Google has pushed back the deadline for third-party cookie deprecation twice already, and the delay has created a lack of urgency for many in the advertising industry. As of Q3 of 2023, less than 25% of advertising buying was occurring in a non-cookie manner, according to Grant Whitmore, Vice President of Ad Technology and Programmatic Revenue at Advance Local.
But the deadline is now fast approaching. If companies want to have a competitive advantage – and deliver on consumers' demands for greater transparency and trust in a privacy-first era – they need to act now.
In December, we hosted a webinar featuring industry experts from UPS, Advance Local, Lotame, Mindshare, The Trade Desk, and BlueConic discussing the future state of marketing and advertising in a cookieless world, why first-party data is crucial, and the steps you can take to future-proof your business. Here are some of the key highlights and takeaways from the discussion.
The importance of first-party data
While the demise of third-party cookies has caused concern in the marketing and advertising industry, forward-thinking companies are viewing the loss of cookies as an opportunity to embrace a new customer engagement model that puts identity at the forefront.
"The whole cookieless thing is more or less just a trigger for us," says Milin Shah, Director of Digital Experience, MarTech, and Data Enablement at UPS. "What can you do with the data that you have?"
By relying more on first-party data, UPS believes it can provide a better customer experience. "We've always spoken about the cookie demise from an ad or media point of view," says Shah. "But now [with first-party data], you can enable cross-channel experiences. You can use the same set of signals across different channels whether somebody calls in or goes to the UPS store. We now have a way to truly hyper-personalize."
More personalization and more privacy
Advances in machine learning coupled with first-party data are bringing new capabilities to the industry, believes Shane McAndrew, Global Chief Data Strategy & Analytics Officer at Mindshare. He also strongly believes there is no inherent conflict between personalization and privacy. On the contrary, he believes personalization will actually improve in a post-privacy world.
"Cookies are illusory objects," says McAndrew. "People believe that they're much more accurate and stable than they actually are, so I feel like we're treading water, and we can do much better than those kinds of illusory objects."
Advances in deduplication, matching algorithms, cross-channel identification, and probabilistic models are all enabling more personalization. McAndrew points out that privacy-enhancing technologies like data clean rooms are also opening up more opportunities to use data at the aggregate level. "We’re going to be able to get more personal in more spaces with a more collected and connected kind of experience.”
Whitmore also sees leaning into these types of technological advancements as necessary for future-proofing. “It might not be practical to assume that you're going to build a giant first-party authenticated audience with a ton of behavior data, but you can do a lot with probabilistic audiences,” says Whitmore. “But you have to have a strategy in place, or you really risk being left behind.”
Higher quality, lower cost per impression
First-party data can also help improve the quality of leads while lowering the cost per impression (CPM). Alexandra Theriault, Chief Growth Officer at Lotame, notes that they were able to help one gaming company expand market share in a cookieless way by using advances in first-party data, such as being able to effectively enrich and activate first-party data.
“We ran an open exchange alongside a private marketplace and a campaign fueled by Panorama ID,” explains Theriault. “What we were able to learn from that was that Panorama ID delivered almost as much inventory as the open exchange, but the quality was higher, and the CPM was lower. Their CPM was 8X what it traditionally was.”
Universal identifiers offer an alternative to third-party cookies
Despite the benefits of using first-party data, there’s no denying that scaling first-party data can be challenging. However, when used in conjunction with universal identifiers (UIDs), companies can tap into the broader data ecosystem to reach a wider audience, gain deeper insights, and deliver more targeted campaigns while still respecting user privacy and consent.
One brand that has done an excellent job of accelerating adoption of the UID as an alternative to third-party cookies is the Trade Desk, which launched its UID2 to ensure everyone has a way to transact once cookies deprecate. With UID2, companies can set up marketing campaigns without using PII data or third-party cookies.
As companies begin to think about using UIDs, Natalie Kansteiner, the Director of Ecosystems and Data Partnerships at the Trade Desk, counsels developing an identity strategy.
“How are you going to use your customer data platform (CDP) to its advantage using universal identifiers to power your solutions and start moving away from cookies? And that includes your website, too,” says Kansteiner. “You need to think about how you can ensure you’re getting authentication or generally getting people to provide an email address so that you can provide them with personalized content now and into the future.”
How UIDs enable more accurate audience segmentation
UIDs also enable marketers to create more detailed audiences based on user behaviors, preferences, and demographics. This allows for more accurate attribution and efficient segmentation, as well as more granular and targeted messaging.
For example, Disney, a client of Trade Desk, has found UIDs to be 12 times more effective at reaching its audience across Disney’s ad marketplace, and they are seeing match rates upwards of 80%. Hewlett Packard, another Trade Desk client, has also leaned into UIDs because they needed a privacy-centric identity solution that they could validate across platforms. “They decided to double their investment in connected TV channels where a UID was available,” says Kansteiner.
Measurement and attribution in a cookieless world
With the loss of third-party cookies, cross-device tracking and attribution will become much more difficult, if not impossible. “Third-party ad server-based reporting measurement is going to be completely out of whack,” says McAndrew.
However, with UIDs, marketers can still track a user’s behavior seamlessly across multiple devices, which allows for a more comprehensive understanding of the user journey.
In addition, McAndrew notes that they’re coaching their clients to pair what-if scenario planning with machine learning-driven marketing mix marketing (MMM), which is faster, more efficient, more granular, and covers a more comprehensive channel mix.
“MMM is the core, and we pair that with incrementality testing,” says McAndrew. “I think that's kind of the one-two punch that gives you a macro view with MMM and a micro view, tactic by tactic and audience by audience, incrementally on what's happening.”
Future-proof with first-party data
Whether cookies go away this year or not, companies that don’t have the capabilities to lean into their first-party data are at serious risk of losing customers and revenue.
“Customers want those contextualized right-timed experiences,” says Shah. “I think irrespective of cookies going away or not, if you don't use the first-party data you have, you're not going to be able to create these kinds of experiences, and you’re going to fall behind your competition.”
Companies need to embrace technology that enables the unification, enrichment, and activation of first-party data, as well as the ability to scale that data through UIDs and share it at the aggregate level with the data ecosystem through privacy-compliant methods such as data clean rooms. Companies that do so can future-proof their business by gaining deeper insights into their audiences, enabling them to provide more personalization and achieve a competitive advantage.
Want to dive deeper into these strategies? Download the on-demand webinar now and unlock the secrets to sustained success in the post-cookie, privacy first era.