Advertising based on a person’s internet habits is so effective because it connects needs with solutions – sometimes in real time. Clearly, it’s far superior to the days when businesses paid primarily for audience reach, hoping somewhere in the crowd, they would connect with the right person at the right time.
Up until now, at the center of this process has been web cookies, the small files embedded in websites that enable the tracking of a user’s online movements. Third-party cookies, which can track behavior across multiple websites, have given marketers a wider window to see more deeply into their target audiences.
But, third-party cookies are exiting the world wide web and taking many marketers’ go-to advertising strategies with them. When it comes to cookies, it’s time to start thinking about new advertising plans.
Why and When Are Cookies Going Away?
Amid growing online privacy concerns, Google initially announced plans in 2020 to phase out third-party cookies in its Chrome browser (the leading internet browser in the world) by early 2022. The plan was to develop more privacy-friendly alternatives with input from the broader advertising industry.
But, moving away from cookies hasn’t proven to be simple. Last summer, Google delayed the move by another year, citing the need for more time to work with partners to improve proposed solutions and get the ecosystem right. It looks like the plan to phase out cookies will happen in two stages. Beginning in late 2022, once testing for solutions is complete and the necessary software is available within Chrome, developers can start to transition to alternatives. Beginning in md-2023, Google will officially begin to phase out support for cookies.
Though the official end of cookies has gotten a bit more time, marketers need to prepare now for the impending cookie-less future.
What Comes After Cookies?
Google is currently evaluating a number of privacy-focused proposals to replace third-party cookies. One that gained attention was proposed by Google itself and known as FLoC. It used machine learning to group web users into “cohorts” by interest – but after widespread opposition, it’s now dead.
Google has just begun to share details about a new interest-based advertising plan called “Topics API.” Based on a user’s browsing behavior, Topics will determine the handful of topics that represent top interests for that week. Information is provided to advertisers without personal identifiers, and topics are deleted after three weeks. Google is building in controls that allow a user to see the topics, remove any they don’t like, or disable the feature entirely.
We will continue to learn more about potential cookie alternatives this year, and marketers should be ready to adapt. At the same time, many marketers are shifting to strategies based on “first-party data.”
Marketers’ Move to First-Party Data
Even after third-party cookies go away, first-party cookies will remain. What’s the difference? Third-party cookies are placed by a party other than the site you are visiting. They are commonly used for things such as retargeting, tracking browsing behavior across numerous websites, and determining which ads are served on sites with advertising platforms. As an example, when someone has browsed a product or service on a company’s website, third-party cookies allow marketers to target that person with ads on other sites to move them toward a purchase.
First-party cookies are created and stored directly by a website. These are what allow businesses to collect customer data such as their behavior while on the website, and remember user preferences such as login information, which pages a user has visited, or if they previously placed products in a shopping cart. The data a business collects about its own customers is extremely valuable to a business – but it is more difficult to get the breadth of desired information firsthand than it is from a third party.
Marketers should start prioritizing first-party data collection now. This means evaluating all of your collection pathways – not just your website! This might include mobile apps, social media, or loyalty programs.
Additionally, marketers can look into a rapidly growing concept: First Party Media Networks or Retail Media Networks. This is where brands with a large reach allow partner companies to advertise and gain insights from their audience. For example, Walgreen’s launched the Walgreen’s Advertising Group, which gives partners access to Walgreen’s first-party dataset built from its more than 100 million loyalty program members.
Amid these changes, data will continue to be at the center of the most effective advertising strategies. If it’s time for your organization to begin, or rethink, the best data-driven marketing efforts, we’re here to help. Here’s how to schedule a conversation!