Google’s announcement that it has no plans to build a direct replacement for third party cookies or any other tracking tech that follows users across the web does not change what we already knew.
The deprecation of third party cookies has no official alternative or solution at the moment. There are many good ideas in the works, including Unified ID 2.0.
But Google's announcement focuses on potential Privacy Sandbox solutions like the Federated Learning of Cohorts (FLoC), which bundles users into groups and cohorts, allowing marketers to continue activating interest-based buys without targeting any one individual.
How concerned should digital marketers be?
For some marketers, there will be little, if any, consequence to this change. For most marketers, the change will be significant. Especially marketers that have a reliance on open internet inventory.
If your current marketing strategy is already heavily reliant upon Google properties (Search, YouTube, etc.) or other walled gardens like Facebook, you can rest a little easier. To be clear, Google is not getting out of the targeted advertising game. It has billions of registered users in its platforms where it will continue to activate campaigns targeting those individuals.
However, if you use Google platforms to buy open web inventory or target consumers using Chrome browsers, things will get tough in a hurry.
Open web marketers who do not materially shift their targeting and measurement strategies from third-party data to first-party data will feel the impact the most. Marketers that do not immediately prioritize the creation of a first party data asset will:
- Suffer a decline in targeting scale and accuracy
- Decrease the measurability of their campaigns
- Struggle to manage attribution models based on cookies
- Have limited platform choices
If you are wondering why Google would make this decision, just follow the money. Relative to the entire Google advertising revenue pool, open web inventory is a very small portion. Making this change will likely result in Google Campaign Manager and DV360 being a little less competitive.
Simultaneously, this move all but forces many advertisers to invest even more heavily in Google-owned and operated properties. In other words, by making the audience targeted, open-web inventory less enticing, you redirect attention to platforms where granular targeting is still available. And who owns one of the world's largest platforms for this sort of targeting? You guessed it. Google.
Which marketers have the advantage?
One thing is abundantly clear: Marketers that have invested in the creation and curation of a first party customer data asset have an unholy advantage now, in the immediate future, and probably over the long term.
The fundamental key is a first-party relationship with a customer (aka user). Marketers that have the asset in-house have far greater strategic advantage than those that do not.
The funny thing is that this has always been the case. However, reliance on third-party data assets for targeting and attribution has historically been cheaper, relatively simple to implement, and easy to swap in/out.
Brands that have a robust first party data asset retain an edge over brands that have no choice but to use what everyone else is using. Ecosystem changes that limit a marketer’s ability to develop their own models, build their own unique audiences, and experiment in their own sandbox end up reducing competitive differentiation.
For example, if your target is “buyers of crossover SUVs” and your buying platform surfaces cohort groups of “crossover SUV buyers,” that is convenient and challenging at the same time. If all your competitors are targeting the same nameless and faceless users as you are, it is harder to come up with a winning strategy other than paying more.
Conversely, a brand that already has a known list of “crossover SUV buyers” can not only compete for the audiences everyone else is going for, but has inside knowledge of existing customers that no one else has.
Unified ID 2.0, FLoC, and everything else emerging from the Privacy Sandbox, etc. are all very compelling ways to activate an audience-focused buy. It is too early to tell which standards will win the day, or if we will continue to operate a patchwork of solutions. It is more likely that the patchwork approach remains indefinitely.
The value of owning a first-party data asset extends beyond targeting. The long-term viability of optimization and attribution dramatically improves when you can close the loop in your own analytics. In a direct relationship, expanding customer sales horizontally or increasing the frequency of purchase becomes more efficient.
First-party data is the one asset that will continue to trump the strategies that are completely reliant upon third parties.
Unfortunately, not all brands are in a position to build a one-to-one relationship with customers. New to market brands will be starting from scratch. As for everyone else, the time to act is now.
Owning a robust, first party data asset is the secret sauce that gives brands an edge over the rest of the market. It is the additive component that differentiates your campaigns from the rest of the marketing herd. Bringing your own data assets to the table puts your brand in the driver's seat now and well into the future.