There are massive changes on the horizon for cookies – and, with apologies to Mrs. Fields and Famous Amos, the new recipe might leave a bad taste in your mouth – if you don’t prepare now.
Of course, we’re talking about digital, third-party cookies – those tiny blobs of data that a website deposits onto your computer when you visit. And though consumers haven’t always been fans of this exchange of data, companies of all sizes rely on them to help us digitally target consumers with more relevant and focused ads.
Typically, third-party cookies have been the key to unlock a world of possibilities for advertisers, using a nifty bit of AI. Here’s an example: Let’s say you are a consumer who visits rottentomatoes.com to get the low-down on the latest flicks. Quietly, in the background, the third-party cookies stored on your computer performs a handshake of information with the movie website. As a result, instead of seeing generic low CPM movies ads, you might see an ad that seems surprisingly relevant to your buying interests. By allowing this exchange to occur, rottentomatoes.com benefits from a higher price paid by the advertiser, since your eyeballs are now a higher quality target.
Why does all this matter?
Well last year, to address privacy concerns, Google announced that sometime in 2021, it will no longer allow third-party cookies to be used in its Chrome browser – a development that would be akin to edible cookies no longer coming with a chocolate chip option.
This is a critical change, given that Google’s popular Chrome browser commands more than two-thirds of the world’s browser market. This means that all of those third-party cookies will crumble into oblivion when a user visits a site using Chrome – returning no information regarding targeting or relevance. Thus, ad performance declines, advertisers pay less (a lower CPM) and publishers either go out of business or will have to start charging for their content (good luck!). Of course, consumers will be happy that Google has helped address their privacy concerns but outraged if the unintended negative consequence is a pay-per-view model for favorite website content.
So, what should an advertiser do about this? These changes certainly expose a truth that most sophisticated companies understand: It’s simply a bad practice not to have a Plan B when it comes to relying on a third party in this manner. Certainly, Google has made algorithmic changes before; in fact, I’ve helped several enterprises deal with unexpected changes made by Google, Facebook, and others.
Start today by looking at, and investing in, alternative tools to replace cookie-based targeting. As an example, contextual targeting – where advertising media are controlled on the basis of the content of a website using linguistic elements – seems likely to emerge as a leading strategy for the post-cookie reality.
Advertisers might also cut back their online ad spending and spend it on internet TV, which does have targeting capabilities (but doesn’t offer the direct response options that online advertising does). Or they might shift even more spending to “walled gardens” like Google, Facebook, Amazon, Pinterest and Snap, which don't rely on third-party cookies for targeting because their tracking metrics are tied to logged-in users.
Multiple companies and associations are implementing work-arounds. In fact, some large ad agency groups recently have made acquisitions in first-party data marketing, to create ways to figure out user identity for personalized marketing campaigns. If you don’t have an agency or an in-house marketing resource that is up to speed, get one!
Worry not – there is a future for digital targeted ads once the cookies crumble. But, there are a ton of factors you’ll want to consider in weighing your alternatives. Your best bet is to stay abreast of the latest developments and find someone with expertise who can help you navigate this ever-changing landscape.