The last cookie crumbs in the digital advertising ecosystem

What the #$% is going on with the digital advertising ecosystem? *

There are many articles available online, explaining both the Google Cookieation (my clever way of saying “situation” in this context) and the Facebook and Apple fight about privacy.

* Probably one of the best I read was Rand Fishkin’s article, which is why I chose to start this one using the same opening statement as he did.

In January 2020, Google put a death sentence on 3rd party cookies announcing that they would no longer be available to companies. It’s a phase-out process that will be completed in 2022.

Facebook and Apple are beefing on ad display and user privacy. Over the years, Tim Cook, Apple’s CEO, has criticized Facebook for “collecting gobs of data” and “monetizing its customers” per the New York Times.

Obviously, this affects everyone dependent on 3rd party data. Which is mostly everyone.

But first, let’s talk a bit about what 3rd party data is and what other types of data are there available.

Well, there are many types of customer data available today, and a lot of names are used to describe them, but it all boils down to 3 (update: 4)

Third-party data (the cookies), is basically info that has been collected and compiled by an organization with no direct link to the subjects of the data that is then sold to other organizations. Third-party data is primarily gathered via cookies that the independent organization places on a variety of webpages, which are then used to “track” the movements of customers across the Internet. This browsing data can then be pieced together to create customer profiles, which can then be segmented based on the pages they visit and used for ad retargeting initiatives based on the tracked behavior.

Source

Then you have 2nd party data, is actually just another company’s first-party data that is either shared with your organization through a partnership or purchased by your company secondhand (thus the “second” in second-party). Data sharing is generally carried out between trusted business partners to ensure that the data is trustworthy and not mishandled by either entity. Second-party data is extremely useful for marketers looking to gather intel on customer segments completely outside of your existing ones. (example sponsors for an online event having access to the people that registered and participated at the event).

Source

First-party data – which is also the digital gold of the internet is the information that your company collects on its customers (thus the “first” in first-party). First-party data is sourced from a variety of direct customer-business interactions, which include: transactional behavior, customer feedback surveys, app uses, subscription based emails etc).

BONUS: There are actually 4 types of data, sorry Yaag (I know you wrote about this too) there is Zero party data. Zero-party data is the information which a customer intentionally and proactively shares with a brand. It can include preference center data, purchase intentions, personal context, and how the individual wants the brand to recognize.

OK, so now that we know what the 4 types of customer data are, let’s go back to the cookies. 

You know what they are but how will this affect you or affect marketing as we know it?

One example is marketing automation tools.

Marketing automation tools are essential to any marketer’s day to day activity. 

These platforms are mostly dependent on 3rd party cookies so if this data no longer exists, there won’t be that much information available to support the automation. The main way out will be the use of the first-party data.

Another example is advertising. The advertising culture and the ad ecosystem is terribly flawed as most companies are highly reliant on 3rd party data to bring new audiences. Across the ecommerce industry there is a need for more accurate targeting, more transparent data, and more relevant advertising, all of which come from using reliable, safe and secure data from legit sources.

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The advertising culture has created high retention rates over the years. Facebook, Google and other tech giants have millions of ecommerce brands retained. Brands are coming every month and pouring money in their services, while their own profitability is sub par or in the best case scenario, they are barely breaking even.

This way agencies got rich, the tech giants got rich while the ecommerce brands were stripped naked of any sort of ownership of the relationship with their existing customers making the ad network a place of big uncertainty.

Why? All because of focusing on growth generating factors (traffic, AOV, revenue) instead of actual growth (Customer Lifetime Value, Retention, Customer Satisfaction, Loyalty, etc.)

But hey, that’s just me. 

Because this topic is important for more people to understand and learn more about, I asked my friend Lorenzo Carreri what he thinks about the death of the cookie. Lorenzo said:

Lorenzo Carreri

CRO and Growth Consultant

I am a CRO and Growth consultant with 11+ years experience in digital and tech. Helping eCommerce and SaaS grow profitably is what gets me excited every day.

After talking to Lorenzo,  we both decided that we need to team up with a group of seasoned marketing professionals in our industry, that cover different layers of growth and together we should take one hot topic at a time and break the myths and fluff around it.

