPR and CCPA compliance. To this end, entities in the advertising and publishing communities are coming together to provide more robust solutions that also address data privacy concerns. For instance, the Pubmatic and Liveramp Identity Hub integration, or Dynata’s integration with Google Ads’ Data Hub.
The bottom line is, no one way is going to be enough. Mr. Thaker adds that CMOs “will need to recognize what each of the emerging UIDs will offer in quality and quantity of information. Each may match thier goals differently and use of multiple ones may become an option.†Marketers are being challenged to think about what combination of emerging solutions will work best for their needs as they build out their next-gen data, identity and targeting strategies. The most successful of them will be aiming for accuracy, reach, and scale; even as they ensure that they do not compromise on privacy, compliance, and brand safety.
As a keen marketer, what’s your solution approach looks like for consumer targeting in the new cookie-less world. Share your thoughts with us on FacebookOpens a new window , TwitterOpens a new window , and LinkedInOpens a new window .