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Digital Hunger Pains - Advertising Without Cookies

In January, 2020, Google announced that it was phasing out third-party cookies (3PCs) in Chrome. Apple's Safari and Mozilla's Firefox browsers had previously deprecated or restricted ad-tracking software, including cookies, but with Chrome commanding 70% of usage on desktop and 41% on mobile, Google's declaration had a larger impact on the future of advertising.

Google and Apple claim that identifier deprecation is about honoring consumer privacy. But it’s also true that these moves personally benefit them, because their direct customer relationships will keep them relatively unaffected while many other identity solutions are weakened. These moves are disrupting the industry, sending adtech companies, agencies and publishers scrambling.

However, consumers move in and out of channels and devices several times a day throughout their path to purchase. Marketers know that targeting is often imprecise because device-based identifiers like cookies are fundamentally flawed. The increasing cookie shortage and impending cookie death have been the catalysts needed for marketers to just move on.

"The world is far bigger than third-party cookies and programmatic display advertisers. Channels like television, direct mail, point-of-sale personalization, search, and email are important and must all work together to optimize the customer experience to impact business results positively."

Every marketer is familiar with the pain caused by cookie syncs across an ecosystem of disparate sources trying to talk to each other. Match rates fall between 45-60%—that’s not even a passing grade, yet it has become a necessary “acceptable loss” due to advertising technology not being interoperable. This lack of interoperability may also cause marketers to tie purchases to the wrong person and rely on fuzzy math instead of having accurate data connectivity. In fact, with cookie-based data, marketers can't:

  • Distinguish individuals from shared devices like computers and tablets

  • Target or measure consumers on cable boxes or connected TV

  • Bridge online and offline data

Right now, about 80% of advertisers rely on third-party cookies, and 67% feel a combination of disappointed, frustrated, overwhelmed, helpless and even confused. Less than 46% of advertisers feel prepared to deal with the implications:

  • A decrease in reach and the need to find a new way to reach customers and prospects online

  • Less ad personalization due to limited behavioral and browsing data

  • Basic capabilities like A/B testing and frequency capping will become more challenging to execute

  • Analytics and attribution will be much harder to measure and will be less effective and changing performance.

"69% of advertisers think the death of the third-party cookie will have a bigger impact than the GDPR and CCPA, and 70% feel that digital advertising overall will take a step backward."

But there's hope!

The digital advertising world is slowly turning to the use of a people-based identifier, which requires integrating identifiers across available touchpoints and devices with behavior, transaction, and contextual information into a cohesive and addressable consumer profile for marketing analysis, orchestration, and delivery. With this methodology, accuracy is achieved because 100% of impressions can be measured across the entire advertising ecosystem. There is no data loss due to cookie syncs. This takes the guesswork out of conversion analysis, frequency optimization, and suppressions.

A true identity resolution approach involves proper storage and management of customer and first party data. The graph below shows the various ways marketers are preparing for cookie data deprecation. All have a technology-first approach, except the fourth option (54% of marketers going this route) that shifts more focus to contextual targeting strategies.

Implementing a system for people-based identifiers takes a sophisticated technology stack. The good news is there are many vendors out there who have risen to the challenge. These diverse vendors vary by size, functionality, geography, and vertical market focus. Forrester published an excellent report in Q4 2020 that outlines the values of identity resolution providers based on their size and functionality. Read the report here.

Need help assessing your preparedness for a cookie-less existence? Contact us.


Source: AdWeek, LiveRamp, Forrester and Epsilon

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