By now, you’ve probably heard about the cookieless future. We’re entering a new era in which third-party cookies, a crucial component of digital advertising and analytics, will be deprecated across many of the world’s leading web browsers including Safari, Chrome, and Firefox.
Ecommerce professionals are being challenged to rethink fundamental issues around ad targeting, measurement, and cross-channel attribution – all of which will be made increasingly difficult over the next 12 months.
This article focuses on the implications these changes will have on ecommerce and the specific steps businesses can take now to prepare for the end of third-party cookies in 2022.
No More Workarounds
Companies like Google and Facebook have built their entire businesses on collecting user data and made billions in the process.
But as we’ve been able to deliver relevant ads to consumers across the web, there has been an erosion of trust.
In fact, 76% of consumers stated that they are more concerned than ever about privacy when browsing the web. At the same time, 49% of industry professionals listed cookie deprecation as their top media challenge in 2021.
If our industry doesn’t evolve to address the growing concerns people have about their privacy and how this is being used in advertising, we risk the future of the free and open web.
This is why Google has now also confirmed they are not planning a workaround and will be sunsetting the use of third-party cookies from 2022.
How Will This Impact Ecommerce?
1. Digital Identity
Identity is fundamental in the highly measurable world of ecommerce. In a world without cookies, even seemingly simple questions become hard to answer.
This makes it tough to measure ad impressions, frequency, and classify new vs. returning website visitors.
Industry giants such as Google are putting forward potential solutions such as FLoC, which will essentially group users together into cohorts who share a group identifier.
But as of early 2021, no single solution seems to have gathered significant momentum and none would tackle the major issue of cross-platform identification.
2. Ad targeting
As we run into challenges with user identification, it’s inevitable that advertisers will struggle with the same level of targeting granularity they’ve been used to.
For many years now, ecommerce advertisers have been able to target product ads against audiences based on data aggregated from third-party cookies. This hyper-specific targeting has been one of the main drivers of advertising spend in digital media.
The types of advertising most impacted by this will be those that sit outside the “walled gardens” of Google, Facebook, and Amazon.
It’s those that rely on the sharing of publisher data to power advertising targeting which includes tactics such as:
- Programmatic display.
- Multi-channel remarketing (e.g. dynamic product remarketing).
- Native advertising.
Without third-party cookie targeting options, it’s inevitable that we’ll see lower performance from these tactics in the next 18 months.
Consumers, meanwhile, will see less personalized advertising. This is the cost of increased privacy.
Attribution is the exercise of matching the effectiveness of marketing activities back to specific touchpoints where users were exposed to specific marketing activities.
I’ve written in the past about how to use multi-touch attribution models to analyze the various touchpoints individuals had with your website.
However, without third-party cookies, it will become impossible to track enough of the customer journey to make attribution reliable.
These challenges are daunting. The good news, however, is that there are a range of solutions to these challenges appearing which we’d expect to develop further into the mainstream over the next 6-12 months.
What Should I Be Doing Now to Prepare?
Develop a First-Party Data Strategy
As outlined above, in the absence of data provided by third-party cookies, first-party data will take on even more value.
Luckily, ecommerce businesses have a direct-to-consumer model, meaning that the collection of first-party data is a necessity in order to do business.
There is still a hurdle to overcome in marketing consent. Specific tactics to create authenticated audiences will vary widely, but the common theme will be value exchange.
If you want people to authenticate (consent to allowing you access to their data) with your brand, you’ll have to give them compelling reasons to do so.
Common examples might include:
- Exclusive pricing or promotional offers.
- Early access to new product launches.
- Exclusive products/member-only shopping areas.
- In-store discounts for retailers operating ecommerce + bricks and mortar stores.
- Competition entries.
However you approach the collection and authentication of first-party data, the more your audience authenticates with your website or app, the easier it will be to tackle analytics challenges such as:
- De-duplicating website visitors (to better understand total audience size).
- Measuring new vs. returning users, and purchase frequency.
- Segmenting audiences into addressable cohorts (e.g., by acquisition date, spend, range purchased).
This will make it easier to stitch data together across your marketing stack.
For example, you should be able to connect the dots for authenticated users between CRM, point of sale (in-store) displays, customer support, and website behavior.
Building authenticated audiences also brings benefits when it comes to ad targeting.
Your first-party data can be used to sync with platforms such as Facebook and Google, who will match your data against anonymized users for more accurate targeting.
The more first-party data you can bring to the table, the better the chance of any third-party data matching the characteristics of your existing customers.
Re-Establish Contextual Targeted Campaigns
You’ll notice that the majority of this post is focused on the issues brands will have identifying customers online. This will create a huge divide between known and unknown audiences, and the ‘known’ audience pool will reduce dramatically.
In order to reach potential new audiences at a greater scale, ecommerce businesses must turn to contextual advertising.
Keyword targeting via paid search is an example of contextual targeting, as is placement targeting via display networks.
When run correctly, you’ll be reaching the right people, at the right time, in the right place with your advertising.
However, with more advertisers turning to contextual over the coming months, strong creative will become crucial for your business to cut through the noise as advertisers move from a 1:1 to a 1-to-many targeting approach.
Get Familiar With Data Clean Rooms
With the loss of third-party cookies and transferable user IDs, user data is now trapped within the “walled gardens” like Google and Facebook.
You can still make use of this data – just not in exactly the same way, and only on the platform’s terms. This is where the concept of data “clean rooms” comes in.
Essentially, Google will allow you to analyze data within the Google ecosystem.
For example, Google’s Ads Data Hub allows you to analyze paid media performance and upload your own first-party data to Google. This allows you to segment audiences, analyze reach and frequency, and analyze different attribution models.
This will offer at least a partial solution to the challenges we’re facing. However, they will only be valid for the marketing touchpoints you orchestrate within each platform’s ecosystem.
The major challenge will be the lack of holistic attribution modeling which we are seeing the first examples of now across Google and Facebook since the recent Apple iOS 14.5 update.
Even so, it makes sense to start building some familiarity with clean rooms, and what it will take for your ecommerce business to unlock the benefits that they provide.
Third-party cookies and the many tactics they’ve supported will be gone sometime in 2022. The question now is how you will evolve in response.
I believe that the biggest impact will be seen in data and the conflicting insights presented from competing walled gardens.
This challenge could actually incentivize brands to dedicate the majority of their ad investments within one platform to reduce the fragmentation of data and insights.
Platforms like Google are in a great position to offer this as they have coverage across the world’s largest display, video, and search platforms. The irony here could be that increased user privacy leads to big tech platforms capturing even greater revenues.
No doubt there will be further announcements over the coming months but it’s obvious that those businesses who start to prepare for these changes now will be in a much stronger position come 2022.
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Screenshot taken by author, May 2021