We also got Valentin on board and this is how the Customer Value Optimization Monthly Round Up came about.

So, let’s see what some of the best digital marketers of the moment think about the cookie.

Or what else is left from it.

Shiva Manjunath

Program Manager – Gartner

An experimentation wizard who is obsessed with data. I’m passionate about testing to learn, driving revenue, and creating high-value user experiences.

Very thought-provoking question. Something a lot of us are probably burying our heads in the sand until it becomes more of an issue in 2022.

In terms of the tools themselves, they will have to pivot to new technologies to target users, especially the testing tools which primarily function on a cookie-basis. I read somewhere about ’trust tokens’ which Google is using as a replacement for cookies, which likely means testing tools should already be preparing to target users based on this (or whatever other technology comes out) instead.

Critically – it’s going to make capturing first party cookies all the more important. CRO needs to focus more on the funnel and creating a better experience, which you THEN trade assets/experience for user data. Which, I’m kind of excited for. This should raise the bar on people creating better sites, better content, better products, etc.

You shouldn’t rely on others (i.e. third party data) to have your user data. You should have a good enough site to capture that information on your own by providing value to the user and a good user experience. Instead of people hyper-focusing on RPV and CVR, I hope this pushes the conversation more towards lifetime value metrics.

Elise Connors

Director of Marketing Client Services at Happy Cog

Elise oversees NYC-based Happy Cog’s SEO, Paid Media, and Analytics teams as the agency’s Director of Marketing Client Services. She has over 13 years of digital marketing experience and is a student of consumer behavior and user experience.

I’m of two minds about the end of third-party cookies. On the one hand, I’m glad because lazy advertisers will be punished. On the other hand, many systems will suffer, and those unaware of how this change will impact them will get left in the dust. 

There will be a “class” separation of sorts between the brands that can afford to prepare and those who can’t. The larger entities have people on staff thinking about their data and how to navigate this situation & minimize the impact. 

The biggest “enemy” here will undoubtedly be a lack of preparation. The sky is not falling, but it will feel that way for companies who don’t think about this and work through a revised digital strategy approach until Q4 2021. They’ll be scrambling to pull the pieces together and won’t have the benefit of using this year (2021) to prepare. 

My biggest recommendation to organizations is to leverage the availability of third-party cookies to build a rock-solid foundation of your first-party data. Invest in a Customer Data Platform (CDP) to make sure that you can connect all of the data that you can about your customers now. Everything that you collect starting now will still be available to you when third-party cookies cease to exist. 

It will require forethought and planning to avoid issues here. The lazy advertiser will be challenged and may not survive. But, those that walk into the change thoughtfully could see themselves thriving on the other side of this.

Jason Greenwood

eCommerce, Digital and Retail Specialist

I ????? ?? ??? ???????? ??????????? ??????? ? ??????? ????. ?? ???????: To drag every business I can, kicking and screaming if need be, towards a New Retail future.

I think smart businesses already see the writing on the wall and are preparing to adopt a CDP or have already. They realize first party data has immense value in this new world and are preparing now to capture, organise and leverage it in smart new ways from segmentation through to remarketing.

Jonathan Ivanco

Customer Experience Data Evangelist

Jon Ivanco is a Customer Experience Consultant with a focus on data for eCommerce companies.

Both Google and Facebook are getting more involved in eCommerce.

They are in a transition to own the complete experience, Google has started it’s Buy on Google Program and Facebook has opened up selling on Facebook Shops and through Instagram. Both have teamed up with Shopify in a direct competition with Amazon.

If you don’t own your audience, someone else is going to be looking to take a cut really soon.

Both Google and Facebook mint money through their advertising businesses, though there are other options, they are by far the most dominant. The long term strategic play for them is to change the way people purchase.

Google as the search engine that powers intent based shopping and Facebook that operates as a media company to push out more visual focused content for brands with the convenience of easily purchasing from an ad.

Because of their cash reserves, they can allow people to use their services for free to sell their goods in order to gain market share, collect more purchasing data, and build out more robust systems. Remember they already can control what individual people see.

The long term play is always the same, acquire users at all costs then figure out ways to monetize their data later. If people are able to make the transition to completing purchases via Buy on Google or Facebook Shops or through Instagram it’s going to be nearly impossible to sell on the internet without paying them both for ads and a percentage of the sale.

