What options ahead for brands after third-party cookie crumbles?

Industry experts believe that impressions and influencer marketing could help with personalized advertising once third-party cookies are phased out

e4m by Nilanjana Basu
Published: Nov 21, 2022 8:29 AM  | 5 min read
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Digital advertising is going through a major transformation. There is a slow paradigm shift as marketers around the world prepare for Google to phase out third-party cookies. All the talks around privacy and demand from customers on transparency are bringing a lot of changes in how hyper-personalization will work in the future. What kind of changes will marketers need to focus on with this big turnaround? Industry experts are of the opinion that most alternatives will take time and are still in the development process.

For brands, it has always been easier to target audience with third-party cookies on search engines to understand consumer needs and wants. If a user looked up hotels for vacation, searched for a dress or shopped for certain books, he or she will be greeted by ads for similar products on other websites. 

But now, Google announcing the phase-out of these cookies will mean looking at alternative options to fish for the right customers. Even with the abundant options, the right alternative for third-party cookies could take a while as privacy regulations around the world get stricter by the day and customers demand transparency of what’s happening with their data.

Deloitte in a report right after Google announced plans for phase-out back in 2020, said, “As an immediate effect after the implementation of the ban, most third-party audiences (those whose data is collected via third-party cookies) will diminish in size due to cookie expiry, until they are no longer sufficiently scalable for most media buying activities. This means that advertisers will need to develop new strategies for prospecting and rely more heavily on other tactics. Advertising data processing and selling organisations will need to develop new ways to collect and aggregate audience data that do not require third-party cookies.”

A lot of people believe that first-party data will be the future of marketing, but it won’t be an alternative to third-party data. First-party data only means that the data will be collected from the website in use, unlike third-party data which monitored customers across websites.

Hareesh Tibrewala, Joint CEO of Mirum India, says, “I think there has to be a balance between privacy and personalization. Right now, due to 3rd party cookies, brands are able to deliver personalized communication but somewhere indirectly privacy is getting comprised. Elimination of 3rd party cookies will result in personalization but it will happen at a cohort (group level), not at an individual level. Also, brands will be forced to acquire opt-in or consent-driven first-party data, which can then be exchanged with other brands with similar first-party data…to create date enrichment and deliver better-personalized experience but with a high level of consumer privacy protection.”

Karan Taurani of Elara Capital tells us that the impact of the cookie crumble will be near-term. “I think this is a negative definitely because it really impacts your conversions on digital platforms. This might also have a negative impact in terms of advertising spends, but that will be near-term in nature because clearly, you cannot go on forever without digital advertising. In terms of alternate mediums that are high ROI or effective, providing such a large audience, there are none in terms of advertising. So, there will be a negative impact in the near term, but the longer-term story remains to be intact for digital advertising.”

Alternatives? Time will tell

In July this year, Google said it will delay phasing out of its third-party cookies in Chrome to 2024 as they expand the testing windows for the Privacy Sandbox APIs before disabling third-party cookies. The new technologies will take time.

Tibrewala also mentions some of the new techniques that might gain focus. “Some of the newer techniques under discussion in the industry are around device fingerprinting, pixel synching, creation of Universal ID and the use of Blockchain. Most of these solutions are still under development at this point in time.”

Taurani talks about impressions and the use of social media as a tool for personalizing while technology gains momentum in figuring out an alternative. “Once third-party cookies are off it's very tough to crack things. I think what they can actually then do is just track the impressions and views. Conversions is something which gets severely impacted because of this.”

“Influencer marketing could become a big positive because of this because you've got influencers marketing on social media and then you have direct conversions over there. You can try and trace the followers of a certain user and then try and see the behaviour of the demographics in terms of reference, and then provide the ad.”

Viren Razdan, Managing Director of Brand-Nomics, rightly explains the third-cookie crumble phenomenon and says whatever the alternative might be, it will take time. “Popularly being touted ‘the app-ocalypse’ as app developers and businesses find alternatives to targeting ads and marketing to specific consumption behaviour. Recent privacy concerns and regulatory concerns have put the Cookies and IDFAs under scrutiny as most such interventions would be removed soon. 

Razdan says whatever the alternative might be, it will take time. “Popularly being touted ‘the app-ocalypse’ as app developers and businesses find alternatives to targeting ads and marketing to specific consumption behaviour. Recent privacy concerns and regulatory concerns have put the Cookies and IDFAs under scrutiny as most such interventions would be removed soon.

"While alternatives like FLoC ( Federated Learning of Cohorts) and 'Topics' API are being experimented with, a sure-shot behavioural reading for marketers is yet to surface. What would be really required is a balanced solution, collection of consumption data, considering Privacy regulations and the patterns that could be potential targets for marketing. As the cookie crumbles the fresh alternative is going to take longer to bake.”

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