The financial sector should still be looking for the right recipe to thrive in a cookieless world, and Alternative Data can help

It’s likely that a number of ingredients, not one, will be used in combination for the perfect cookie replacement. One of those data alternatives may just be alternative data.

Marketers might still be able to call Google’s bluff–after finally removing cookies for 1% of Chrome users (or around 30 million people) back in January, they pushed back the cookie deprecation deadline yet again–but it’s still essential they prepare for a post-cookie future before it’s too late.

With Google continually pushing back the cookie deprecation deadline, advertisers still don’t expect, and some haven’t prepared, for the actual demise of cookies to actually come about. As a result, even with the cookiepocalypse bearing down on them, most programmatic buyers still haven’t embraced cookie alternatives.

Even so, the financial sector and advertisers both might benefit from a renewed focus on alternative data–a promising solution in the chaos of the cookie crumble.

No one is ready for cookie crunch time

Identity providers are having a heyday with creating solutions to fill in the gap that cookies will inevitably end up leaving, spawning a number of ID solutions ranging from the Trade Desk’s Unified ID 2.0, LiveRamp’s RampID, and Google’s PAIR and Privacy Sandbox. Many publishers don’t have the budget and investment capabilities to try them all out, so they’re relying on buyers to do the work for them. One alternative ID solution is expected to eventually rise to the top. 

While we wait on alternative IDs to sort themselves out, a complete reliance on first party data still isn’t ideal, especially for smaller partners who must rely on retail media networks to provide them with that first party data. The other methods around, like contextual targeting, are beginning to fall by the wayside as advertisers continually seek the same returns provided by cookies. 

It seems cookies still need a worthy successor. First party data, retail media networks, and even zero-party data still have their place, but the market still necessitates a number of tools to work together to support a post-cookie solution. In comes alternative data! Another soon-to-be-essential tool in the box.

What is alternative data?

Initially used in the world of hedge funds, alternative data went mainstream in that industry as investment managers began employing it as a way to gain a leg-up on competitors still heavily using its counterpart, traditional data.

In finance, traditional data consists of quarterly reports, company statements, and other publicly available sources of data used to make investment decisions. Alternative data came to mean anything else, and now consists of data procured through web scraping, satellite imagery, credit and debit transactions, mobile app data, and more.

With time, alternative data moved beyond its initial world of hedge funds into the rest of the finance industry, and eventually, also into the hands of government bodies and policymakers, not to mention credit bureaus and commercial businesses. Now, it’s also serving as a tentative additional solution to the cookie crisis. As traditional “cookie” data goes away, alternative data, the kind that can be acquired through web scraping, geolocation information, public databases, and the like, becomes part of the puzzle that replaces it.

When you layer AI tools on top of alternative data and the increasing digitization of information, the capabilities of using such large swaths of data scraped from the internet and other sources becomes much easier to use. Alternative data may emerge as one of the pioneering cookie alternatives and industries are beginning to take note.

The boom of alternative data

Initially used by hedge fund managers before spreading to other types of investment management, alternative data is going to grow exponentially in the coming years. The decades-long use of alternative data in the financial industry has prepped alternative data for use in market research as well as consumer insights.

With solutions like nowcasting–a portmanteau of “now” and “forecasting”, which presents nearly real-time data to power things like dynamic pricing, alternative data may increasingly present the answer – or an answer – as the cookie continues to crumble.

The global revenue for alternative data is expected to reach $137 billion by 2030, according to Deloitte. That’s 29 times the global revenue for alternative data today. Investment management is expected to drive most of this growth.

Reconciling alternative data with mainstream cookie solutions

So what does alternative data really have to do with the disappearance of cookies?

While cookies may soon be gone, newer technologies, like AI and big data analytics, are only growing. The enormous amounts of data currently on the internet, along with the ability of machine learning to parse through it all and deliver valuable insights, is just one harbinger of the effect alternative data can have on the advertising industry. 

The pressure on cookies will inevitably lead to spontaneous solutions as cookieless solutions become no longer a nice-to-have, but a need. Alternative data is primed to not only serve as a useful tool for investors, but for advertisers. 

Once cookies are gone gone really gone, alternative data will feel very  mainstream.