As Featured in Toolbox Marketing: Why Brands Should Celebrate the End of Third-Party Cookies
Originally published by Toolbox Marketing February 10, 2021
In this article, Matthew Kenyon, VP, Brand Strategy, Stirista, shares a positive outlook on the demise of third-party cookies and increased reliance on existing online identifiers for customer reach and growth.
Until recently, the entire history of the world has managed to unfold without this much angst about cookies.
Third-party cookies have become the skunk at digital advertising’s garden party, causing a similar level of grief. As users do not consent to third-party cookies’ collection and use of the associated behavioral and other data, browser makers and new privacy laws like the European Union’s General Data Protection Regulation and the California Privacy Rights Act are taking steps to do away with these cookies.
And while first-party cookies offer brands a mechanism to collect customer analytics data, it is not a persistent and scalable strategy and cannot be used for CTV. So, what is the answer in the quest to identify and reach current and new consumers?
The Promised Land and the Apocalypse
For marketers, the promised land — as well as the pending apocalypse — is represented by the large walled gardens, including Google, Amazon, and Facebook.
Because many of their visitors are registered, these proprietary environments can build up extensive profiles and use them to create targeted ads or product offers directly at specific individuals. This deterministic marketing based on definitive identity data is what makes the walled gardens unique and so powerful. They do not need third-party cookies because their registered user bases are so massive.
Outside the walled gardens, advertisers and publishers who utilized third-party cookies to expand their customer base have been largely shooting in the dark. These cookies make probabilistic assumptions about user profiles based on behavior and demographics, with tentative linkages between different datasets.
The result: often inaccurate profiles, dirty data analytics, and annoying ads that follow you around the web. It is almost an act of mercy that browser makers and privacy laws are now signaling that third-party cookies are heading for oblivion.
If this were all a Hollywood movie, right now, we would be at the part where the protagonist realizes that the love-of-a-lifetime has been there all along, just waiting to be appreciated — hashed emails and IP addresses.
Identity Resolution in Post Cookieless World
While offline identifiers like name, phone number, and address are still crucial in determining a person’s characteristics, online data such as a person’s email address ultimately determines the correct identity. In recent years, email has sometimes been characterized as a dying communications medium that would inevitably be replaced by younger generations’ fondness for real-time communications like messaging. But now, email is enjoying a second life, as encrypted or hashed email addresses are still the most persistent method of matching an individual and helping brands build customer relationship campaigns around email.
With mobile ad IDs (MAIDs) likely headed in the same fate as third-party cookies, tried-and-true digital identifiers like IP addresses that allow matching back to the household will once again reign supreme in the quest for identity resolution. This is particularly true as brands further invest in digital TV such as CTV and OTT, where cookies and MAIDs are rendered useless anyway. Mapping to a household level to effectively target and measure is now more critical than ever for marketers investing in this new medium.
A new appreciation for personal and digital identifier data is also leading many publishers to join forces in consortia that similarly share their data and create their own walled gardens. A buyer of one brand’s gourmet foods might be interested in another brand’s high-end leather goods, for instance, as well as a third brand’s premium voyages.
The walled gardens’ competitive advantages boil down to two factors: accurate user identification and scale. By focusing on persistent and reliable data, publishers and advertisers can counter the first advantage. By banding together, they can tackle the second.
The profiles created around digital identifier data can also be supplemented by data from offline purchases, using fixed identifiers like street addresses or phone numbers as linkages. When available, third-party data from anonymous users still has its uses, such as assisting in the measurement of campaign effectiveness.
By embracing online identifiers as the de facto of identity resolution, brands and marketers no longer face the age-old dilemma of whether or not their campaign/s reached their intended audience and determining the campaign’s effectiveness. What was once a nearly unresolvable issue is now one that is easily adjustable.
There is a massive paradigm shift for brands now investing in identity resolution and having confidence in their ability to reach a targeted consumer. The issue is no longer the deliverability but in the campaign’s size or the money allocated towards it.
In this recast marketing universe built around online identifiers, brands still have every reason to expect similar kinds of customer retention and growth. They can also expect similar kinds of segmented marketing, enriched by better conversion rates and better measurement.