Consumer awareness and concerns about data privacy are driving data regulations and changes in the tech sector as brands move from third-party cookies to first-party data and other less invasive methods of gathering customer demographics, analytics and historical details. Let’s take a look at marketing in a world without third-party cookies, and how it will impact a brand’s relationships with its customers.
Why Are Third-Party Cookies Being Phased Out?
Google is set to phase out third-party cookies in its Chrome web browser by 2024. Initially set for 2022, Google pushed the date back because it wanted marketers to have more time to change their advertising strategy. The move comes due to ongoing pressure from privacy advocacy groups and regulators pushing for more significant consumer data privacy regulations.
Up until recently, most businesses relied upon third-party cookies to monitor and analyze the behavior of users across multiple domains. This behavior was largely tolerated by consumers, but it came at the cost of customer privacy. As such, brands including Google and Apple started considering restrictions on the use of third-party cookies. Apple has disabled third-party cookies in its Safari web browser by default.
The European General Data Protection Regulation (GDPR) laws, which took effect in 2018, effectively put brands on notice, requiring all websites that European users could access to place notices on their sites that allowed users to opt out of the use of third-party cookies. Since then, GDPR cookie notices have become common on most websites.
Raj De Datta, CEO and founder at Bloomreach, a commerce experience platform provider, told CMSWire that brands must be proactive about data privacy. “You can’t assume you’re too small to get caught or that certain regulations don’t apply to you. Data privacy regulations will only continue to grow, and businesses that are building their practices (marketing or otherwise) with their customers’ privacy at the forefront today will be ready for whatever may be down the road,” said De Datta.
How Will Brands Obtain First-Party Data?
The biggest effect of the elimination of third-party cookies for brands is that it will vastly change the relationship they have with customers. Previously, brands made the assumption that customers were willing to provide their data to the brands. Now, brands must work to gain that trust because the customer is in charge. Aurelia Solomon, senior director of product marketing at Drift, a conversational marketing platform provider, told CMSWire marketing without third-party cookies will be focused on building trust with customers.
“To do that, marketers will have to create value for customers before asking them for anything in return. Taking this a step further, removing third-party cookies from the marketing cycle completely shifts the relationship between brands and buyers by asking buyers to qualify your brand before you can qualify them,” said Solomon. “This creates trust and results in customers willingly ‘opting in’ to share more information about themselves with you.” Solomon explained that this helps brands learn what customers care about and how to connect with them — without infringing on their privacy.
Joe Karasin, head of growth at CircleIt, a generational platform provider, told CMSWire that the change from third- to first-party data for marketing and advertising will be difficult for some. “Essentially, we are moving into what Seth Godin famously termed ‘permission marketing.’ Consumers are going to have to give consent in order to start receiving marketing from different brands,” said Karasin.
Permission marketing is defined by Godin as the privilege (not the right) of delivering anticipated, personal and relevant messages to people who actually want to get them. In his blog, Godin stated that real permission differs from presumed or legalistic permission. When consumers give brands permission to market to them, it means they are already interested in what the brand has to say, and they are prepared to listen. It’s a different way of thinking about marketing and advertising.
How Will This Impact Marketing?
According to Twilio’s 2022 State of Customer Engagement Report, 42% of brands predict that the upcoming changes will result in lower ROI on ad spend and a decreased ability to measure campaign efficiency. Additionally, 55% of brands say they aren’t fully prepared for cookieless marketing, as 81% are still reliant on third-party cookies. From the customer’s perspective, the report revealed that 85% of consumers want brands to use only first-party data when creating personalized services.
Twilio Segment's VP of marketing, Katrina Wong, told CMSWire now that the tools to harness first-party data exist, marketers are finally free to be truly privacy and consumer first. “This macro trend is pulling marketers in a direction they’ve long wanted to go: creating trusted, direct relationships with customers via first-party data,” said Wong. “When you’ve got robust first-party data, you can start using that to identify your best customers.” Wong said that by offering those customers customized experiences, discovering what makes them even more engaged, and upselling or cross-selling them additional products and services, brands will be able to generate additional revenue without spending any of their budgets on customer acquisition costs (CAC).
For over half of those brands that Twilio surveyed that aren’t fully prepared for cookieless marketing, there will be no shortage of challenges. “Without cookies, ad targeting will become impossible, forcing digital marketers to develop new strategies to build brand awareness and increase website traffic,” said Solomon, who suggested that it will be harder for demand generation teams to engage and convert high-quality prospects or re-engage customers who had previously considered a given product.
Jill Meuzelaar, director of product marketing at Amperity, an enterprise customer data platform provider, told CMSWire although third-party cookies haven’t gone away yet, the impact is already being felt. “Brands are seeing a huge degradation in match rates as consumers continue to ask not to be tracked,” Meuzelaar explained. “Brands who are starting to activate first-party cookies through on-boarders face an unacceptable data lag — sometimes a week or more waiting for first-party cookies to be converted into another ID and then activated.” Meuzelaar said this results in small(er) audiences and less impactful ads.
The Challenges of First-Party Marketing
Hamish Anderson, founder of Three Piece Marketing, a Sydney-based digital marketing agency, told CMSWire that ultimately, there are a few issues that stand to stymie marketers in the first stages of using first-party data. “Foremost among these is the fact that there will be so much data available, deciphering what it means, how to use it and where to store it will be a huge challenge,” said Anderson. “A secondary, but still significant challenge is that there is an increased likelihood of data silos springing up as companies try to manage the ever-increasing levels of data, whether to cope with the volume or to try and minimize the risk of a data breach.”
Anderson said the challenge with this is that piecing the data together in a meaningful way then becomes costly or slow. “Brands need to start thinking now about what data they need and what they can use meaningfully. This will best serve them to be able to actually interpret the data in a way that adds value to their marketing and to the consumer.”
Andrew Duffy, CEO and co-founder of SparkPlug, an employee incentive management platform provider, told CMSWire the biggest challenge for first-party marketers is reach — the number of potentially monetizable customers a brand can market to. “The ubiquity of third-party cookies made it possible for a marketer with the right customer profiles and the right budget to find and market to customers by narrowing down from the entire population of internet users — thus even for niche interests or demographic profiles they could find hundreds, thousands or millions of people to target,” said Duffy.
Duffy believes that the future of marketing will require building personalized, intimate relationships with customers and that the most economically viable way to do it is via the physical world. “Digital advertising is already cost prohibitive, and with the death of third-party cookies, it’ll only get more expensive to find the right purchasers.” Duffy pointed out that at this juncture, retail space is as cheap as it’s been in years post-pandemic and foot traffic in stores has rebounded aggressively. “Eighty-five percent of consumer purchasing still happens in a brick-and-mortar store, and smart brands are diving headfirst into the race to turn retail into an experiential hub for building long-term relationships with loyal customers.”
Final Takeaways: The Future Is First-Party Data
The move from third-party data to first-party data is going to drastically impact marketers and change the relationship between brands and their customers. Brands will need to create value and build trust for customers before asking for anything in return. Permission marketing, conversational marketing and brick-and-mortar marketing will play an increasing role in obtaining first-party data, as brands develop new marketing and advertising strategies to connect with customers.