Today, most eCommerce brands rely on Facebook and Google Ads to reach and stay top of mind with their customers, they’ve watched as prices have increased and reach has been reduced. This isn’t an accident. The latest moves to own the entire experience are Facebook and Google hedging against the end of 3rd party data as we know it.

If you can’t track people around the internet, you need to prevent them from leaving your web properties. The solution is to reduce friction and allow people to purchase without having to visit another website. The longer they can track the entire transaction on their properties, the more powerful they become. Large amounts of data are necessary to create accurate predictions and adding these purchasing signals on property will just add to the targeting abilities. Amazon has followed this playbook to the letter but in reverse.

Focus 100% on building your owned audience and double down on tracking your website visitors to create a great experience. Further, as a brand you need to view yourself as a micro media company, content is king and finding engaging ways to attract users to come visit your website will become a necessity. There isn’t a future where you can completely decouple from advertising, but there are ways to ensure that your advertising dollars are being well spent.

Marketing is changing, the methods will continue to change, but the companies that can make the adjustments now that focus on the customer journey and collection of 1st party and Zero party data will be the ones to adapt and overcome. Or at least have a fighting cha

Chase Dimond

The $50M Ecommerce Email Marketer

Chase is currently a Partner at Structured — a top ecommerce marketing agency, where he runs the email team. Since June of 2018, we’ve helped our clients send over a billion emails resulting in over $50 million in email attributable revenue. A few of our previous and current clients include: The Chive, IBEX, Original Grain, and CrossNet.

People love to complain about how creepy it is to see ads based on what they’ve searched, viewed or even what they’ve talked about (thanks Siri and Alexa).

And while I do also think it’s a bit creepy, I personally would rather see relevant ads based on what I truly care about vs. irrelevant ads that I have 0 interest in whatsoever.

Unfortunately, with everything that’s going on, I think we’ll start seeing less relevant, more generic ads. Which frankly, will be a major blow for brands and agencies that depend on it. And honestly, I think it’ll suck for consumers too. I want to see recommended products based on what these platforms know I care about. As such, the discovery of new products will become a whole lot less useful (since ads will become more cookie cutter and less targeted, for those that decide they don’t want platforms to have their data, that is).

At the start of 2020, ironically, my agency (Boundless Labs) which focuses exclusively on ecommerce email marketing merged with another agency that focuses exclusively on ecommerce paid acquisition (Structured Social). 

We merged due to the fact that we were servicing a lot of the same and similar clients. And in our humble opinion, paid acquisition and email marketing are arguably the two most important levers that brands can pull to drive explosive revenue. 

By no means did we predict what was going to happen, but looking back, the timing couldn’t have been better.

Reason being: I think paid acquisition agencies that only offer this one service are going to struggle. I think agencies are going to need to start selling multiple marketing services and instead be judged based on an overall performance vs. a single channel performance.

I also think the importance and investment into owned marketing will increase massively this year. Much like we saw last year with the acceleration of ecommerce. 

Brands NEED to own their audience. When you have an email list, you get to control your own destiny. You won’t be at the misery of social networks, who, as we’ve seen, can and will change policies that benefit themselves, not you and me. Social networks care about themselves and maybe a few of the largest advertisers. They don’t care about the small guys.

At the end of the day, only time will tell what the actual impact is. My last words that I hope you take seriously: Invest into your email channel.

Yaagneshwaran Ganesh

Top 100 Marketing Technologist, Author & Narrative Builder

Yaag is among the top 100 global martech influencers, a TEDx speaker, and a category creator. He helps early stage martech startups in building their narrative and category. He conducts marketing workshops and speaks at major global forums, conferences, and academic institutions.

The race towards tapping into 3rd party data has always been about identifying intent. And to me, intent data seems to be the biggest of fraudulent in the martech industry. At least in my view.

With Google’s third party cookies all set to go away for good, and the trust-ability of the so called third party data being questionable — I’ve always questioned the need for relying on it. 

The reason is that the third party data you invest on can only be predictive in nature and used for interpretation. It’s not explicit. More importantly, third party data may not always pass the consent test.

