August 16, 2021
Data privacy changes have been a hot topic of discussion for digital marketers. Google recently extended until 2023 its deadline to phase out third-party cookies tracking from the popular Chrome web browser. That announcement followed Apple’s launch of App Tracking Transparency, an iOS 14 feature that requires apps to get user permission before collecting and sharing their data.
Both changes have seismic implications for advertisers who have long depended on third-party cookies and iOS tracking data to connect with their target audiences and measure campaign performance. Let's look at the the changes, what they mean to you today, and what you can do to get ready for a cookie-less future.
Third-party cookies are a piece of code embedded into a browser by an outside domain or data company. When a user visits a site that employs third-party cookies, a snippet of code is added to their browser to collect data on browsing behavior.
It’s important to note that cookies do not collect personal information such as name or email; rather, they take note of search query history, behaviors and interests. Once cookies are in place, users will see more relevant ads popping up when they browse the internet. For advertisers, the extra information gathered enables you to retarget and behaviorally target specific audiences — two of the most efficient digital tactics for many campaigns.
Third-party cookies have been the primary tool for audience targeting for the better part of 20 years, making the impending phase-out a massive disruption to the way advertisers serve ads to customers. The transition is so significant to the industry that it acquired the nickname “the cookie apocalypse.”
While Apple’s Safari and Mozilla’s Firefox have already discontinued use of third-party cookies, more digital marketer eyes have been on Chrome, the world’s dominant browser with 60 percent of usage globally. Advertising challenges associated with a move away from cookies include:
Google’s original plan was to phase out third-party cookies from Chrome in 2022. The company’s decision to delay the transition by a year underscores the complexities of finding answers that balance privacy concerns and the needs of marketers. Frankly, the timeline change also highlights Google’s admission that they will most likely take a significant hit without cookies, and are incentivized to phase out the technology only after a strong alternative becomes available.
Many advertisers have been awaiting an industry solution to tracking, and most importantly retargeting, and they have been concerned about the immediate future without a viable alternative to cookies. The extension bought them some time to look for guidance from industry leadership, and prepare to implement any necessary changes.
The industry has yet to come up with a viable replacement for third-party cookies, but they are actively searching. The Interactive Advertising Bureau (IAB) has been discussing how to “re-architect digital marketing” and make it a better place for consumers, while Google is also working to solve this issue. The Google Ads platform relies heavily on data from third-party cookies, so Google has a vested interest in the issue.
Starting with the iOS 14.5 operating system, Apple implemented App Tracking Transparency (ATT for short), requiring apps in the App Store that engage in ad tracking to show users an opt-in prompt. The vast majority of iOS users are choosing greater control over how their behavior is tracked, with more than 90 percent opting out. This placed significant limits on marketers accustomed to robust ad personalization and performance reporting capabilities.
Impacts of opt-outs on advertisers include:
The other big change iOS 14 brought was a significant reduction in the ability to target iOS 14 users based on location, as well as to track foot traffic to retail locations where that is relevant. Any campaign that relies on mobile device location tracking will miss the majority of the iOS 14 audience — nearly 50 percent of all mobile users. Location-based tracking was one of the most tested and promising alternatives to cookie-based targeting, and about half of the potential audience was gone overnight.
The ability to track campaign performance has already begun changing, and there will be additional shifts as cookies are phased out. Advertisers will have to accept less personalization of both targeting and tracking, and a move to cohorts or groups of like users. This is similar to traditional advertising; think about broadcast advertising running on a radio station or during a specific TV show based on high concentrations of types of viewers.
At Performance Marketing, we’re working with clients to evolve the way we target their customers. We strongly recommend taking this opportunity to shift focus from third-party data to first-party data that can be leveraged in future campaigns. The sooner advertisers begin building a strong database, the better they will be positioned to pivot as targeting and measurement options evolve into 2023 and beyond.
If you have any questions about how these data privacy changes might impact your business or would like to start developing an alternative digital media plan, reach out.
This article was written by Andi McIlwee, Media Director at Performance Marketing.