Data-driven digital marketing doesn’t have to crumble alongside third-party cookies

Welcome to 2020. It’s a bizarre land of pandemics, a largely remote workforce, Tiger King, murder hornets, and everyone trying to figure out what our new normal looks like.

In the midst of all this upheaval, the digital marketing community itself is also poised for some dramatic changes in the not too distant future. Back in January, Google announced its plan to sunset third-party cookies in Chrome within the next two years and, not to be outdone, Apple followed suit by announcing their own steps to block third-party cookies by default in Safari’s Spring 2020 update.

Cookies, a staple of the open web since their release on Netscape in 1994, have served to enhance user experience in a variety of ways. Everything from authenticating logins to online cart tracking to personalization relies on cookies to function. However, these pleasantly named packets of data also bring with them a variety of other applications – many of which have come under fire in recent years thanks to high profile security breaches and abuses by marketers (real and perceived) who look to tap into the goldmine of browsing data to drive results. Now, with the proliferation of privacy regulations such as GDPR and CCPA, cries for online privacy have reached a fever pitch and spurred the major tech giants to step in and make some changes.

The immediate and upcoming changes to third-party cookie support carry a variety of challenges for digital marketing. Much of our current industry landscape is reliant on cookie data to function, such as:

  • Behavioral Targeting
  • Reach and Frequency Tracking/Management
  • Conversion Tracking and Attribution
  • Remarketing and Site Retargeting
  • CRM Targeting and Segmentation

Without third-party cookies, the aforementioned will evolve to work in different and seemingly reduced capacities. Conversion tracking shifts from view-through conversions (users who saw the ad but didn’t click) to only giving last-touch credit based on click-through. If you’re not familiar with the differences in these attribution methodologies, this essentially means you will only be able track conversions from users who clicked on your ad. If this doesn’t scare you, then I challenge you to think about your own consumer behavior for a moment: how often do you really click on ads?

In other cases these tactics will cease to function as we know it. Site retargeting is dependent on third-party cookie data to identify the correct anonymized users to target. Behavioral data segments are predominantly cookie-based, as are DMPs and many ad servers’ conversion tracking. Multi-touch attribution goes away, leaving many advertisers potentially in the dark about the comprehensive impact of their digital marketing efforts.

Make no mistake, these changes will bring with them some significant repercussions for advertisers and technology companies that do not adequately seek out and prepare for the new normal. However, there are steps that can be taken now to wean ourselves off of the cookie.

Identify New Ways to Capture Reliable Data…Responsibly

Third-party cookie data is positioned to fade into the distance in less than 2 years. However, that doesn’t mean that data capture will hop aboard the train. The open web is largely fueled by advertising revenue and data will remain a fundamental part of focusing marketers’ ad dollars to reach their best prospects efficiently.

There have been early predictions that contextual targeting will experience a renaissance during this transition. On one hand, it certainly is true that contextual data – specifically site and app targeting – is well positioned to capitalize on changes. This type of data will let marketers quickly align with the consumer and industry content that they deem most relevant to their target audience, but it also tends to have a steep price tag and require higher CPMs. This is especially true when you start looking at the publishers and verticals that offer high audience reach, like Sports and News properties. Fortunately, this is not the only angle of attack.

There is a great deal of opportunity awaiting marketers who are willing to tap into the power of location data. If the current pandemic has reminded us of anything, we are creatures rooted in the physical-world. Each of us has thought long and hard about the first place we will go after things get back to normal. What this demonstrates is that our real-world signals can provide as many, if not more meaningful data signals as third-party cookies ever could. This data can then be utilized for audience targeting, location-based retargeting, personalization, and attribution when measuring foot traffic to key Places-of-Interest (POIs).

It is important to note that not all location data is created equal. Many location data providers rely on bid stream data to scale up, but this data is notoriously inaccurate. As marketers look to onboard location data, they should scrutinize their providers not just to understand where they get their data, but how they collect it.

At Gimbal, our location data comes from our proprietary Location SDK, which is integrated into thousands of publisher and brand apps. Our SDK provides utility to the app developer and ultimately the end consumer, whereas many other players in the space rely on incentivized apps and programs to collect their data. In fact, an independent review by MightySignal in 2020 found that the Gimbal SDK boasts the single largest number of app installations among our competitive set.

More installs means more monthly active users, more robust data collection, and a higher degree of data validation without needing to rely on statistical models to fill the gaps. We then take this location data and feed it into our Identity Graph, allowing us to anchor the real-world data signals back to consumer profiles for use in segmentation and numerous other marketing applications. But, let’s not forget that it is the year 2020.

It is not enough to just capture a lot of actionable data. The burden is on technology companies and marketers to capture data responsibly, lest we repeat our past mistakes and provoke a new wave of backlash against our industry that brings us right back to where we started

We must remain sensitive to customer needs and sensibilities by providing best-in-class privacy policies and utilities that are minimally intrusive. Moving forward, credible data platforms must be built with consumer consent in mind.

Use Location Data to Bridge the Gaps in Consumer Identity

The cookie may have been one of the most widely adopted currencies for identity, but by no means is it the only one. We can expect to see some of those other existing currencies, such as Device ID and IP address, compete for a chance to sit on the Iron Throne in a cookie-less marketing world.