So, what next? Simple. Look into your own backyard – first party and zero party data, which is right within your martech ecosystems across your CRMs, marketing automation tools and more. You do not need to look for intent elsewhere. Pay attention to what your customers and prospects are saying. Use that information to extend their life time with you. 

Rishi Rawat

Founder, Frictionless Commerce

If you’ve invented a *truly* better consumer product, sell on Shopify, and have one product on your site that does over $250,000 in annual sales I’m confident I can grow its sales 20% within 90 days.

Personally, I’m very happy about this move.

3rd party cookies create an information asymmetry where marketers have an advantage consumers don’t.

I like old school direct response marketing where the marketer generally knows the audience but doesn’t have any super advantage ‘insider info’.

They can get creative, but can’t have a disproportionate advantage.

This also levels the playing field between advertisers. In the current set up, mega advertisers buy up all the 3rd party cookie data and can create such accurate models that buyers don’t have a choice but to fall for their siren songs. This means smaller advertisers can’t really compete, which means they die, which means the mega advertisers get even bigger.

I believe ending 3rd party cookies will lead to more creative advertising.

Eden Bidani

Conversion copywriter. Growth mentor. Secret anthropologist.

I write conversion-magnetic copy for landing pages, websites, and ads. And I do this with a 3-part “selling-not-selling” technique I’ve developed over 10+ years in direct sales and copywriting. It’s a solid little technique that turns even ice-cold traffic into leads and sales simply because it helps you connect with your should-be customers on a deeply genuine level.

Marketing is going to have to get creative again. Period. There’s no easy way around it. Many brands and companies have been squeaking by with mediocre copy and creatives in their campaigns because they’ve just been rinsing and repeating on “what the data says.”

Now, they have no choice but to dig deeper and find other ways to get their audiences to engage, buy, and become loyal supporters besides just waving a coupon code at them.

It will mean more, fresh, “big ideas” and bolder, omnichannel campaigns. And it will be exciting to watch as it unfolds.

Juan Mendoza

Founder – The Martech Weekly, strategist at the Lumery

Newsletter writer and strategist at The Lumery, I analyze marketing, data, and technology trends for some of the most well-known Australian and global brands.

As marketers and advertisers have flocked to digital channels during the pandemic, another force in the market has caused monumental change in 2020 – The phase out of 3rd party tracking across the majority of advertising platforms and apps. Either forced upon us by Apple killing IDFA tracking for iOS apps, Google changing cookie retention in browsers, following Firefox’s and Apple’s lead and the mounting research that targeting that leverages 3rd party data increasingly does not produce the results. With tightening budgets comes constraints on what you can do, and the evidence is mounting that programmatic advertising can introduce data privacy risks.

Because of this, marketers are searching for ways to get around the 3rd party data problem. For instance, The Washington Post recently released its contextual advertising solution that uses first party data. Also, CDPs and tag management solutions are building first party data pipelines into display and social advertising platforms as an alternative solution, by tying onsite behavior with a known customer identity (such as an email address). In 2020 we also saw a shift into server-side tag management from Google and other platforms further indicating that using anonymous, browser and app-based data for advertising targeting is becoming less important. 2020 has become a turning point on data literacy in the world of social, search and display advertising creating new opportunities to use first-party data for advertising as part of a broader shift away from 3rd party cookies.

Abby Wilson

Web Developer and Copywriter

I’m the founder of Tailor Framed, a Web Development company that relies on user research to make informed web design and copywriting decisions. My goal with every project is to make the most of the traffic you already have and make a great first impression on every visitor.

Nike’s Employee Number One (Jeff Johnson) single handedly grew his pen pal list from 0 to hundreds of people nationwide BEFORE the internet. 

What he ended up with was a wealth of customer information (stored on index cards) that was a precursor to the CRMs we have today. 

If he could do that pre internet, brands will find a way survive and thrive without third party cookies.

The agencies that relied too heavily on 3rd party cookies will have to learn the importance of diversification of lead generation. Never put all of your eggs in one basket, no matter how stable that basket seems. 

Great brands have always understood that customer relationships and perception is the driving force for growth. 

So they do whatever they can to make sure the relationship continues, before AND after a purchase. 

