Cookies created modern digital marketing. Are they going to kill it?

Cookies: A Primer

Cookies are small, randomly encoded text files containing small amounts of data that can be used to identify your computer to different networks as you browse the internet. Originally created to simplify the browsing experience, cookies stored information about a site visit (like shopping cart and search history) on a user’s computer instead of on company servers.

Cookies and Digital Marketing

Over time, cookie functionality was co-opted by advertisers. Instead of simply keeping an online shopping cart full, ad tech companies started using invasive third-party cookies to track browsing across multiple sites and build highly detailed user profiles. These profiles were then sold to marketers and advertisers by the billion-dollar data brokerage industry without the knowledge or permission of the person the data was collected from.

The prevailing theory has been that these precise data profiles improve the performance of digital campaigns by allowing relevant ads to be targeted to individual users. In the name of personalization, companies began collecting and selling more and more sensitive personal information with little regulatory oversight.

These reckless collection practices and lax information security protocols led to massive data breaches that continually made headlines in recent years and launched the consumer privacy movement.

Cookies and Data Privacy

After consumer privacy advocates raised the alarm, Big Tech and governments took action.

The European Union adopted the General Data Protection Regulation (GDPR) in 2016. Among other things, the GDPR required sites to have a legal basis (such as consent) for launching cookies not strictly required for site functionality. Later, Safari and Firefox, two of the world’s top three internet browsers, banned third-party cookies. And finally, Google announced that their browser, Chrome, would not support third-party cookies by 2023.

Even though there aren’t any laws specifically prohibiting the use of third-party cookies, Apple and Google’s announcement effectively ended the current model of digital advertising.

Cookie-Based Marketing Was Stale, Even If No One Knew It

The initial response of marketers to the impending demise of the cookie was one of panic.

But once the experts started getting into the nitty-gritty details of existing best practices, people started realizing something important: targeting ads and providing relevant experiences aren’t the same thing.

Here’s why:

  • Targeting is only as good as the data
  • Retargeting the wrong people is a waste of time
  • Targeting has facilitated the proliferation of misinformation

Bad data = bad ads

Anyone who has ever filled out an online form knows that sometimes you put in a fake name, made up an email address, lied about your birthday, or used your ex’s address. But targeted ads rely heavily on the assumption that accurate data is used to create audience segments. No matter what ad buyers promise, campaigns built on bad data are 100% guaranteed to target the wrong (or even non-existent) people.

Retargeting = your annoying younger sibling

Another universal internet experience? Bad ad retargeting.

For example, say you buy a cooking class as a gift for your mom. Within minutes, you start seeing ads for pans and spatulas and mixers and aprons.

You don’t cook. At all.

In fact, the owner of the taco shop down the street calls to check on you if she doesn’t see you for two days in a row.

But because you bought a cooking class gift certificate for Mother’s Day, you’ll be getting ads for kitchenware you definitely won’t buy for weeks.

Retargeting is often like an annoying little brother or sister that constantly follows everyone around telling knock-knock jokes at random intervals.

Retargeting is great in theory, but in practice, it’s the perfect example of how wide the user-experience chasm between targeting and personalization can be.

Misinformation and problematic contexts

One of the issues with programmatic marketing, or using a software program to buy digital ad space, is that your ads may end up somewhere you don’t want them, i.e. extremist, competitor, or offensive pages.

Retargeting also allows special interest groups to effectively execute misinformation campaigns that result in ideological echo chambers and filter bubbles. Bots can also manipulate ad targeting software and falsify ad performance data, so it can be very difficult to actually know if you’re getting the results you paid for.

How to Redesign Your Marketing Strategy for the Cookieless Future

It’s clear that the loss of third-party cookies isn’t going to be the digital marketing death knell everyone initially expected it to be, but that doesn’t mean it’s business as usual.

To maintain successful marketing operations and preserve user experience, teams will have to make a few pivots.

Preference centers

You may not have heard of preference centers yet, but you will. A data privacy best practice, a preference center is a dedicated page in your app or on your website that allows your users to tell you:

  • What information they’re okay with you collecting
  • What they’ll allow you to do with that information
  • How often you can contact them
  • Correct data if the data you’ve collected about them is wrong

Preference centers are a triple threat because they:

  • Provide your users with transparency and control
  • Establish regulatory compliance for your data privacy program
  • Give you accurate, first-party data to build your campaigns around

While the first two bullet points are incredibly important, it’s the last one that gets marketers excited.

First-party data is as good as gold, and if you have a preferences center, odds are better than good that your customers will trust you enough to provide accurate information.

Another bonus? If you know how and when your target audiences want to be contacted, you’ve eliminated the guesswork that’s always been part of marketing and can instead spend your time creating messages that are both relevant and targeted.

Cohort-based targeting

One way in which browsers are trying to get around cookies is the idea of cohorts, such as Google’s FLoC, or the Federated Learning of Cohorts. In theory, this approach allows marketers to target demographics based on data like age and location while also providing anonymity for targeted individuals.

In practice, it remains to be seen how cohort-based targeting will function. Google has suggested that the smallest cohort size will be in the thousands, meaning that you are unlikely to end up in a cohort like “Men living in Jacksonville apartments with two cats, a Prius, a gluten allergy, and a son getting married on September 12th” (at which point anonymity could be said to be compromised). Cohorts will target more specific and subjective data than age and location, however—meaning that Thai-food-loving ferret owners could still find themselves with some pretty specific offers.

Walled gardens and programmatic marketing

A digital walled garden is a site that allows groups to run operations within their ecosystem without sharing their technology or user data to run those operations. Walled gardens give advertisers access to audiences, but those advertisers aren’t allowed to see customer-level data about audience members (Facebook, Google, and Amazon are the most powerful walled gardens in the market today, and Apple is believed to be developing similar technology).

While cookies used to help companies work around walled gardens, their loss means it will be even harder to find quality data. Many marketers are turning to programmatic and performance marketing to fill the gap.

Programmatic marketing isn’t perfect, but it can make marketing more efficient. By placing bids on multiple ad spaces within walled gardens, the system that was designed to work against marketers can work for them.

The Future Is Now

Navigating the intersection of technology, marketing, and privacy can be complicated. Red Clover Advisors excels at helping our clients manage these crucial but sometimes competing priorities through streamlined, practical solutions that drive compliance and improve user experience.

Contact us today to see what we can do for you.

 

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