Have you ever wondered how brands can serve you ads across the web? Maybe you were looking at Nike and then saw an ad on Facebook for those same shoes. Third-party cookies control these ads.
In March of 2021, Google’s Director of Product Management announced that they are phasing out the “third-party cookie” and explicitly stated that they don’t plan to build an alternative way to track individuals as they browse.
For a lot of marketers — myself included — this made our stomachs flip. Google Chrome holds 67% of the browser market share, and eliminating the third-party cookie will change the fabric of digital marketing for years to come.
This “cookiepocalypse” doesn’t just bring an end to retargeting ads by B2C companies. It’s essential to call out that even SaaS companies’ digital marketing efforts will be affected.
The good news: Google is delaying plans to phase out third-party cookies until 2023, meaning you have more time to prepare.
So, you might be wondering, “Hey Ian, should my startup be worried? How should I prepare?” Well, I am glad you asked. This article is for you.
What are third-party & first-party cookies?
There are various types of cookies on the web. Third-party and first-party cookies are the two that you likely come into contact with each day.
First-Party Cookie
First-party cookies are easy to understand. They’re defined as data stored directly on your domain that can only be created and viewed by the website’s owner. Examples include login information, language preferences, and much more.
Third-Party Cookie
To be frank, defining third-party cookies is much more confusing. To describe them simply, they are tracking codes placed on your website from any source outside of your website. Typical uses of the third-party cookie include online advertisers, support chat widgets, and social media.
For example, let’s pretend you’ve visited an online skincare store looking for a new face wash. You browsed multiple pages to weigh out the pros and cons of each product, but you’re hesitant to purchase, so you leave the site and intend to come back later.
A few days pass, and while you are on Instagram, you see an ad about one of the products you viewed. Later on Youtube, you see another ad. Then you see the same ad again on a local news site.
Why? The skincare site you visited used a third-party cookie, and that cookie was stored as a part of your session data. This allows you to be sent related ads across platforms, apps, and websites.
What Will Replace the Third-Party Cookie?
The writing has been on the wall for the third-party cookie for some time now. In 2013, Firefox rolled out the ‘Do Not Track’ feature that defaults users into not being tracked by third-party cookies. Both Microsoft and Apple followed suit in 2017.
In 2019, EU data protection and privacy laws (like that of GDPR) put into place a law that consent must be obtained from website users before storing tracking cookies for targeted advertising. Around the same time, the California legislature passed California Consumer Privacy Act (CCPA) that implemented new requirements for identifying, managing, securing, tracking, producing, and deleting consumer privacy information.
With these new regulations combined with an increased need for consumer data protection, Google recognizes it’s time to make a change. Below I’ll outline what you can expect as a replacement in the future.
First-Party Data Partnerships
As discussed earlier, you own the data on the users that come to your website via first-party cookies. Publishers like Vox Media and New York Times also collect and hold the data on their website visitors.
If you and a publisher share information on a similar user, partnerships can be formed, and ads are distributed on both sites that benefit both parties. These connections are very complex and will benefit large businesses with vast first-party data.
These types of partnerships boost consumer privacy because consumers gain control of who they give their data. Instead of the shady business of selling user data, consumers are voluntarily giving up their data in exchange for free downloadable content, coupons, and other benefits from these brands and publishers.
The true losers in this situation are small and mid-size brands, publishers, and startups that limited first-party data. This increase in privacy from leading tech companies like Apple and Google has unintentionally impacted the reach of smaller companies and startups.
The downside of this option is some companies can still partner with third-party data companies to “enrich” their first-party data. These third-party companies have access to a slew of other demographic data to append to their current database. While consenting to first-party data is more private, you might still be giving away more than you are privy to.
Browser-Based Tracking
In this solution, browsers (Google Chrome, Safari, etc.) would collect information about what you do online and save that data to your computer. Based on this data, these browsers can segment users with others like them. After that — every time you visit a website — your browser will communicate your segment with the site you’re visiting, allowing advertisers to target you based on your interests.
So, how is this different? Your data is hosted on your computer and not somewhere else. Additionally, advertisers would never see your specific information. Instead, they only see the general segment you belong to.
This approach would completely change the advertising industry by making the browser the sole source of advertising data distribution. This would bring browsers, specifically Google, to the center of all advertising moving forward.
Google Chrome is currently testing this in Australia, Brazil, Canada, India, Indonesia, Japan, Mexico, New Zealand, the Philippines, and the United States. Chrome is the first browser to state that it is working on a product like this.
