How a cookieless world will impact digital businesses

Matias Gaffoglio
31 de May de 2021 · 7 min de lectura

Last year, Google announced plans to stop using third-party cookies on its Chrome browser by 2022. Apple too is cracking down on cookies, and will soon require users to opt-in to having their data tracked across third-party apps or websites.
User privacy is taking center stage, and personalized marketing campaigns need to be reinvented. So, how is the industry preparing to address these new challenges? And what exactly is Zero Party Data?

For years, third-party cookies allowed companies to gather demographic data about Internet users. They could know your gender, age, product preferences, and even what web pages you visited and what searches you made. Those data were then turned into information and used to place digital ads tailored to consumer profiles.

In an increasingly virtualized world, this system has been a cornerstone of developing digital marketing campaigns. At the same time, it formed the base for an almost ideal business model. For the first time ever, companies knew exactly who they were talking to and could direct their ads to the people they most wanted to reach.

However, this triggered debates about privacy and security. The concern forced large technology companies to rethink the model and propose alternatives with privacy in the center. Although Chrome isn’t the first to eliminate cookies (Firefox and Safari did it years ago), the impact will be huge, given that it holds nearly two-thirds of the global browser market.

Perhaps unsurprisingly, third-party cookie deprecation was ranked as the single biggest challenge for digital media in 2021, according to a survey by Statista. In the United States, this advertisement model is worth around $20 billion per year. To be clear – a lot is at stake.

Whatever your thoughts may be, it’s undeniable is that this new scenario leaves many unanswered questions for the marketing and advertising industry. If third-party cookies disappear, how will advertisers reach their target audience? What will happen with audience segmentation? How will companies reach specific audiences? Although it may not seem like it, there is a light at the end of the tunnel.

What will digital marketing without cookies look like?

The ultimate goal of any brand is to drive growth forward, and the use of data to understand consumer behavior is fundamental to success. Now, these goals must go hand-in-hand with new measures and techniques that are based on trust and transparency. Consider that more and more companies will start moving in this direction and implementing changes regarding data handling and user privacy
In summary, this new context allows us to anticipate five key challenges for the industry:

  • The exploitation of individual data created from companies’ own identifiers, which are different than cookies, will become much more relevant.
  • Campaigns should be optimized according to a particular environment or ecosystem, leaving aside the identities of individual users.
  • The use of segmentation based on context will become more important.
  • Traceability and measurement will be limited, and the focus will move toward the last ad on which a user clicked.
  • Companies will have to offer the users something in return for sharing their data.

According to a Statista survey from the end of 2020, 28.5% of executives polled signaled that third-party cookies will be replaced by email addresses as the main consumer identifier. Others suggested that data collected by publications (24.5%), a Universal ID (22%) and a telephone number (8.5%) could also step up as the main replacements.
Similarly, 5.7% of those polled said that their companies needed until 2022 to move from cookies toward new identification solutions. On the other hand, 34.8% said the change would take six months.

What are Sandbox and FLoC?

Google created Sandbox as a solution to this challenge. This learning mechanism allows advertisements to be delivered to “groups of users with similar interests” instead of individual users. Within this ecosystem, these groups of users, or cohorts, would fall under an umbrella called the Federated Learning of Cohorts (FLoC).
Using the FLoC mechanism, Google has achieved “a 350% improvement in recall and a 70% improvement in precision at very high anonymity levels compared to random user grouping,” according to this whitepaper.

The goal of the FLoC API, according to Google is “to preserve interest-based advertising, but to do so in a privacy-preserving manner.”

What is Zero Party Data?

Alongside FloC and Sandbox, we also have a new trend called Zero Party Data. It is the evolution of first, second, and third-party data, and proposes a new way to reach users based on two fundamental aspects: privacy and added value.

According to Forrester, this concept is based on “data that a consumer proactively and intentionally shares about herself.” This information could be preferences, what she wants to purchase, and anything else that serves to determine how a brand wants to present itself. Zero Party Data is oriented around getting to know, on a deeper level, the users’ interests instead of trying to interfere in their personal decisions.
In terms of added value, businesses must give the users something in return for this information. This could be tangible or intangible, including better personalization or an improved user experience.
This self-declared data (on a user’s interests, tastes or desires) will allow companies to offer a truly personalized customer journey. At the same time, thanks to new techniques and methodologies, companies will be able to create better products and services in the long term. This, in turn, will boost customer satisfaction.
We live in an era where people are overwhelmed with information and are demanding more respect for their privacy. In this context, the key to success will be offering relevant content and solutions.

That’s why at Multiplica we are convinced that the path to success will be paved with creating more relevant experiences. Get in touch and we’ll tell you how we can help you make the most of the cookieless future.

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