A new law will come into force on December 1, 2021, which will make it difficult to track usage data. But there are alternatives that companies can use.
The Telecommunications Telemedia Data Protection Act, which will replace the Telemedia Act, would assure even higher data protection standards. In future, the tech giants Google and Apple will also technologically suppress the tracking of usage data on end devices for external third-party providers. Third-party providers will no longer be able to generate user profiles for the sake of marketing. Advertisers are threatened with the cookie apocalypse.
The majority of free online offers are funded by tailored advertising. Personalization is possible through so-called third-party cookies, which analyses users’ online behavior. These cookies, like first-party cookies, are stored on the user's hard drive when they visit a website. They are, however, not from the website accessed by the user, but from another (third) provider who uses them for advertising purposes. Cookies from third-party providers are used on a website if, for example, advertising banners or "Like" buttons are utilized by other providers.
The end of the cookie age
Blocking against tracking cookies from third-party providers is already a feature implemented in Apple's Safari. Google has announced that it will block third-party cookies in the Chrome browser from 2023 (originally 2022).
This has huge implications for earlier kinds of digital marketing, such as targeting customers with the help of third-party suppliers, because this data can no longer be used in the future. This eliminates the most crucial aspect of online marketing: tracking. A significant challenge for digital advertisers. Third-party providers rely on advertising revenues generated by third-party cookies to some extent. If third-party cookies are no longer used, we will face a cookie apocalypse and the loss of significant advertising revenue.
The future lies in first-party data strategies
As a result, it is advisable to look out for existing or future alternatives for the time after the cookie tracking age. The emphasis is on alternatives that enable companies to use first-party data, and thus their own company data. This is possible, for example, through context-related advertising: In the future, companies will be able to try even harder to reach their potential buyers with the help of so-called context targeting.
In this method, advertisements are displayed after selected keywords appear. If a predefined keyword is mentioned on a website, a corresponding ad will be displayed there again. In this way, automobile manufacturers, for example, might position advertisements alongside media stories on the automobile industry. Users who are interested in a certain topic are presented with the appropriate advertising. To find relevant keywords, the company's own data is used. This method is already in use in online marketing today and will play an even greater role in future.
Another option for first-party data is the use of Google's FLoC, which is part of the company's "Privacy Sandbox Initiative". Federated Learning of Cohorts," or FLoC, is a technique for clustering and bringing together groups of users based on their interests. The user surfing habits of the Google Chrome browser, for example, are analysed and evaluated. The algorithm creates groupings of users with similar features and interests based on the cohort data. Due to the ambiguous legal status regarding whether FLoC must be brought in compliance with the GDPR, FLoC is currently not used in the EU. For the time being, Google has suspended the first tests in Europe. For companies that advertise outside the EU, however, this method is quite promising. FLoC data is compared to the company's own data for advertising reasons in order to precisely reach potential target groups.
Anyone interested in third-party cookie-free marketing can, for example, use so-called "walled gardens", which are closed platforms in which the respective platform operator maintains control over advertising activities. Facebook operates in a similar way: Facebook Inc. owns the platform, and advertisers there can only display their advertising through the operator. As advertisers are typically reliant on the platform operator, the platform operator’s market power has often been criticized in the past. Publishers are expected to exploit their first-party data to create their own "walled gardens" to a larger extent. A stronger fragmentation of targeting, measurement and campaign management is to be expected.
The end of third-party cookies is approaching - time to look for alternatives
The future of online marketing is becoming more difficult for businesses. Many users are already unable to be reached due to ad blockers or browser tracking blockers. The regulatory framework and the plans of the big tech companies will finally end the age of third-party cookies. Even so, online marketing is still crucial for businesses.
It is critical for companies to begin looking for ways to reach their target audiences online as soon as possible. If no measures are taken, or if alternatives to cookie-based tracking are sought too late, the effectiveness of your digital marketing will suffer significantly, and you may lose revenue. But with the help of your company's own data and the ways to a first-party data strategy outlined above, you have other excellent opportunities to reach target groups with a precise fit.
This original article has been published for DUP Unternehmer.
OMMAX – Digital Solutions is a digital strategy consultancy based in Europe, specializing in sustainable digital value creation while catering to an array of mid-sized companies, large enterprises, and >100 private equity firms around the world. Composed of >200 international experts and with >700 realized projects in the fields of digital strategy, digital operational excellence, data science, and transaction advisory services, OMMAX is a front-runner regarding holistic data-driven strategy consulting and end-to-end execution of digital solutions.
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