Experts believe that Google’s decision to phase out third-party cookies and Apple’s ATT framework requiring user consent for data tracking in iOS 14.5 will significantly reduce the effectiveness of Identifiers for Advertisers (IDFAs). As a result, marketers are growing anxious about adapting to a new digital advertising landscape without cookies.
As we enter a cookieless advertising era, navigating the new norms is becoming increasingly critical. After all, in 2024, retailers are not just embracing AI-driven personalization but are also trying to strike a balance between delivering personalized experiences and respecting customer privacy along with data protection. In fact, companies that integrate AI/ML solutions in their strategies are witnessing a substantial increase in their business outcomes, with a reported growth of approximately 2.3 times in sales and a 2.5-fold increase in profits.
Hence, now is the right time to explore the future of advertising in a cookieless world and create strategies that respect consumer privacy and still deliver custom experiences.
The Basics: Starting from the Beginning
Understanding the core elements of digital advertising is crucial for marketers in the evolving landscape of advertising in a cookieless world. The main aspects here are learning what a cookie is, what its function is in advertising, and the driving force behind governments pushing for these reforms. This knowledge will help advertisers navigate their way to success with digital marketing.
What is a Cookie?
In the online world, a cookie is essentially a small piece of data stored on a device by the user’s browser while exploring a website. They were initially created to enhance user experience by remembering login information, site preferences, and other customizable aspects. Cookies are essentially web standards that are neither good nor bad.
Over the years, cookies have evolved and are playing a crucial role in the world of online advertising. They have been easing important functions like user tracking and content personalization. Despite their numerous benefits, cookies, especially third-party cookies, have created serious privacy concerns as well, leading to a re-evaluation of their usage in the online space.
How do Cookies Work for Advertising?
Cookies serve a crucial role in tracking and gathering data about the online behavior of users. They enable advertisers to create detailed user profiles, which are essential for targeted advertising strategies. Cookies are also exchanged and linked with other ad-tech providers, who add depth to the associated data for refined targeting purposes.
By analyzing cookies, advertisers can gain insights into metrics like interests, frequently visited sites and purchasing habits of different users. The information is pivotal for delivering personalized ads to users, based on their online behavior , and in ensuring that users only see advertisements that are relevant to their interests. This approach helps marketers and brands improve the chances of customer engagement and conversion.
Why are Governments Pushing Cookie Reforms?
Increasing concerns over user privacy and data security primarily drive the push for cookie reforms by governments worldwide. Third-party cookies have been under scrutiny for potentially invasive tracking practices, and are believed to be collecting extensive personal data without consent from users.
To address these concerns, governments are supporting tough regulations to ensure the protection of user privacy. This has led to a growing demand for transparent data collection practices to power advertising in a cookieless world with strategies that respect user privacy and still deliver effective marketing outcomes.
Cookieless Future: A Shifting Landscape
As of 2024, the digital landscape is witnessing a significant shift toward a cookieless future since the process to go cookieless started back in 2022. This transformation is expected to culminate over the next two years with the commencement of the new era of advertising in a cookieless world. The gradual phasing out of third-party cookies, an essential aspect of digital marketing for over three decades, has been a key focus area for major technology players and governments worldwide.
This development assumes greater importance because over 86% of users have expressed concerns about their data privacy, and 78% have raised issues with the amount of customer data being collected while browsing online. Let’s have a closer look at the critical aspects of this transition and what the future of digital marketing holds.
Google's Gradual Phase-Out
Google, holding over 65% market share in the online browsing space, has adopted a gradual approach to phase out third-party cookies in Chrome. Initially planned for mid-2023, Google has delayed this transition to the second half of 2024, starting with a limited user base. This careful approach aims to balance the need for privacy with the vital needs of online businesses and advertisers. Google’s Privacy Sandbox initiative is at the core of this strategy and is focused on developing new tools and methods to support key online functions in a privacy-conscious manner. For instance, the Google Privacy Sandbox proposes tracking consumer behavior while retaining data on the device rather than sending it to external servers. This will categorize users into groups based on interests, allowing advertisers to access these classifications without tracking individual browsing behavior.
Proactive Stance from Mozilla and Apple
Other leading names in the internet browsing space, like Mozilla and Apple, have been highly proactive in response to concerns about third-party cookies. Mozilla Firefox has implemented strict anti-tracking policies, blocking known trackers, and introducing Total Cookie Protection. Safari browser from Apple also follows a robust tracking prevention policy. With initiatives like Intelligent Tracking Prevention (ITP), Apple’s approach highlights the growing importance given by the company to user privacy. All these measures reflect an increasing focus on enhanced user privacy while advertising in a cookieless world.
