When cookies crumbles: People-based marketing in a privacy-first world

With the impending demise of third-party cookies and recent restrictions on the use of mobile device IDs for targeting, businesses need to rethink their advertising strategies to prepare for a radically different landscape. McKinsey & Company recommends shift to:

·??????using your own consumer touchpoints to collect your own data

·??????creating partnerships to use third-party data

·??????experimenting with contextual and interest-based advertising.

Creating and maintaining strong consumer relationships while protecting user privacy is key to success.

Advertisers have long relied on cookies to track consumers on the open web, serving targeted ads based on a users’ browsing histories. However, cookie-based targeting will soon become obsolete. By the end of 2024, Google Chrome is expected to block third-party cookies, a step both Safari and Firefox have taken since 2013. In the area of mobile apps, Apple already requires app providers to obtain explicit consent from consumers before tracking them through a device. Preliminary observations suggest that only 46 percent of consumers will agree to tracking, and that percentage may be even lower in countries where users are particularly sensitive to privacy based on McKinsey and Company report. In practice, this means that application providers will not be able to track most users across Apple’s ecosystem using device ID. It is worth noting that both Google and Apple have stated that they will not create or support workarounds such as probabilistic fingerprinting to create user-level profiles in their ecosystems.

Advertisers will also need to rethink how they approach measurement and attribution, the process of evaluating the contribution of advertising channels that drive customers to their site or app. Given Google's cookie ban, and Apple's App Tracking Transparency Policy are changing as the Privacy Principles come into force, the protection laws will render some existing measurement and attribution methods obsolete.

Use your brand's consumer touchpoints to collect your own data

As it becomes increasingly difficult to track users on the open web, brands should step up their efforts to collect data at consumer touchpoints they control, such as their own websites and apps, and use analytics tools to fill gaps where their data collections are incomplete.

Data that are passively collected - without direct participation, but with consent - is called first-party data. This includes information such as browsing behavior, content consumption, location, device, and time of day.

While the information is valuable, it is not enough to understand the entire customer journey and to support the development of detailed user profiles, let alone customized contents. To really understand who they're talking to, companies need information about users' intention, preferences, and lifestyle. A powerful way to convince users to identify and share this kind of information (so-called null data) is to offer them something of value in return. Examples include personalized product recommendations, free samples, discount coupons, extended warranties, and exclusive or early access to new products.

Leading companies use customer data platforms (CDPs) to integrate data from multiple sources. This consists of first, second, and acceptable third-party sources—such as traditional customer relationship management (CRM) systems, websites, and apps. CDPs enable creating unified real-time anonymous profiles, as well as known users, with the rights to use the data that each of them has granted.

Based on this integrated platform, brands can offer a personalized user experience and targeted advertising while protecting the privacy of their users. When you opt in to (or opt out of) a particular service, such as push notifications about exclusive sales or special offers, those preferences will be automatically reflected in the company's outbound marketing campaign tools.

Leverage third-party data from partnership

While first-party data is a great starting point for advertising in the post-cookie era, it is not enough to enable a state-of-the-art targeting and attribution solution. The more connected a dataset is to other data items, the more valuable it is. In addition, proprietary data is not sufficient to satisfy a brand's reach aspirations.

To maximize the value of their own data, advertisers can form partnerships with other companies to exchange data that users have purged for specific purposes. Typically, marketing data partnerships bring together two companies that are not competitors but have complementary interests.

Brands dedicate a larger proportion of their advertising budgets to online retail media, including retailer websites, apps, and other digital assets.

With the rise of smart shops, digital partnerships between advertisers and retailers may even extend into the physical realm. Imagine a customer who has signed up for a brand can receive personalized offers via a retailer's app while shopping in a smart brick-and-mortar store, based on the buyer's customer profile, previous purchases, and in-store location. In other cases, advertisers may choose to work with content providers such as TV networks or online publishers to reach users whose attributes match those of existing customers, such as families with children interested in team sports.

The key factor enabling secure data sharing is the data clean room concept, a structure resembling a notarial trust account. In a clean room, the data being shared is usually stored in the cloud by a neutral third party. While neither party is required to disclose their data to their partner, both parties can access the shared data for audience segmentation and analytics. The targeting itself is done anonymously; the identity of the target user is not disclosed to the advertising brand. A clean data room allows advertisers and media owners to expand their relationships in a way that complies with privacy laws without disclosing personal information.

In addition to local recognition technology, advertisers are exploring so-called persistent identifiers. The Trade Desk and other players are working to establish universal identifiers, anchored in identifiers such as email addresses. Universal ID acts as the primary first-party "cookie", but one that is persistent and valid across all data collection (and activation) channels. This identifier can then be used to appropriately enrich and activate second or third-party data across multiple marketing channels, including the open web. To comply with the GDPR, these solutions will need to respect consumer privacy choices, including explicit user consent.

Experiment with contextual advertising

Marketers can learn a lot about your interests based on where you spend your time, what you do or what you watch, and they can use this information to send you resonant messages. This is what contextual targeting and interest-based advertising are all about. While cookie-based approaches serve ads based on the user's browsing history and inferred interests, contextual advertising is based on the current content viewed by the users. Interest-based advertising continues to rely on data about the websites you visit, but only to determine general content topics that you may be interested in. Based on visitors’ behaviors, selected topics are then shared with the site to help determine which ads to shown them.

With users becoming increasingly concerned about being tracked and tech giants limiting person-level targeting online and in apps, contextual advertising is emerging as a promising way for brands to reach their target groups. Contextual advertising has traditionally been keyword-based, but keywords often don't reflect the full context of a website or an app. New contextual targeting tools, which rely on natural language processing and image recognition, enable algorithms to capture the sentiment of pages and apps with unprecedented speed and reliability. This capability allows marketers to serve ads in a safe and highly relevant environment to their potential customers. With the development of technology, what might look like, at a first glance, a step back, sometimes turns out to be a few steps forward in a completely new direction.

The advent of device ID restrictions and the end of third-party cookies are sure to have a very disruptive impact on the advertising industry. While advertisers have already had to start adapting to privacy-related changes, they should intensify their experimentation with viable alternatives to third-party cookies. Unless they make radical changes in their approach to advertising, they will face much higher acquisition costs in the future.

The overriding principle should be to create and maintain consumer relationships that lead to the exchange of values, while protecting the privacy of users.