Updated March 2021
The tracking cookie continues to crumble. Firefox and Safari already block tracking cookies by default, and not only has Google's Chrome browser joined the third-party-cookie-blocking fray, the search giant has announced that it will not roll out alternative user-level ad identifiers to replace third-party cookies.
The big question on all our minds is what marketers and advertisers will do without third-party cookies? Should you give up on marketing and pursue your passion of painting koala bears eating ice cream? You can put away the paintbrushes for now. While change is coming, marketing as we know it will survive without third-party cookies and solutions are already in the oven. Smell that? It’s the future of marketing.
Google Won’t Replace Third-Party Cookies with New Individual User Tracking [March 2021 Update]
Google has been characteristically mum over the last year on whether or not it would introduce new individual user tracking to replace third-party cookies. In early March 2021, they provided the long-awaited answer: the replacement for third-party cookies is first-party data.
Google announced that it will not implement alternative user-level identifiers to replace third-party cookies. "Today, we’re making explicit that once third-party cookies are phased out, we will not build alternate identifiers to track individuals as they browse across the web, nor will we use them in our products," said David Temkin, Google's director of product management for ads privacy and trust.
Temkin also insinuated that other cookie-substitutes being proposed across the marketing and advertising industry (as we discuss below) will not pan out when it comes to meeting evolving privacy standards. “We realize this means other providers may offer a level of user identity for ad tracking across the web that we will not — like PII graphs based on people’s email addresses. We don’t believe these solutions will meet rising consumer expectations for privacy, nor will they stand up to rapidly evolving regulatory restrictions, and therefore aren’t a sustainable long-term investment,” he said.
This is a no-brainer for Google, as they have a wealth of first-party data, or data it collects from users directly, to target ads on its own publishing platforms. This is great within the walled gardens of Google, but other publishers may feel left high and dry by this solution. However, it appears that Google will provide support for all publishers to succeed in this brave new privacy-first world. “We will continue to support first-party relationships on our ad platforms for partners, in which they have direct connections with their own customers. And we'll deepen our support for solutions that build on these direct relationships between consumers and the brands and publishers they engage with,” said Temkin.
What does this mean for you? It’s time to kick third-party data for good and focus on developing relationships with your customers. “For years, marketers have been addicted to using third-party data, but it wasn’t because third-party data was the most effective way to reach their target customers, said Invoca CEO Gregg Johnson in reaction to Google’s news. “Actually, it was because that data was just so easy for them to access and execute short-term campaigns. Google’s announcement today is a wake-up call for marketers to break their third-party data addictions and instead turn to review the data strategies within their organizations.”
First-party, privacy-friendly datasets are richer and more impactful when it comes to improving campaign performance. They also stand the test of time while strengthening the trust between the customer and the business, and who doesn’t want that?
Keep on reading to learn more about how marketers can use first-party data to better serve customers while respecting user privacy.
Cookies Were Messy Anyway
The first logical thing to do when something you like is taken away from you is to justify its loss by saying it sucked anyway. This is actually in some ways true with the ubiquitous tracking cookie. Cookie synching aka cookie matching—which is used by demand-side platforms (DSPs) and data management platforms (DMPs) to sync cookies data so they know when they are dealing with the same user—isn’t exactly perfect. In the world of data-driven marketing, it’s actually pretty awful.
Unifying data is critical to providing personalized experiences to consumers, and it also must be done right to prevent annoying the everloving snot out of everyone. Where this tends to come apart for cookie-based targeting is when you take into consideration the massive amount of data that has to be synched up across the ad ecosystem. When a cookie from one site is not passed to an adtech platform, you miss a part of the puzzle and an appropriate match is not made. This happens often, and because of this, cookie match rates range from only 40 to 60 percent. This is why when you are searching for red Nikes on Zappos you end up getting retargeted with ads for black lingerie—which can cause other unforeseen issues for consumers at home. But, really, bad targeting from fragmented cookies is a big waste of money and annoys people with irrelevant ads. In addition to this, cookies are device-based, so they can’t help you when someone goes from desktop to mobile or switches computers or browsers, further fracturing the customer journey.