European and Global Government Responses
On the regulatory front, governments across Europe, particularly Germany, as well as from other parts of the world, have played a vital role in pushing for strong data management and privacy laws. The European Union’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) in the US are prime examples of such initiatives. These regulations have made it mandatory for companies to be transparent about their cookie usage and data collection practices. This approach has been helpful in providing consumers with better control over their personal information in the online world.
Advertising in a Cookieless World: The Road Ahead
In response to these developments, platforms are experimenting with privacy-conscious methods for advertising in a cookieless world. Google’s Performance Max campaigns and Meta’s scaling back of detailed targeting options reflect this shift. These changes indicate a movement towards broader audience segments and less personalized targeting with a focus on pattern recognition.
For marketers, the key to navigating this new landscape lies in adapting to new targeting and optimization methods. This approach would include embracing machine learning-driven campaigns like Google’s Performance Max and Meta’s Advantage+ shopping campaigns, which optimize ad delivery across various platforms based on broader user behaviors and interests.
The transition away from third-party cookies also necessitates changes in measurement and attribution methods through new tools and approaches that align with the post-cookie era. Advanced solutions like AI-driven attribution, utilizing AI and first-party data, will become critical to gaining accurate insights into marketing performance while keeping in line with the evolving privacy regulations.
The Alternatives to Advertise in a Cookieless World
As the transition to advertising in a cookieless world gathers pace, marketers may initially find this shift challenging. However, there are several effective strategies that retailers can adopt for customer targeting without relying on third-party cookies. These methods comply with new privacy standards and offer innovative ways to connect with consumers. Let’s have a look at them.
Get Your First-Party Data in Order
First-party data like website interactions, purchases, or customer feedback can be gathered directly from the audience or customers. Retailers can collate this data through their websites with the help of methods like user registration, feedback forms, and tracking customer interactions on the platform. To augment and effectively utilize this data, retailers should focus on enhancing their data collection methods. This approach would help with accurate data analysis to gain insights into customer behavior and preferences.
For this purpose, retailers can leverage techniques like data enrichment, where additional information is added to existing customer profiles, and segmentation, which involves categorizing customers based on shared characteristics. Retailers must leverage analytics tools to derive actionable insights from this data and create personalized marketing strategies to enhance customer experiences.
Start Using Contextual Advertising
Contextual advertising is a method that targets ads based on the content of a web page rather than the behavior of the user. This strategy becomes increasingly relevant as third-party cookies are being phased out by offering a privacy-friendly way to target potential customers. By analyzing the context and content of pages, advertisers can place relevant ads that align with the present preferences of users, leading to potentially higher engagement rates. Contextual advertising respects user privacy while still allowing effective targeting based on the immediate relevance of the content.
To implement contextual advertising effectively, retailers can utilize various tools that specialize in analyzing the content and context of web pages to place relevant ads. Tools like Flipkart Commerce Cloud offer contextual targeting options through the FCC Ads Manager, ensuring that ads appear in appropriate and relevant digital environments.
Use Federated Learning of Cohorts for Better Targeting
Federated Learning of Cohorts (FLoC) is an emerging technology designed for privacy-preserving ad targeting. Instead of individual tracking, FLoC groups users into cohorts based on similar browsing behaviors. This approach allows advertisers to create ads targeting a group with shared interests without identifying individual users. By utilizing FLoC, advertisers can reach their desired audience effectively and align with the new norms of digital privacy while advertising in a cookieless world.
How can FCC (Flipkart Commerce Cloud) help?
FCC stands out as a versatile tool for retailers and e-commerce platforms, enabling precise and contextual targeting without relying on traditional cookie-based methods. FCC’s offerings include an advanced Ads Manager, which supports display ads, product contextual ads, and product listing ads. This tool is designed to maximize the efficiency of online advertising campaigns by utilizing data-driven insights and AI-powered algorithms.
FCC also provides a comprehensive Pricing Manager, which includes a Pricing Optimizer and a Dynamic Pricing Engine, allowing for smart pricing strategies that can adapt in real-time to market conditions. The FCC Assortment Manager further enhances the capability of retailers with assortment intelligence, helping them optimize their product offerings and stay competitive.
FCC’s suite of solutions covers various aspects of e-commerce, from marketplace technology stacks and retail media solutions to inventory management and forecasting. Each solution leverages Artificial Intelligence and Machine Learning, ensuring robust solutions for businesses aiming to grow their digital presence.
For retailers looking to achieve their goals with advertising in a cookieless world, FCC offers the technology and expertise required to be successful. To explore how FCC can assist in your retail business digital transformation and to learn more about its full range of services, reach out to our experts for a comprehensive consultation.