The looming deadline for removing third-party cookies, which the digital advertising industry relies on for data-driven marketing, and data deprecation, is causing a lot of chaos and confusion for marketers.
But it’s not all bad news.
Why? Because it presents an opportunity to build a sustainable ecosystem that allows retailers and other advertisers to achieve their marketing goals, with user privacy at the heart. It increases the need for brands to have a more transparent value exchange when collecting consumer data and actioning that data via trusted publishers and partners.
The upside of taking this approach is wide-ranging. The retailer gets to build even deeper connections with its customers while bringing new strategic partners into its tech stack. And working with publishers directly, for example, creates a much cleaner supply chain and reduces the risk that the retailer’s data will be harvested by a supplier it does not work with directly.
There is a privacy upside for consumers in that they can be confident their personal information is being used in a way they feel comfortable with. This is key, as marketers understand that consumers will actively avoid brands they don’t trust with their data.
Marketers are starting to shift from third-party to first-party data
And first-party consumer data is more plentiful than ever. Marketers—and in particular, DTC brands—have had an opportunity to collect much more first-party data throughout the pandemic, where shoppers have, at times, been forced to shop entirely online.
But many are reticent to commit to a new marketing strategy that doesn’t rely on third-party data, waiting to see what their competitors will do first and what other changes are afoot. The truth is that wherever a marketer falls along the retail spectrum, they might face different structural challenges within their businesses. Regardless of whether you are a DTC brand or a traditional brick-and-mortar retailer, you must understand where your data is housed and whether any structural bottlenecks prevent you from accessing that data for marketing and building insight about your customers.
Rather than focusing on deficits, retail marketers would be well advised to audit the data they are using in their marketing campaigns. They should be mindful of how much they rely on third-party data—which many marketers still do. A research study Forrester conducted for Permutive found that 41% of marketers still rely exclusively on third-party data. A lot of education about data still needs to happen.
So what does the future of data look like?
When third-party cookies sunset, some 95% of the web becomes anonymous, which means that publishers and advertisers won’t have a one-to-one match for each individual user. But via first-party data, publishers will continue to see and understand 100% of the users who browse their websites.
And this means that the role of publishers to reach consumers on the open web is critical in a future without cookies.
In addition, the data that will be used to plan media buys is going to shift to publisher cohorts, meaning audiences built directly at the source of the inventory and not by third-party players. An important distinction here is that these publisher cohorts are different from Google's recently announced FLoC (Federated Learning of Cohorts), a privacy-preserving mechanism for interest-based ad selection. Google’s approach decouples publishers’ data and inventory, so the publisher becomes a transactional channel, similar to how third-party data works today.
Publisher cohorts ensure privacy is built into the ecosystem because data and inventory are coupled. This prevents data leakage. Publisher cohorts also enable the bucketing of users into more than one cohort, meaning publishers can provide a more nuanced description of the user without identifying them.
Despite the opportunity of first-party data, marketers’ anxiety is understandable considering their continued reliance on third-party data. But they needn’t worry about a cookieless world. They simply need to find a partner who is excited about the future and well-positioned to help them along this journey.
It is also imperative for brands to take control of their data on their own data practices.
What we've seen of late when there are browser or privacy announcements is that the industry falls into disarray because many marketers are waiting for someone to present them with “the answer.” What retailers can do right now is to test and learn with technology and with different publishers, positioning themselves to build a best-in-class tech stack that doesn’t rely on the third-party cookie.