On top of that, a majority of tracking cookies are already rejected by browsers anyway. An ad-serving firm analyzed 20 advertisers and more than 5 billion impressions in fourth-quarter 2017, and found 64% of their tracking cookies were either blocked or deleted by web browsers. The rejection rate on mobile devices was higher — at 75%, compared with 41% on desktop. Because of this, advertisers can actually be throwing away half of their budgets on missed opportunities by not reaching potential customers and having dollars go toward unnecessary impressions to people who were going to convert anyway.
The Trade Desk's Unified Ad ID Gaining Traction in 2021
Previously, we talked about how Organizations like IAB Tech Lab’s DigiTrust and the Advertising ID Consortium aimed to create a standardized user token that prevents fragmentation of data. IAB said that a standardized user “ID for Advertising” can eliminate the barrage of third-party cookie and pixel synch requests that slow down the user experience and make data sharing and collection a completely opaque process to the consumer. Unfortunately, at this point these two universal IDs have not gained adequate industry adoptions and are seen as launch failures.
The Unified ID 2.0 is an industry-wide effort to develop and drive adoption of an open-source ad ID framework. Built from hashed and encrypted email addresses, this ID will remain open and ubiquitous while introducing significant upgrades to consumer privacy and transparency, according to The Trade Desk. Watch this video to learn more about how Unified Ad 2.0 works:
In winter 2020, Trade Desk lined up three partnerships with LiveRamp, Criteo, and Nielsen to support the Unified ID 2.0 initiative.
These high-profile deals, particularly with vendors that are also the largest technical gateways to inventory, measurement and data for their clients, is necessary to achieve the industrywide collaboration vibe that TTD is going for. “The more collaborators join this initiative, the more critical mass it will achieve in the market,” said Michelle Hulst, EVP of global data and strategy at The Trade Desk.
The UID 2.0 has some significant, limitations today, though. Namely that it relies on authentication through logins to identify users “It’s great for accuracy, but we know that this method doesn’t scale,” Roche said. “The market expects user identification to work at scale, including for non-logged in users, and this is currently not addressed by the proposed UID 2.0 specs.” In order to be successful, it will have to gain adoptions from a number of high-profile brands, supply-side partners, and publishers in order to clear the login hurdle and become a truly scalable solution. Being an industry collaboration, it relies heavily on action from advertisers and publishers to make it work. "“The important thing for publishers and platforms is to realize that sitting on the sidelines is the same as voting for silos in the future,” said Nikesh Patel, SVP for measurement product development at Nielsen. “Active engagement — even if it’s to disagree — is better than abstaining, because this is a collective problem.”
Additionally, Unified ID 2.0 is also without a centralized third-party governing body, despite its backing from The Trade desk. The Trade Desk has said it will eventually be administered by an independent entity, but it has yet to name one. There is hope for a universal ad ID yet, but only time will tell if UID 2.0 will gain the backing and adoption it needs to become a universal standard that can replace the third-party cookie and meet privacy needs for consumers.
How Digital Advertising Can Work Without Cookies
Okay, there has been a lot of talk about the future, but cookie blocking is here today. What can you do to replace the tracking cookie and still connect with your audience? Here are a few tactics that can help you break your cookie habit.
Contextual Advertising (and Content) is the New Cookies
What’s old is new again and contextual advertising is back. “We don’t expect a decline in ad dollars or a decline in ad traffic, we expect a reallocation and shift of budgets,” said Jon Kagan, VP of search at Cogniscient Media. “The next best option to cookies based behavioral targeting is anything keyword or keyword contextual-based advertising. Years ago everyone discounted it and we moved further and further away from keyword targeting, but now we’re going to have to go straight back to it.”
