The death of the cookie: What does this industry shift mean for marketers?
Over the past two decades, digital advertising’s rise to prominence has been swift and expansive, due in large part to the emergence of the cookie. Cookies – small packets of data stored on a user’s computer and the browser domain – have a wide range of use cases, from authenticating users to keeping track of items in a shopping cart.
Marketers and ecommerce companies have been leveraging the cookie and its insight for years, but after Google’s announcement that it still plans to make third-party cookies on browsers obsolete by the end of 2024, marketers and online businesses are left struggling to determine what a cookie-less world could look like. As a company that enables brands to use data to provide personalization and relevancy to consumers, our team has been discussing the impending industry shift since it was announced. We’ve outlined everything you need to know as the industry moves away from cookie-based attribution.
Cookie tracking: a brief history
Third-party cookie tracking has been a centerpiece of digital marketing for more than a quarter of a century. By tracking users’ web activity, cookies have helped marketers effectively target potential consumers with tailored ads. However, more recently, the use of cookies by third-party advertising companies has primarily shifted to tracking individual users ‘off site’, gathering browsing data over an extended period of time. The addition of this third-party cookie has granted marketing teams and advertisers a wealth of data that allows them to better understand consumer behavior, refine targeted audiences, and attribute purchases to specific advertising placements. Put simply, when returning to the same site, the browser sends the cookie file to the server and in turn, the user gets a personalized browsing experience.
This access to data has propelled exponential growth in the digital advertising industry, driving $248.72 billion in ad spend in 2022 within the United States alone. This number is expected to swell to more than $300 billion by 2025, making up over 75% of total media spend across the US by 2025.
The rise of the third-party cookie and extended access to consumer data has triggered widespread concern over the lack of consumer privacy and control the individual has in the exchange of their personal information. Advertising platforms who place cookies on a webpage have the ability to track a consumer across all subsequent page visits over a potentially limitless time period, developing a ‘footprint’ of an individual’s browsing habits. However, many sites host cookies as a means of revenue and can have dozens of third-party cookies running simultaneously from different clients. In response to this, both consumers and regulators have been demanding change from the software companies ultimately responsible for the securitization of that data and its privacy.
Web browsers, the ‘first line of defense’ against third-party cookies, have come under scrutiny in recent years as not having done enough in the way of protecting consumer privacy. Historically, browsers have included options to disable third-party cookies, but the ability to do so sits behind a complicated path of settings that’s often difficult to navigate. As a result, in June 2019 Firefox blocked third-party cookies by default, becoming the first major browser to do so. Apple was quick to follow suit, releasing a similar update in March 2020 to disallow third-party cookies as a default in Safari. As Safari (18.66%) and Firefox (3.14%) currently hold the second and fourth largest browser market share across all platforms, this marks a significant shift in the way that companies will be handling third-party data moving forward. Google (who originally called on the industry to make a change in a blog post from May 2019) and Microsoft are both in a unique position, as they continue to maintain advertising platforms that rely on the current system of third-party cookies for revenue. Even so, Google has announced plans to block third-party cookies on Chrome by the end of 2024, while Microsoft has made increased efforts to simplify turning off third-party cookies on their Edge browser.
Bottom line, by 2025, 90% of browser traffic will become untrackable by third-party cookies, completely eliminating their effectiveness as a method of attribution.
What does this mean for marketers?
As close to 25% of total browser traffic has become attribution-less as of 2022, digital marketers are struggling to account for billions of dollars in ad spend. Crucial marketing metrics like add to cart, purchases, cost per acquisition, and return on ad spend (ROAS) become unreliable due to the inability to tie conversions back to users. Stricter government regulations like the CCPA have given Californians further control over their personal data, with the ability to know what personal data is being collected and the ability to deny its use. Similarly, The General Data Protection Regulation (GDPR) regulates data protection and privacy in the European Union and the European Economic Area. As marketers have grown increasingly reliant on receiving this data to inform strategic business decisions, many are now needing to completely re-evaluate how to identify and best serve their customers.
Does the death of the cookie mean the end of digital advertising? Hardly. This development simply means marketers will need to shift their tactics and find new, innovative solutions.
Marketers can change the way they market or ignore ad targeting altogether. Of course, any good marketing professional will dismiss the latter. Without targeting, customers in Los Angeles would be shown ads for snowsuits, shoppers in Minnesota would be seeing promotions for flip flops, etc. So, the solution is clear – it’s time to change the way marketers gather information and ensure their messages are seen by appropriate demographics.
Without cookies, there are a few ways to continue targeted marketing. Contextual Advertising, where ads on the page directly relate to the content, is one solution that many marketers are turning to. However, contextual advertising has its drawbacks – too many ads on content can clutter the page and frustrated consumers, oftentimes they will dismiss them or ignore them altogether. With the end of the data, marketers will also need to look into other data sources to enhance their acquisition strategies.
Ultimately, as the industry shifts away from third-party cookies, advertisers will have to continue to look for solutions that protect consumer privacy while also providing the data necessary for optimal customer experiences.
The Rokt solution – persistent identity
Now more than ever, the market is hungry for a solution that unifies a single persistent identity in a controlled first-party environment. This solution would not only maintain consumer privacy (as data would only be collected after a consensual relationship with consumers had been established), but also deliver more customer data points to help marketing teams accurately segment, target, and attribute marketing spend – all while fostering deeper connections with their customers.
At Rokt, we’ve been able to build out our foundation of persistent identity around the primary email address.
By starting with an email address as the main identifier, we utilize a persistent data point around which to construct a privacy-safe profile, which allows us to deliver quality customer insights to our advertisers without compromising data security.
In addition, we focus on the Transaction Moment – when engagement, interest, and buying intention are at their highest. Our award-winning AI dynamically chooses the next best action for every individual user in the Transaction Moment, without relying on cookies.
Our GDPR and CCPA compliant platform utilizes hashed email to create buyer personas, and our suite of Machine Learning Technology is able to improve optimization and achieve the best campaign results. With our existing profiles, our AI determines the greatest value potential in consumers and shows relevant messages accordingly, while harnessing the power of the Transaction Moment – where users are 7x more likely to engage. Privacy compliant targeting paired with the increased engagement of the Transaction Moment are exactly the solution marketers are seeking as we navigate the industry shift away from third-party cookie reliance and crave new acquisition channels.
To learn more about leveraging the Rokt platform for your acquisition strategies request a demo or contact Solutions@rokt.com today!