Since the 90s a lot of companies have relied on 3rd party cookies to learn more about their customers in an effort to create a relationship but those days are over. 

The need for data still exists, the source will simply shift.

We’re probably going to see an increase in first party data aggregation software (Like Vox’s Forte), and software like LiveRamp’s Authenticated Traffic Solutions. 

We’re definitely going to see a shift back to contextual ads as well. 

I think it’s a step in the right direction towards privacy rights but hopefully 3rd party cookie tracking isn’t replaced by something more invasive such as Fingerprinting.

Will Laurenson

Customer Experience Consultant

Will Laurenson is a customer conversion expert, with 9 years experience optimizing customer journeys to convert more traffic into customers, and retain those customers for longer helping companies achieve more profitable growth. He is also the host of the Customers Who Click podcast, interviewing guests from across the marketing spectrum to give actionable insights into growth.

Everyone is going to have to adapt, massively, and we’re going to see a lot of smaller agencies killed off. The ones who aren’t actually that technical or aren’t really marketers but simply know how to drive traffic and sales via channels like Facebook.

The brands who want to succeed, need to be just that. Brands.

Businesses that have clear values, and promote those values not only do better anyway because they encourage better engagement and loyalty from their customers, but they’ll stand out more, become the dominant ‘word of mouth’ brands, and that will be huge.

Some huge brands are explaining how they’re discovering massive waste in ad spend, and while some of it will be fraud, or bad behaviour, the fact that they are huge brands means a lot of this traffic would have found them anyway.

Consumers are generally happy with contextually sensitive, coherent brand experiences, but to do so brands will need to really master first party data, and learn that there are other ways to grow a company other than throwing hundreds of thousands, if not millions of dollars at Google and Facebook.

It’s going to get a lot tougher to acquire customers for brands who don’t take a creative, value led approach to acquisition, and brands who don’t place an immediate focus on retention and customer values just won’t be with us in 2022.

Philipp Loringoven

Professional Marketing, Analytics and CX Freelancer at Team Advertico

I am a marketer, developer and data nerd. Every day I combine digital marketing, technology, and data to create ideal solutions for customers. To keep it short and simple: Customer centricity!
For me, data is a resource for aligning a company to the needs of the customer, as well as to those of the employees to generate the most positive results for all parties involved.

Firefox and Safari started blocking 3. Party Cookies in 2013 – so nothing rly new here, except that Google is late to the party. I honestly look forward to it’s death because it’ll make the web a little tiny bit safer. Especially for people who have no real knowledge about the web.

So what will this mean for us marketeers? I see 3 fields of impact:

1) User centric targeting in programmatic advertising will shift to content and intent based targeting, because we’re losing a source of data that we needed: user identification.

2) Marketeers will invest more into marketing on walled gardens. The quality of data within the ecosystems of the GAFAM industry will now become even more valuable because external 

3) Growth of an API based marketing economy. With Google Chromes introduction of the “Privacy Sandbox” Marketers will still have the possibility so send data to 3. party APIs – with the exception that the user will stay anonymous.

Alex McEarchen

Founder of Spark Retention

Alex is a marketer, retention/loyalty enthusiast and Disney nerd. He is the founder of Spark Retention Consulting and Co-Host of The Exchange (a podcast on retention).

This announcement is going to accelerate the adoption of retention marketing efforts in ecommerce. It has never been more important to grow from your existing customer base. You need to understand your existing customers and optimize for repeat purchases and customer loyalty. 

The brands that will win (and were already winning) are the ones that create an experience beyond the transaction and don’t rely solely on ads to drive sales.

I think this is the kick in the ecommerce marketing community’s a** that was needed for a while 🙂

Dresean Ryan

Business Development Consultant

Dresean Ryan helps SEO consultants grow their brand and revenue.

Like everything else in Digital Marketing, I think those who are not willing to adapt during this time of change will lose. This is yet another obstacle that agencies and larger brands must overcome if they want to succeed. With Google eliminating third party cookies, marketers will be forced to be more transparent with their audience. It will make them have to do honest marketing and work harder to build a strong relationship with their audience. 

This shift also makes email marketing much more important than it already is, as it is a medium where marketers can collect the data points they need to have successful marketing campaigns. Ultimately, as we start to see more trends like this, it just reinforces that true sustainable marketing is building a relationship with your audience, and those who focus on this are the ones who will win.