Contextual advertising is basically ads that are relevant to the other content on the screen. It’s like beer ads in a bar: go where your customers are. From the average non-marketer consumers’ perspective, contextual ads are more relevant and far less creepy feeling than cookie-based behavioral retargeting. Think of it this way:
With behavioral targeting, someone like you may get ads for martech platforms, ad agencies and the like everywhere you go on the web. But as an everyday consumer, you’re actually more interested in knitting. It doesn’t make much sense for you to get ads for Marketo when you are on Knitterly sharing your latest pattern—which could happen when behavioral targeting is being employed.
With contextual targeting, the ads you see are based on the content you are looking at instead of your overall behavior profile. So when you are looking at your knitting blog, you see ads for knitting needles, and when you’re reading up on how to boost the click-through rate on your email newsletters, you see ads for relevant email automation platforms.
The move to contextual targeting will also mean a move back to focusing on producing and distributing relevant content. Content is the new cookie (says the content marketer)! This is a bit easier said than done, though, as it will take more alignment between advertisers and publishers to make it work at scale. This article in Marketing Land outlines the four key steps publishers and advertisers need to take to executing this alternative to cookie-based behavioral targeting. A great takeaway is that content-as-ads works, mainly because people hate ads, but they like to be informed and entertained—and appreciate relevant offers while that’s happening.
The tools for contextual keyword advertising are available in Google AdSense, which allows you to place image, video, and text ads on the pages of participating sites online. This enables you to put dynamic content in front of people who aren’t necessarily searching for you. This article in Disruptive Advertising shows you how to get started with contextual advertising.
From the consumer perspective, contextual ads are way less creepy because they don’t give you the feeling that you’re being followed around the web. They only see ads that are relevant to the content they are currently consuming, so they are more relevant and in turn, more likely to feel invited to the party.
The shift to mobile has been hampering the effectiveness of cross-device remarketing for a while now, since most mobile devices and apps don’t accept cookies. This is not to mention that cookies are device-specific, so when someone goes from their work computer to home or switches from desktop to mobile, or even switches between browsers on the same device, the retargeting trail goes cold. It also causes trouble with suppression, so you also end up wasting money on retargeting people who already converted on their other devices. This is where people-based advertising comes and bridges the gap.
Introduced to the marketing world by Facebook, people-based advertising relies on a unique identifier that is related to the user, not the device. According to MartechSeries, people-based marketing is defined as “a means to create a customer-centric, cohesive marketing system that revolves around customers and their real-time behavioral data. This data, combined with available first-party brand data, allows brands to target customers in real-time, across devices and channels.” This method does not rely on third-party cookies to track users or gather data, and allows brands to meet customers in the places and times that they actually want to engage with them. “I don’t think that behavioral marketing is going to go away, but we will have to shift to looking at the behavior of known individuals,” said Kagan.
According to BounceX (who provides a platform that enables this to work), a successful People-Based Marketing strategy boils down to these three key elements:
Brands need to identify their customers and connect them correctly to their various devices. The goal here is to ensure persistent, cross-device recognition for a single view of the customer. If this single customer journey is not tracked well, it could lead to incorrect assumptions about customer behavior, thereby causing inaccuracies in data which ultimately cause ill-designed marketing campaigns. To avoid that, brands must be able to identify their customer across channels and devices.
Today, brands have a plethora of data on each of their customers; from purchase data to email engagement to device information. The identification-first approach for customer data gives brands an upper-hand of targeting them effectively. Not just historical data, brands should also refer to real-time behavioral data like their device, their interaction with your website, their carts as well as the products and categories they visited while browsing. Linking together these data points allows brands to get a singular view of the customer.
Instead of relying on cookie-based data, People-Based Marketing automation relies on people-based targeting. It helps brands unlock a singular view of the customer, anchoring all of the data to a single source. As a result, brands can automate and omnichannel marketing approach across all devices under a single cohesive marketing strategy.
