Consumers prefer ads tailored to their interests yet want less invasive advertising. Marketers and advertisers need cost-effective ways to achieve their financial objectives but are moving toward less data to validate campaigns, without access to third-party cookie data. These factors, combined with the importance of privacy, requires marketers to get even more creative in their approach toward digital marketing strategy.
Let’s look at the potential impact on agencies, brands, publishers and consumers.
For Agencies And Brands:
What does the migration away from third-party cookies mean for agencies and brands? Cookie-based data is the most commonly used data in digital marketing campaigns. The lack of cookie-based tracking and less clarity surrounding online consumer behaviors will make it more difficult to validate digital campaign effectiveness.
The loss of third-party cookie data makes it more difficult to deliver relevant offers to consumers around their current interests or intentions. Algorithms can no longer be used as effectively to show personalized ads to consumers, risking the possibility of ads for products appearing that they have no interest in.
Google completed a study in an attempt to quantify the potential impact that disabling third-party cookies would have on programmatic ad revenue for publishers. The results showed the average revenue decreased by 52% for the top 500 global publishers.
The inability for publishers to easily quantify and categorize site traffic will make it harder for publishers to value and monetize their traffic. Premium publishers may look at this as an opportunity to create products that advertisers will want once third-party tracking goes away. Leveraging first-party data using identifiers like a login and site activity of visitors may create a premium alternative to traditional less-expensive third-party data.
With the elimination of third-party cookies, consumers gain a greater degree of privacy, data protection and control over how their online data is used. Laws like the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) have mandated a higher level of online privacy for consumers. These laws and requirements specifically address the way data is collected, used and shared through cookies.
The elimination of third-party cookie data also leads to less relevant ads for consumers. Many online properties have been able to offer access to their content and services for free. However, if the lack of cookies causes a significant drop in advertising-based revenue, we risk the possibility of consumers being asked to pay for access to services that have been free up to this point.
Who’s benefitting most from this ‘cookie-less’ world?
In my opinion, Facebook is in the best position to directly benefit from the transition away from third-party cookie data. Facebook can fill the cookie gap by serving as a “digital identity” source. The digital identity will gather the behaviors of users through their embedded login, SDK and mobile application as data sources in lieu of cookie data. Facebook is ubiquitous with users and in the best position to gather enough share of voice to offer a solution to any gap in a cookie-less environment.
What happens to programmatic advertising?
Without cookie data, the primary source of user data will have to shift to digital identity — profile, opt-in or login-based data. Other data sources could be mobile device IDs, which are closely tied to the individual consumer. Programmatic advertising has been heavily cookie-based and will need to adapt and adjust to more human engagement and less campaign automation.
How will this impact ad budgets?
I believe more budget allocation will shift toward strategic planning and less on heavy automation. Digital campaign planning will need to become more sophisticated in sourcing the targeting and validating the results of campaigns. More effort will need to be put into data validation between available data points.
Marketers will have to tie campaign results to more first-party data sources and other channels that are more difficult to validate or quantify. Previous low barrier of entry automated campaigns will be challenged in a cookie-less environment as the signals that previously were able to prove campaign value will be less obvious and more difficult to quantify.
What does this mean for marketing and campaign strategy?
Rather than using “out of the box” audience segments from data partners, agencies and brands will need to work closely with data providers to leverage digital signals. A combination of logged-in activity, mobile device usage, location, purchase data and lookalike modeling will need to be used to craft a targeting strategy.
What’s the solution?
Even though third-party cookies may be going away, first-party cookies are here to stay. The reliance on first-party and higher quality data collected and housed in CRM systems will increase in value and importance. Marketers and agencies that are accustomed to performance-based marketing will be those that adjust most successfully and easily.
Tips To Succeed
Data is extremely valuable and can be accessed and used in many ways. Using simple overlay data or basic market segmentation will not get the level of performance marketers and brands need to be profitable, especially in a cookie-less world. The sophistication required to achieve excellence in this environment requires marketing experts who are also data-savvy and understand ways to explore custom executions with data providers. Knowing which data providers have what you need to create custom data strategies is also a key to your marketing success in this new world.
No silver bullet will replace the value that brands and advertisers were able to gain from third-party cookies. Since third-party cookies are on their way out, we’ll find a way to adapt. Change in marketing and life is inevitable. It’s how we respond that counts.
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