If you’re reading this and you’re concerned about this shift, I’d like to pose a few questions:

How have you been preparing for this shift in the world?

Are you being as transparent as possible with your audience regarding data collection?

As long as you continue to do marketing in an ethical way, you will always be okay.

All in all, I think we all should have seen this coming given the fact that other browsers pulled the plug on 3rd party cookies a long time ago.

Bryan Starck

CEO (Chief Email Officer) @ 100 Celsius

I help eComm entrepreneurs create lifelong fans and scale profitably with email marketing

My opinion – this won’t be doomsday for brands.

There have been huge shifts in the advertising landscape many times before. 

And smart entrepreneurs have always come up with ways to thrive in new environments.

That said…

Facebook’s killer targeting has made it super easy to make money on its platform for quite a while.  

But very soon, the changes of iOS 14 and 3rd-party cookies will make attribution, tracking, and retargeting a lot more difficult.

As such, here are my four big predictions:

1. This shift will separate the paid media “wheat from the chaff”. Great marketers will still be able to scale top-of-funnel campaigns and show ROI. Average marketers won’t be able to anymore. 

2. Advertising is going to be all about knowing your real P&L numbers. ROAS will become an even more pointless measure of return than it already is.

3. Having an offer that makes your top-of-funnel audience scream “YES PLEASE!” will be critical. (It always has been… but now even more so)

4. Retailers will have to shift from focusing on acquisition to focusing on retention. 

Without the ability to do such advanced targeting on the front end…growing LTV, leveraging 1st party data, and nurturing relationships on the back-end through email and other CRM channels will be critical

Brands that can nail those ^^ will be just fine.  Brands that can’t… I’m not so sure.

James Barger

Freelance Marketing Consultant

I help 7-8 figure e-commerce companies 2X their sales and build deep customer relationships with email marketing. If you have a list of over 10K people, let’s talk!

The Internet is becoming more like real-life.

For example… Let’s say you ran a candle shop in the mall. You wouldn’t follow someone around, thrusting scented candles in their face after they looked at your storefront once. You’d probably politely approach them while they visited your store.

Agencies that have relied on 3rd party cookies alone are scrambling to find out if they’ll have a business in 2021. Brands I’m less worried about. They had to drive the cold traffic to their site in the first place. They may just need to change their retargeting campaigns. Chances are they’ve got a good email capture game as well. There are still a lot of options for them.

Retargeting isn’t dead yet. There are still 3rd party pixels. We aren’t out of the privacy woods just yet. But I think adtech companies will need to give people a lot more control over the ads they see.

Lior Barak

Founder | Podcaster | Hummus cook

Developing the Data Wabi Sabi method, thinking we overuse data and need to reduce it as much as possible

These brands will merge to increase their user databases, we see it now with the gaming industry where studios buy each other to increase user assortment. on the other side, agencies using the third party and didn’t change the practice to focus on the user “now and here” will dissolve the others will struggle to adapt the content served to the user. 

We focus on the first-party too little and now we are forced to look at the user based on what we know about him and not what others tell us about him.

Conclusions

The market is changing. The focus is changing. As Valentin Radu says:

Who owns the relationship with the customer wins.

That means the 1st party data are now crucial for any company, big and small. 

Brands & agencies that were relying on 3rd party data will have to reinvent themselves and become fluent at understanding things like data lakes, customer journey, customer value optimization so that they can keep up the pace. 

On the other hand, the digital behemoths will march towards more control: Amazon owns the relationships with the customers, not giving a chance for the small companies to build authentic relationships, create retention, and grow sustainably. 

Facebook, Youtube, Instagram will become storefronts: the question is whether  

Shopify will change its DNA for the sake of more profits or not. 

From empowering small companies to thrive they can easily facilitate Facebook to connect with the end customers and transform the small companies and DTCs into 3rd parties that are not in contact with the customer (like Amazon does).

Valentin Radu

Founder at Omniconvert

I love to grow companies. Because that allows me to help people grow. Nowadays, I grow Omniconvert.

This article looks so pretty on our blog thanks to the help of my amazing colleague Andrada Vonhaz.