Will retailers be ready when the third-party cookies crumble?

@lelia_milaya via Twenty20
Apr 13, 2022

Eighty-one percent of companies are reliant on third-party cookies while 85 percent of consumers want brands to use only first-party data, according to Twilio’s “State of Customer Engagement Report.”

The global survey of 3,450 business leaders and 4,500 consumers further found that more than half (55 percent) of companies are not fully prepared for a cookieless world. Forty-two percent predict the impending changes will lead to lower return on investment on their marketing spend.

Google plans to start blocking cookies in Chrome, the dominant browser, by the end of 2023. Firefox and Safari are already doing so.

In a new study, McKinsey identified three strategies that can help companies prepare for the impending demise of third-party cookies as well as new opt-in requirements that restrict mobile-device identifiers for ad targeting.

  • Use their own consumer touchpoints to collect first-party data;
  • Create partnerships to leverage second-party data;
  • Experiment with contextual advertising, which displays ads based on the content a user is viewing, and explore the evolution of interest-based advertising, which targets consumers based on their recent top categories of interest.

McKinsey added, “Advertisers will also need to rethink how they approach measurement and attribution — the process of assessing the contribution of the advertising channels that lead customers to their website or app — given that Google’s cookie ban, Apple’s app-tracking-transparency policy, and evolving privacy-protection regulation will render some existing measurement and attribution methods obsolete.”

Capgemini wrote in a recent blog entry, “Solutions that help marketers to strengthen first party data, match and analyze first party data from any source, and expand overlaps for greater accuracy and scale while being agnostic of cloud and identity provider will empower data enrichment and identity resolution.”

Deloitte said in a study last fall that post-cookies success will most likely take a multichannel measurement approach that blends insights from a CDP (consumer data platform), cohort analytics and deeper relationships with ecosystem partners. The consultancy wrote, “There will likely be more speed bumps in the road, but, ultimately, a shift to first-party data can lead companies toward a better understanding of their customer journey.”

DISCUSSION QUESTIONS: What advice would you give marketers about shifting from reliance on third-party data to first-party data for ad targeting? What promising alternatives to third-party data do you see?

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"As the third-party cookies crumble, retailers’ in-house ad shops are poised to pick up the pieces."

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13 Comments on "Will retailers be ready when the third-party cookies crumble?"

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Suresh Chaganti

This is yet another place where customer-centric companies understood the importance of direct connection and invested in knowing them better.

Third-party cookies are like a sugar rush. They give an immediate revenue high, but are very detrimental to growth and not sustainable. For businesses accustomed to buying growth, this is a bitter yet much needed pill. For some, it could be too late and they may perish.

Michael La Kier

There will be winners and losers as the cookies crumble. Those who don’t practice a privacy-first, user consent-based approach to obtaining first-party data will certainly be the losers. Rather than waiting for all of the third-party identifier depreciation to shake out, brands must push forward to experiment, test, and learn what is working today and what will work in the future.

The walled gardens – the big tech players and retailers – who have the direct relationship are most likely to come out on top.

David Spear

Understanding the customer journey so companies can over-deliver on the experience is crucial to delighting and maintaining consumers as brand evangelists. The shift away from third-party cookies will create a capability gap for most companies. In reality, companies will have an extremely difficult time stitching together the multi-modal touch-points that occur, leaving marketers blind to a number of opportunities. To compensate, companies must leverage a multi-prong strategy that includes the use of first-party cookie technology, deep analytics and a variety of eco-system partners. But this isn’t all bad. We’re on the verge of another round of interesting innovation that will flow through our industry.

Carol Spieckerman

As the third-party cookies crumble, retailers’ in-house ad shops are poised to pick up the pieces. Retailers will be a logical first destination for marketers seeking first-party and zero-party data that consumers willingly provide. The emergence of “clean rooms,” where marketers and retailers can share data without leakage concerns is also interesting.

