You don't need cookies to track conversions, why?

You don't need cookies to track conversions, why? Because the conversions you were tracking with third party cookies were not real anyway. Let me count the ways.

Individual ads do not cause individual conversions

Advertisers have been misled by data to think that individual ads caused individual conversions. But, as a human, when was the last time you bought something just because you saw one display ad, one video ad, or one search ad? Seriously, think about this for a minute. Even if you did purchase something once or twice immediately after seeing an ad, are you a human who can be repeatedly convinced to buy something simply because you saw a single ad? I hope not.

Obviously, ads play a role in the awareness of a previously unknown product, or as a reminder to buy a product or brand you already know. Modern consumers are too smart to be tricked into buying something after seeing just one ad (I hope). Modern consumers are also armed with more information at their fingertips than ever before. Even if they wanted to buy something after seeing an ad, they are likely to search for more information about the product before making the purchase, especially if it were a more expensive item. They read Amazon reviews; they see what folks are saying about the product on Instagram or YouTube. All of that information further informs their purchase, not just seeing one ad.

So the whole notion of using cookies to track which individuals were exposed to an ad and which individuals went on to buy something is fundamentally flawed. It is just as flawed as the notion of "the right ad to the right person at the right time" being good digital marketing. The availability of third party cookies led advertisers down the 10-year-long rabbit hole of collecting more and more information about users, using that information to target users with ads that the advertiser thought were relevant, and then using the cookies to attribute certain sales to certain "exposed" users -- i.e. trying to do attribution down to the cookie level (which users converted because they saw an ad).

If you understand that human consumers don't buy something because they saw one ad, you will also understand that tracking conversions down to the cookie level is flawed and unnecessary anyway. Humans DO convert after seeing ads; but they don't convert after seeing a single, particular ad. That's why you don't need to track conversions down to the cookie level; and that's why after third party cookies go away, you can still track conversions -- overall conversions and lift in sales from digital campaigns, not individual conversions attributable to individual ads -- i.e. you don't need to track conversions per cookie.

The conversions would have happened anyway

Why did this lead marketers into doing bad marketing for the last decade? Simple. Because marketers believed that digital campaigns were driving so many conversions, they kept pouring more money into digital campaigns, specifically the ones that purported to be able to achieve "the right ad targeted to the right person at the right time." Turns out, the vast majority of the conversions would have happened anyway. To be clear, the conversions were not caused by the digital marketing, even though the reporting made it appear that way.

How did this come to be (that reporting made it appear there was some cause and effect)? Years ago, when Google came on the scene and displaced Yahoo as the go-to place for humans coming online, paid search ads also overtook banner ads in terms of ad spending. Attribution reporting at the time gave credit to search ads for having "driven the sale." This made sense intuitively, because humans do "google" things when they are researching something they want to buy. And sometimes after clicking a search ad, they did indeed bought the item they were researching. Giving credit to search ads for causing that sale was called "last click attribution" because the click on the search ad was the last click before the conversion event.

Adtech vendors selling display ads and audience targeting claimed this was so, so unfair -- to give Google search ads credit for driving the sale simply because they were the "last click." These vendors claimed that display ads and video ads should also get credit for driving the sale, even if they were not the last click. That's fair; but they took this notion too far. The industry collectively made up the notion of "view through conversions" (VTC) where display ads and video ads would somehow get some of the credit for driving the conversion event, even if those ads were seen 30, 60, 90 days beforehand. Again, while this was plausible, the tech and the data quickly devolved into "was there a VTC ("view through conversion") cookie when the purchase occurred? If so, give credit to the display or video ad for driving the conversion." This effectively created a fictitious cause and effect that everyone happily bought into. "Wow, our display and video ads caused so many conversions! Yay!" (even though the customer would have bought the item anyway). The conversion was NOT CAUSED by seeing the ad, it was just made to look that way by the reporting. This led marketers into doing bad marketing and overinvesting in digital tactics that did not actually cause more sales.

"This effectively created a fictitious cause and effect that everyone happily bought into."