The big catch here is customer identification and data. In the walled gardens of Google, Amazon, and Facebook, the customer remains logged in within these ecosystems across devices. Not to mention that they have more first-party customer behavioral data at their fingertips than anyone on earth. The feasibility of people-based marketing could be limited for brands that have don’t have adequate first-party data and login information about their customers. There are plenty of technology platforms that allow marketers to resolve identification and behavioral data like purchase data, email engagement, device information, but not everyone will have enough data to make this work on the scale and price point that cookie-based retargeting allowed.
First-Party Data is More Valuable Than Ever
Getting your hands on first-party data will be more important than ever in the absence of third-party cookies. Facebook, Google, and Amazon obviously have a huge advantage, but brands often have access to more data than they think. Not to mention that utilizing data from customers who have shown interest in reaching out to you is generally seen as more above-the-board than buying and selling access to third-party consumer data.
One untapped source of first-party customer data might be hiding in your call center. When your customers call you, they are literally telling you what they want and how they talk about it. To feasibly classify customer conversations into useful digital datasets, you need an automated system that can understand what’s being said and accurately derive meaning from it. Enter Invoca Signal AI — our machine learning-powered predictive analytics technology that analyzes your callers’ conversations and turns them into actionable marketing intelligence.
With Signal AI, not only can you predict whether a conversion happened on each call, you can predict things like caller type (e.g. service call vs. sales call), as well as milestones on the path to conversion. And when you understand the nature of a call, you can optimize your media for higher ROI, which can be particularly helpful when you are nailing down the right keywords to feed to your contextual advertising campaigns.
Invoca also enables you to unify your digital customer journey data to data from phone calls to create a single and comprehensive customer profile. By using online data collection and trackable phone numbers, marketers can attribute digital campaigns to actions taken on inbound calls. With this information being connected in the Invoca platform, you can analyze digital and call data in one place and get a more complete view of your customers.
How Cookie Blocking and ITP Effect Invoca Call Tracking Software
Even regulations that limit the amount of time that cookies can last to seven days (or browsers that reduce that to one day) will not negatively affect most call tracking users. Our data suggest that 90% of customers call within one hour of being shown a phone number. Browsers with blocking technology will also refresh the cookie-clearing time counter upon a user revisiting a website.
The latest cookie-blocking news comes with the launch of iOS 14, where first-party cookies will be deprecated after seven days at the OS level. This means that first-party cookies will only persist for a week no matter what browser you are using on an iOS 14 device, including those placed by Invoca. This will not have a significant impact on Invoca users for a few reasons:
- Most Invoca customers use last-touch attribution, which does not rely on a long cookie persistence window.
- Most iOS users use Safari, which has had the seven-day cookie deprecation window in place for some time. Any impact this had has already been felt and addressed. The only new impact is for Apple users who use browsers other than Safari.
The long and short of it is, the cookie apocalypse will not significantly affect the functionality or effectiveness of Invoca. And like many others in the marketing technology business, we will also soon be reducing our reliance on browser cookies for attribution to future-proof our technology.
Value, Transparency, and Choice Will Move Marketing Forward
While it seems pretty scary right now, keep in mind that cookies are a 25-year-old technology and we’ll definitely find a way to move on. It will take a combination of tactics, but moving forward, the marketing and advertising industry must not only provide more value to consumers from advertising, they must also strike a balance between profit and privacy.
A balance between personalization and privacy appears to be what people want. A recent Harris Poll survey revealed that 63 percent of consumers expect personalization “as a standard of service.” But they also expect and deserve to have the choice to be tracked or not, to get a personalized experience or not, and to see ads or not.
The days of finding workarounds are over. If marketers focus on making advertising more relevant and less invasive, consumers will likely see the value of it an choose to allow it in their digital lives.
No matter what, the consumer needs to be central—as does privacy—in the latest shift in marketing, or there will just be more backlash, more blockers, and more challenges for the industry as a whole.