Joel Rubinson
First and foremost, marketers need to up their game regarding their targeting science. The most important targeting variables are whether or not a consumer is active, i.e. intending to make a purchase, and if they are interested in your product at all (What my white paper calls the “Movable Middle”.) Targeting non-buyers for conquest is actually a really bad idea. If you target based on intention to purchase and Movable Middle, that segment can deliver 10-20 TIMES the ad response. In reality, you target audiences but if the audience has a high density of this segment, it can deliver 50-100 percent higher ROAS (return on ad spending). These statements are based on hard data. There will always be a way to find audiences that are rich in this target segment with digitally or via profiling of traditional media (even retailer shoppers are audiences that are differentiated on this, (e.g. Publix vs. Winn-Dixie have different “best matches”.) What I advise clients against is succumbing to the hysteria and starting to use context-based placement as their media… Read more »

There are many opportunities to shift away from third-party data and still improve customer engagement. For known or registered visitors, make sure you are connecting all of their transactional and browsing history to that session in order to personalize their experience – including suppressing them from offers they don’t need.

Ensure that you have technology in place that includes PII Vaults and Data Clean Rooms for high quality data matching and integration with valued partners to supplement first-party data. Create new and better ways to entice visitors to provide email and other contact information through improved brand awareness, surveys, games or charitable/humanitarian activities.

Paula Rosenblum

A few years ago I saw some software that was very cool, but it doesn’t seem to have taken off. It was part of the crypto movement, but that was tertiary to the concept. Let the customer fill out the information she is willing to give you, store it in an Ethereum database, and ask when she comes to a website if you can use it. If she says yes, pay her a token.

Then we could have truly personalized sites, instead of seeing the same patio cushions we bought six months ago. It’s not like our cookie-based system is all that perfect, anyway.

Brian Cluster

Using third-party data for marketing was lazy marketing and not consumer-concentric because the consumer never consented.

Now marketers have an opportunity to reset and build a consent-based connection with consumers so they can communicate in a personalized way. By gathering and managing customer data in a responsible way and being able to transparently share how the data is used, companies not only reduce any privacy regulation challenges but build loyalty. Brands and retailers need to build their own communities and first-party data resources and find partners who can collaborate to help build this out responsibly.

My colleague Matt Cawsey, just wrote about this topic recently at the Consumer Goods Forum.

Phil Rubin

It’s really simple: build direct, permission-based and mutually beneficial addressable relationships with customers. The more you concentrate on that the less reliance you are on the Google/Meta/ad networks that are inefficient, fraud-infested and increasingly ineffective.

There are some new technologies coming to market that simultaneously empower consumers to manage their own data and allow brands to use the data to be more relevant in how they serve customers.

Sadly, this is not a new concept, but rather one that is more than three decades old. The advertising business, including agencies, perpetuate this stalemate all for their outdated business models.

Doug Garnett

This raises an even more fundamental question: Did cookies in truth make interactions with customers any more effective? A great deal of experience suggests they probably didn’t.

We were sold this approach as a “magic” of the internet and retailers and corporations accepted on the ideas put forth by the vendors and websites. Yet, AC Fou is an internet advertising fraud researcher and has published numerous scenario studies which indicate both in testing and the real world that much that was promised and has become “best practice” doesn’t make ads any more effective.

Matt Krepsik

The shift away from third-party data gives marketers an opportunity to better connect with consumers if they know how to go about it. Retail media, thanks to the first-party data that powers it, is able to reach authenticated users and further target them based on behavioral data. This can result in brands delivering relevant messages to real consumers and driving awareness and sales.

Oliver Guy

There are a few things that can be looked at in this area. Retailers can primarily look at using their own consumer touchpoints. Retailers have a much bigger opportunity to collect this than they did a few years ago due to the increases in online commerce.

There is also potential to create sharing partnerships with other organisations — these could be other non-competing — retailers or other organisations that have relationships with consumers.

Shikha Jain

While retailers may not be ready for it, cookies are quickly becoming a thing of the past. This could actually be a good thing. As companies will have to rely more on first party data and contextual-based advertising, they will have a better opportunity for personalization and marketing efficiency, which will stand out to the consumer. First party data will allow retailers to collect valuable information about their customers which they can use to create individually curated experiences, resulting in higher customer loyalty.

"As the third-party cookies crumble, retailers’ in-house ad shops are poised to pick up the pieces."

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