Recent examples are starting to show exactly this. This Twitter thread by Bryan Porter told the story of how after spending $10 million on Amazon ads, Simple Modern decided to spend $0. Why? Did advertising on Amazon not work? No, it worked. But, it didn't work as well as they believed. "For years we spent 8% of revenue on advertising. This is a standard practice for sellers, it bought top placement, the lift in sales was noticeable and ACOS was below 30%. It seemed like this was driving our business forward… but we were wrong. Mike Beckham, CEO of Simple Modern, had this key insight -- Advertising profitability was inflated by ads not driving sales. In other words, organic customers were using ads to shop when they were going to purchase anyway." To re-iterate, consumers who were already on their way to purchasing Simple Modern drinkware clicked on an ad that appeared at the top of the search results. This made it appear that the ad led to the sale. But the sale would have happed anyway. Because the user clicked the ad instead of the organic search result, the reporting attributed the sale to the ad, making it appear that an individual ad caused an individual sale. Simple Modern proved that sales were falsely attributed to ads when they turned off $10 million of ad spending. The sales continued unabated.

Fraudsters use cookies to claim credit for conversions, including "foot fall"

And.... then there's fraud -- i.e. fraudsters using cookies to claim credit for conversions that had already occurred. You heard that right. This is one of the oldest forms of digital ad fraud in the book, also known as affiliate fraud. From 2006 to 2013, eBay cooperated with the FBI to root out the largest fraudsters committing affiliate fraud. They used a technique called "cookie stuffing" which sets affiliate cookies on human users' browsers without their knowledge, so that when they do make a purchase (in this case from eBay), the fraudster earns the affiliate revenue share, under false pretenses. By cookie stuffing as many different human users as possible, the fraudster increases their probability that they will earn the revenue shares because some of those individuals would have purchased from eBay anyway. In 2014, the largest eBay super-affiliates was sentenced: "Shawn Hogan, the CEO of Digital Point Solutions, was sentenced to five months in federal prison for his role in defrauding eBay of an alleged $28 million in online marketing fees, and was fined $25,000." Source: https://www.businessinsider.com/shawn-hogan-sentenced-in-ebay-affiliate-marketing-scam-2014-5 Still don't believe me about cookies being abused to create the illusion of campaign performance?

How do fraudsters falsely claim credit for "foot-fall" -- i.e. people walking into a store like Dunkin Donuts or Taco Bell? Right, use third party cookies. By buying as many billions of low-cost display ads as possible, fraudulent mobile location attribution companies stuffed cookies on as many mobile devices as possible, causing those devices to be marked as "exposed" (exposed to the ad for a particular client of theirs). Then when that mobile device walked into the target store, the fraudster could claim credit for that "foot-fall" even though the human person walks into the Dunkin Donuts every morning anyway. Third party cookies were used by fraudsters and ad tech companies to claim credit for conversion events that would have happened anyway. This created the illusion of "performance" and misled advertisers into pouring more money into certain digital tactics that did not actually drive any conversions, let alone incremental conversions.

Overall conversions and incrementality

So what? What do we go do now? Attribution reporting that made it appear that display and video ads led to conversions caused advertisers to over-invest in digital tactics that did not actually drive those sales. This also meant that advertisers under-invested in other tactics and channels that actually generated awareness and incremental sales.

After third party cookies go away, you can still track conversions -- overall conversions, not individual conversions attributable to individual ads. But hopefully you now understand that trying to attribute a sale to an ad impression using third party cookies is flawed and therefore unnecessary. A better approach is to look at the rate of conversions and number of overall conversions BEFORE turning on digital marketing and compare that to the rate and number of overall conversions AFTER turning on digital campaigns to see if there's a lift. That is incrementality. Those are new sales that would not have occurred in the absence of the digital campaign -- that's real incrementality, not organic sales incorrectly attributed to ads. That is how you properly attribute the impact of digital campaigns and whether they drove incremental business/sales for you. You don't need third party cookies for this.

I realize this is SO opposite to what many marketers were led to believe that it may be hard to accept. So, let's talk about it in comments. Share with others who have other points of view and counter arguments.

P.S. FouAnalytics does not use or set cookies. Never needed them and never will. FouAnalytics is also GDPR compliant. FouAnalytics is a GDPR-Compliant Alternative to Google Analytics - https://www.dhirubhai.net/pulse/fouanalytics-gdpr-compliant-alternative-google-dr-augustine/

Further reading: https://www.dhirubhai.net/in/augustinefou/recent-activity/newsletter/