Device IDs are arguably best positioned to step into the cookie’s shoes, as they provide a similar 1-to-1 targeting relationship between brands and consumers. The limitation with targeting by Device ID alone is that it only provides insight into a single device, yet most consumers own 3+ devices (tablet, smartphone, laptop, etc). This leads to a highly fragmented view of audience segmentation and measurement. Meanwhile, IP address targeting has been around for quite some time but suffers from high levels of inaccuracy due to the IP address not being correlated to geographical location – or even to an individual user. This isn’t even considering the fact that VPN technology, which stands to see more adoption in a remote work landscape, switches your IP address to be in a new virtual location. This inaccuracy will likely rub many advertisers the wrong way since they have grown accustomed to precision and the reduction in wasted impressions that comes with it.

So what should we do? Utilize technologies that ingest quality physical-world location data to bridge the gaps in consumer identity.

Identity solutions have been steadily growing in popularity over the last few years and are databases that compile all known identifiers that correspond to an individual consumer into a singular customer profile. Some examples of identifiers include datasets ranging from device IDs to email addresses to physical locations. The latter gives marketers a view into the real-world data signals of consumers’ interests, purchase intent, and even brand loyalty. By ingesting this location data, marketers can approach their consumers on a 1-to-1 basis and maintain that relationship across all their devices using a single, anonymized audience profile. These profiles can then be used in many applications, including user-level frequency capping, segmentation, and performance tracking – things we historically relied on the cookie to accomplish.

Define Your Measurement Strategy and [Re]Set Your KPIs

Perhaps one of the most pressing changes ahead for marketers is the way digital advertising success is measured. View-through conversion tracking and, by extension, multi-touch attribution as we know it will be going away. As a result, the troves of historical benchmarks against your most conversion-based KPIs will be going away as well. This brings with it some challenges and opportunities. 

Marketers have grown accustomed to holding digital ad spend to a higher standard than traditional tactics due to the high degree of measurability available through digital channels. As the measurement capabilities change, marketers will be forced to reset their expectations on most of their digital media mix. For example, it will no longer be reasonable to expect display ads to drive conversions on par with paid search ads (SEM) if display cannot deploy cookie-based retargeting tactics.

While it may be tempting to simply funnel those dollars from other digital tactics into SEM, don’t lose sight of the fact that Google is trying to play both sides of this issue. The death of the third-party cookie means a near total reliance on last-touch, click-through conversion tracking. Blindly accepting this, however, is a trap. Back in 2015, Nico Neumann, then a senior research analyst at University of South Australia, succinctly shed light on the issue:

“…It should be noted that one of the biggest winners of last- touch attribution typically is the SEM industry. The reason for SEM being so strong here is that consumers often search the desired brand or product online when they intend to return to the website and convert. Yet, whenever multi-touch methods are used to assess marketing tactics, ‘search’ tends to experience the greatest losses in comparison to the last-touch approach.”

It’s easy to see SEM as low hanging fruit to drive performance in the cookie-free New World Order. However, savvy marketers should question whether or not this performance is truly from incremental returns or if they are simply paying to make organic leads into paid ones. The death of third-party cookies stands to directly benefit Google, and similarly Facebook, as a walled garden platform for not just targeting, but also measurement. Instead we should be ready  to scrutinize the tactics being deployed in our media mix, champion transparency in our ad and data platforms, and cherry pick the specific metrics and definitions that best indicate campaign success.

While this may seem daunting, there is a tremendous opportunity here for advertisers to recalibrate their digital measurement strategy to best align with their business objectives. Just because we lose data historically provided by third-party cookies does not mean we have to settle for only tracking clicks or click-based conversions. Marketers still have access to a range of measurement options in their toolbox, and perhaps the death of the cookie is the catalyst we needed to give ourselves permission to try something new or different.

Let’s revisit the location data gathered from Gimbal’s Location SDK. In addition to the aforementioned segmentation use case, this same data set can enable customizable measurement strategies across nearly every industry vertical. Below are some examples:

  • Restaurant advertisers who have long relied on online reservation tracking to measure ad effectiveness can adopt visit-based metrics to evaluate how efficiently their digital spend drives foot traffic to their locations.
  • Hotel and Hospitality advertisers can enhance their measurement approach to track visitation from unique travelers exposed to their digital ad campaigns.
  • Automotive advertisers can measure foot traffic to their dealership showrooms as an indication of consideration. Moreover, they can track visits to the dealership service centers to get a gauge of how effectively their marketing tactics drive upsell.
  • Retail advertisers can track visits from ad-exposed customers as well as visitation frequency in order to measure loyalty.

Wrapping Up

The immediate and upcoming changes to third-party cookies stand to uproot the way the advertising industry has been doing digital for over a decade. The proliferation of cookie data helped fuel the growth of digital media beyond merely being a piece of added-value tacked onto a TV, radio, or print deal. It empowered marketers to make smarter, more agile, performance-driven decisions using technologies like view-through attribution, site retargeting, and DMPs. It even spurred us to nearly quadruple the number of acronyms in our repertoire.

Change is at our doorstep, but advertisers that take action now will have a leg up over their peers. Now is the time to explore and test new ways to drive meaningful business results. We can learn now how to best measure the effectiveness of our media dollars tomorrow, so we can establish the data-driven benchmarks that help us in a new era of online advertising.