Cookies – the elephant in the room for digital businesses
Since the early days of the internet, cookies have been the primary method publishers and advertisers have relied upon to target consumers on the web. Without cookies, targeting digital campaigns would have been very hit or miss – providing a poor experience for consumers and inconsistent ROI for advertisers and publishers. Matt Rousseau, managing consultant at Frog Data, with editorial insight from consultant Edouard Payne, assesses what the imminent changes to cookies will mean for the industry.
Frog on how marketers can prepare for the changes to cookies
In recent years, the effectiveness of cookies has reduced dramatically; this has resulted in some publishers losing up to 40% in revenue from online advertising. However, we believe organizations implementing a first-party data strategy can significantly reduce these negative consequences.
There are two reasons for the reduction of cookie effectiveness. The first one is legislative (for example GDPR regulations in the EU): visitors to a website must be served a banner and must consent to having cookies added to their browser. The second reason is technology-based: some browsers (Safari in particular) will automatically remove cookies if the user hasn’t visited the site linked to the cookie recently. This time period was previously set at two years, but has now been reduced to just seven days. This means the window of opportunity advertisers have to retarget consumers has been reduced significantly.
The impact for advertisers and publishers is summarized below:
Technology impact: If a user doesn’t visit your website for seven days, they will count as a ‘new user’ – the previous limit was two years. This means advertisers would be challenged to run targeted and retargeted ad campaigns on Safari browsers, reducing the reach and effectiveness of campaigns. For publishers there would be a reduction in advertising revenue as less targeted ads are served, meaning click rates drop significantly and publishers are most often paid per click.
Legislative impact: There will be less data from users who do not consent from the cookie banner. Advertisers will be unable to run targeted and retargeted ad campaigns on users who opted out, reducing the reach of campaigns. For publishers the same as the above; there will be a reduction in advertising revenue.
The widespread implications of these changes look to accelerate with Google announcing they have decided to block third-party cookies in Chrome come 2023. Third-party cookies are cookies created by a domain other than that of the website you’ve visited – this is done to enable cross domain tracking so that advertisers can track users across websites. The removal of the functionality will mean advertisers effectively won’t be able to target approximately 69% of browsers. This ban would, however, have no impact on search activity – Google’s primary advertising revenue stream.
Collecting data through server-side tracking
To support this process, several tech companies have developed innovative solutions. Google itself has introduced ‘server-side tracking.’ This circumvents the cookie expiry policy for Safari browsers, allowing publishers and advertisers to acquire accurate, granular data about users, and maintain targeting strategies and products, producing improved ROI.
Server-side tracking can also enable tangible improvements in user experience (UX) for consumers. Most users will experience significant improvement in load times, with third-party cookies replaced by service-side tracking, due to reduced demands on a user’s computer. On average, every 0.5 seconds of additional page load time will result in a 4.42% decrease in conversion rate, so it’s pivotal for e-commerce companies in particular to address this. Using Google’s speed test, server-side tracking can reduce the time-to-interact by four seconds.
Server-side tracking is also more secure than using third-party cookies. Removing the need to download scripts via a third party reduces the risk of downloading malicious code. Malicious code can scrape and steal information such a bank details, resulting in potentially devasting reputational damage for any brand implicated. In 2018, the Magecart hack resulted in thousands of British Airways’ customers’ credit card details being stolen. The resultant fine was £22m and left British Airways to rectify the relationship with their customers.
Using a custom-built analytics solution
A number of technology companies, for example Snowplow, allow you to record anonymized data on user interactions, enabling you to embrace cookieless tracking. This means you are able to report on high-level metrics while still respecting the privacy of the user. Developing a custom analytics solution, using technology such as Snowplow’s Behavioral Data Platform, allows advertisers to circumvent many ad-blockers. Around 43% of users worldwide use an ad-blocker at least once a month. Google Analytics doesn’t allow you to retarget users with ad-blockers installed but, by leveraging a custom solution, you can collect data from customers, which you can still use in email, SMS or in-app campaigns.
The future landscape
As we move towards 2023, we expect further announcements about the curtailing of third-party cookies and other tracking technology. It’s certain to create a fair amount of turbulence for advertisers, publishers and technology providers in equal measure. However, out of every uncertain period comes opportunity. We believe the future is bright for advertisers and publishers who have the right infrastructure and strategy in place to leverage first-party data.
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frog is a leading global creative consultancy, part of Capgemini Invent. Partnering with passionate leaders and visionary entrepreneurs, we apply creativity, strategy, design and data to re-invent businesses, drive growth and orchestrate customer centric transformation.
Together we strive to shape a regenerative future that is both sustainable and inclusive for businesses, people and planet.