The end of the cookie

Google’s announcement that it will reject third-party cookies next year was hugely significant and has prompted much existential dread about the future of data-driven marketing (DDM).

But the death of the cookie isn’t the only cause of DDM’s demise. In fact, DDM as we’ve known it has been going through a slow, painful death for a number of years.

Apple’s Intelligent Tracking Prevention was introduced to the Safari browser in 2017, one of the earliest moves to limit interference in consumer privacy by the ad tech ecosystem. Mozilla Firefox followed suit.

Such pressures have already pushed the cookie to breaking point even before the Google announcement. An analysis of 20 advertisers conducted by ad serving firm Flashtalking in 2018 found that 64% of their cookies were either blocked or deleted by web browsers. Rejection rates on mobile devices were particularly high – 75% of mobile cookies were rejected, compared with 41% on desktop.

All this indicates that the epitaph for data-driven marketing as we’ve known it was, arguably, already chiselled some time ago.

The question is what comes next and how should advertisers prepare?

There are many initiatives out there seeking to establish a replacement to third-party cookies. Google’s Privacy Sandbox has proposed various ideas, such as Federated Learning Cohorts (or FLoCs) and Private Interest Groups Including Noise (or PIGIN).

Others have either modified these proposals or come out with alternatives.

Advertisers are beginning to rally behind an advertiser-centric approach, driven by the ANA with the support of WFA and other groups. The initiative is called the Partnership for Responsible Addressable Media. PRAM, as it’s known, seeks to establish new means of addressing consumers in a privacy-centric fashion.

While such initiatives develop, the natural focus for advertisers should be on first-party data and first-party cookies – the goal should be to establish more direct relationships with your consumers.

First-party data is becoming the critical ingredient for clients for all key phases of programmatic operations, from audience targeting and segmentation to optimisation, to measurement and attribution.

Such assets can be bolstered via partnerships with trusted publishers that are open to first-party data sharing. Initiatives such as private data clean rooms will potentially become more important than ever.

It is hard to scale these arrangements up to the levels desired by many brands but they are certainly something to consider.

One alternative point of view is that advertisers should simply abandon the pursuit of precision. Instead some in the industry argue that advertisers will achieve more of their desired business outcomes from digital marketing:

• by focusing on incrementality measurement,
• by slashing audience targeting costs,
• by cutting the ad tech expenses that don’t yield improved business outcomes, and
• by moving money away from behavioural targeting, microtargeting and hyper-targeting, and back to the basics of marketing.

Indeed – a recent study from The AudienceProject found that the accuracy of audience targeting varies wildly from 7% to 77%. Essentially, the data being used to create audiences may often be flawed and brands might be better off without it.

Not everyone will agree with this viewpoint but there are some advertisers who do. Recent conversations with WFA members reveal that some brands are moving away from precision in favour of more rudimentary targeting and contextual approaches.

Byron Sharp’s well-known approach of “sophisticated mass marketing” from the infamous ‘How Brands Grow’ may be back in fashion.

My recommendation would be for advertisers to hedge their bets. You should be seeking the means to bolster first-party data assets and first-party relationships; you should be keeping an on the cookie replacement initiatives; but you should also consider whether precise targeting matters for your brand.

If it doesn’t, perhaps the end of the third-party cookie isn’t such a big deal after all.