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A global study by DoubleVerify reveals that while 60% of publishers express significant concern about the impact of cookie deprecation on their business, only 24% have taken steps to implement a post-cookie solution.
Given the increasing privacy concerns, stricter regulations, and shifting consumer expectations, it’s clear that businesses must act quickly.
In this article, we’ll take a closer look at the challenges these changes pose to advertisers and offer actionable advice on how your business can adapt to an environment where third-party cookies are no longer in use.
The rise of cookie-free advertising initiatives became popular when businesses started misusing cookies for unauthorized personal profiling of users, often to increase profits. This practice included capturing personal information such as demographics, interests, lifestyle choices, and financial data.
Some key events that highlight the issue include:
To address these privacy concerns, more companies are adopting cookieless advertising instead of traditional tracking techniques. Additionally, with over 80% market share, Google is attempting to smooth the transition away from cookies without harming the decades-long advertising ecosystem.
For years, cookies have been indispensable to marketers, helping them tailor ads and assess the success of their campaigns. However, rising data privacy concerns are limiting how cookies and other tracking technologies can be used.
Some major challenges this situation poses are listed below.
Without cookies, advertisers find it increasingly difficult to monitor user behavior across different websites, leading to less targeted and personalized advertising. This shift is particularly challenging for sectors that rely heavily on accurate targeting, such as e-commerce and travel.
In addition to operational hurdles, the legal environment is becoming more complex. Laws like GDPR and CCPA are becoming stricter, requiring businesses to obtain clear user consent before tracking any data. Non-compliance can result in fines and significant reputational harm. For instance, the GDPR can impose penalties as high as €20 million or 4% of a company’s yearly global turnover.
To gain an edge in a cookieless world, businesses need new tactics that prioritize user privacy while maintaining ad efficiency. Here are three best practices to navigate this transition:
Allison Urffer, senior marketing and research analyst at Geisinger, believes that “with the planned phase-out of third-party cookies, first-party data has become more important than ever.” First-party data, gathered directly from user interactions on your platforms, should become central to your digital advertising strategy.
With a reliable CRM and a clear approach to efficient first-party data collection, companies can still deliver personalized offers effectively.
Netflix, for example, has been personalizing and recommending videos to users based on behavioral (first-party) or self-declared interest data like genres, actors, and favorite show types for over 20 years. By using its powerful ML algorithm, Netflix has continuously grown its audience.
Netflix’s message is simple: “Spend less time picking your next show and get better recommendations from us with just one or two clicks a day to rate the shows.” This clear and honest approach has played a key role in building a strong sense of loyalty among their viewers.
In the absence of third-party cookies, companies must explore alternative tracking technologies that are both effective and privacy-compliant. One example is contextual advertising, which targets ads based on the content of the webpage instead of user behavior.
In June 2020, The New York Times launched its own advertising data program based on its proprietary first-party modeling and clustering. Instead of relying on cookies, they serve ads based on the content being consumed by users.
Additionally, server-side tracking collects data directly from the server rather than through a browser, offering a more secure and privacy-focused way to gather insights.
A well-designed custom software solution can help businesses maintain privacy compliance while maximizing ad efforts. By hiring a professional custom software development team, you can create applications with advanced data encryption, anonymization methods, and secure storage to protect user privacy while ensuring a strong ROI on digital campaigns.
Here are seven tools advertisers can use to reduce their dependence on third-party cookies. The key is to gather well-organized, structured first-party data from customers, centralizing it through a Customer Data Platform (CDP) to make it effective with the solutions listed below.
Google’s Privacy Sandbox includes technologies designed to enhance online privacy, such as the Protected Audience API (formerly Google FLEDGE), aimed at reducing third-party cookie usage and protecting user data for retargeting.
Google’s solutions allow firms to enter their first-party data anonymously into Google’s Clean Room (Google PAIRS) or use it for retargeting through the Protected Audience API. By integrating your first-party data with Google’s API and/or PAIRS, marketing teams can adjust to these shifts and build personalized ad experiences without the need for third-party cookies.
Platforms like Okta are crucial for managing user identity details across various platforms and touchpoints. By using a CDP to capture and merge these identities into unified customer profiles, businesses can tailor their messaging and promotions based on these insights.
Data clean rooms are secure environments where companies can share and analyze data without compromising individual customer identities. These environments are gaining traction as companies explore how to engage with existing clean rooms or establish their own. Major retail ecosystems like Amazon and Walmart are building data clean rooms to create closed advertising environments for brands and affiliates.
PPIDs are unique identifiers issued by publishers to help companies track and target audiences across their platforms.
By using PPIDs, publishers can collaborate with advertisers to manage the entire ad ecosystem using their global unique identifiers. Successful publishers may invest in a CDP to manage subscribers and user data, while advertisers can work with partners to create a proprietary advertising environment. The synergy between advertisers and publishers using a CDP to harness first-party data, synchronize PPIDs, and monitor related activities can provide valuable insights.
Digital fingerprinting is a technology that identifies user behaviors and preferences based on their unique digital characteristics, such as browser types, screen resolutions, or installed fonts. While this data can be crucial for delivering relevant ads in suitable channels, its primary usage lies in optimizing ad placements to ensure visibility, rather than customizing ads for individual profiles. Solutions like Fingerprint, Shield, and SEON can analyze this data to help build optimal advertising experiences for clients.
Advertising automation software can help businesses manage the complexities of cookieless advertising by automating tasks such as ad placement, targeting, and reporting. Tools like HubSpot’s Marketing Hub offer robust automation capabilities, enabling marketers to execute complex campaigns with minimal manual intervention. By integrating these tools with first-party data sources, businesses can create highly targeted and effective campaigns that comply with privacy regulations.
These tools enable companies to collect and analyze first-party data, automate marketing processes, and deliver personalized experiences at scale. For example, Adobe Experience Platform allows marketers to unify customer data from multiple sources, providing a comprehensive view of the customer journey without relying on third-party cookies.
In this article, we observed the challenges a cookieless future presents to advertisers and provided best practices and solutions to help your business adapt to an environment where third-party cookies are no longer used.
By embracing new digital advertising strategies, technologies, and partnerships, businesses can navigate this transition successfully and continue to thrive in the digital age.
Kanda Software specializes in developing custom software that enables businesses to collect and utilize first-party data effectively and in compliance with privacy laws. By applying advanced technologies such as AI, machine learning, and secure data storage, we help clients maintain a competitive edge in the ever-changing digital landscape.
Want to join the list of companies staying ahead of regulatory challenges? Talk to our experts today.