Advertising ID Tracking
Another avenue for replacing the third-party cookie is assigning every web user an advertising ID. Every time a user logs in to a website with their email address, advertisers could identify and track them using their specific ID. This ID would not be available to third-party companies because it would be encrypted. With this in place, digital advertising would appear unchanged by giving ad tech platforms insight into users’ behavior while being privacy compliant.
The Trade Desk developed Unified ID 2.0, which uses consumers’ anonymized email addresses to serve advertisements. Quite a few companies have gotten involved with Unified ID 2.0 since October 2020, including The Washington Post, Nielsen, and FuboTV.
The downside to this approach: People aren’t used to giving away their email address the moment they visit a website. Educating users on this change would burden brands to educate and incentivize users to give away that information.
Contextual Advertising
The advertising industry could also pivot back to older strategies, like contextual advertising. where you could place ads in publications next to stories with related content to your product or service. This strategy would rely on last-touch attribution. Last touch attribution is not the best approach to measuring leads, and success is only measured by the people who click on the ad and lead to sales. It does not track those who view it and come to the site later to make a purchase. This limits data access and our ability to track campaign efficacy.
In my opinion, this pivot is unlikely, but we could see contextual marketing rise in popularity temporarily while brands find a new way to target their audience.
How Can Your Startup Prepare?
By now, I hope you have grasped that this is a huge shift on the internet. My first bit of advice: don’t panic. It is easy to get lost in the change, but there are some practical ways that you do for your company to pivot to a cookieless world.
1. Develop Your Database
As a startup, you might not have a lot of first-party data. You might have a database of 100-500 people. That might be a good start, but limits who you can target. Again, don’t panic. Here are a few practical ways you can build your database quickly:
Lead Magnet Content
User data is vital to your startup and collecting that data via a landing page with a form is a practical way of approaching this. A good landing page experience coupled with a high-quality piece of content that you promote can allow gathering that information effectively. Keep in mind, this should not be a low-quality piece of content. Answer your customer pain points by giving something valuable to them in exchange for their data.
Search Engine Optimization (SEO)
With the decline in paid advertising nearing our front door, higher importance is being placed on SEO. This means that you have to start even earlier in your startup’s lifecycle to develop and implement a strong SEO strategy.
Something to keep in mind with SEO, unlike paid advertising, it is not a short-term play and takes a lot of work to see results. Grady Neff, an SEO Consultant at Demandwell points out, “with the tidal wave of content that people produce every day, you’ll need to produce more to even begin making a dent in SEO growth.”
When those results come in, this will start filling your database with relevant leads and giving you more data on your customer profile.
Event Marketing
Events are another very effective channel in capturing customer data. Through online registration pages, you can capture all the data you need from new and existing contacts for your webinar or in-person event. Be aware of any data policies as you collect this information and ask for permission to use the contact information provided.
Newsletters & Email Nurture
Email marketing is making a strong comeback because of the dip in the effectiveness of advertising. Develop an email marketing strategy and get users to sign up for a newsletter and nurture users via email marketing campaigns. Don’t just add to the noise in their inbox, stand out and nurture them to become customers. Give potential readers a reason to sign up and consume your content (valuable lessons can be learned from Morning Brew).
2. Use the Google Marketing Cloud
Google Analytics and GA4 are excellent tools for your startup and learning about your website visitors and customers’ web activity. If these aren’t implemented correctly, you miss out on valuable first-party data.
Other tools, like Google Tag Manager, that focus on first-party tagging are highly valuable in tracking on-site conversions and web activity in Google Analytics. Using this correctly can tremendously increase the amount of visibility into the first-party data you have on your site.
3. Segment. Segment. Segment.
It’s one thing as a start-up to grow your database, but you also need to understand who your contacts are. Conduct an audit of your current database and identify where you’re capturing contact data on your site. This will give you a view into who makes up your database and what types of content you need to make to tailor to different segments.
Have a bunch of leads from an awesome guide you have produced? Send related content and nurture them to go further down the funnel through personalized emails.
Have a group of contacts that are consistently viewing bottom of funnel pages? Spin up an email campaign to check out your product.
Conclusion
At the end of the day, 2023 is going to be a big year for marketers around the world as they adapt to this change. I hope that you can keep a level head when navigating these changing times and be prepared as you continue to grow your start-up in the digital space.
