If you are wondering why we are discussing alternatives to third-party cookies, read the article about The State of Third-Party Cookies in 2024. Essentially, the third-party cookies are going away and in this blog post, we will discuss the available alternatives.
What will break?
In the simplest terms, the following two areas will have the most impact and must be addressed to maintain a healthy advertisement ecosystem.
Conversion Reporting
Advertisers rely heavily on the ability to track users across different sites and show personalized ads. Once third-party cookies go away, it will become challenging for advertisers to track user behaviour across different websites and rightfully attribute it to specific ad campaigns. Without complete information, it will become difficult for organizations to budget appropriately, and it can potentially put money in the wrong channels, which will eventually cause burnout in media spending and force organizations to look at alternatives to digital marketing.
Audience Building
Big or small organizations rely on modelling users based on similar interests and behaviours for targeted advertising. This targeting is mainly done using third-party data as it’s not scalable for an organization to target its users with first-party data alone.
The success of an ad can be directly measured by its relevancy, and so far, third-party data has helped provide that relevancy to ads. The more information you have on an individual, the more relevant your ads can be.
Google’s Federated Learning of Cohorts (FLoC)
Even though Google’s Federated Learning of Cohorts (FLoC) was on track to become the de facto model for replacing cookies, we are unsure if Google is proceeding with the rollout or is already phasing it out. What we do know is that the rollout has been delayed. What will replace FLoC needs to be clarified. It is essential to understand how FLoC tried to solve the gap that will be left behind after third-party cookies are phased out. In layman’s terms, instead of targeting individual users, FLoC was based on placing users into groups or “Cohorts” based on their browsing habits. Google proposed to put thousands of users in these cohorts, and instead of sharing data about individuals, the unique identifier of the cohort would be shared with the advertiser.
The future of FLoC is unclear, as privacy advocates have already questioned its effectiveness. They fear that it doesn’t address the issue of fingerprinting users and doesn’t explain how individual data will be protected.
Alternatives
In the absence of a clear path, here are some alternatives that will help you reduce the impact of cookies being phased out:
Zero-Party Data
It is the data that comes directly from your users. Organizations use tools such as surveys, contests, and polls to collect as much data as possible from their users, and it’s totally up to the users to provide this information with complete transparency. As you can imagine, this approach is not scalable, but this is the traditional grassroots work that can be done while we have a robust replacement of third-party cookies.
First-Party Data
It is the data that the organization already has about its registered/engaged users. This data is collected when you visit a website, and that website either requires you to log in to use its website or saves your preferences as a guest user – either way, your data is relatively safe in this case.
First-party data is also where we expect to see a lot of disparity between small organizations and mid-to-large organizations, as small organizations don’t always have an ecosystem of web applications, mobile apps, and data warehouses. It is easy to ask organizations to shift focus to first-party data, but the truth is that this pivotal change will require a lot of investment; many small-to-mid organizations don’t even have CRM systems to facilitate this change.
Contextual and Ethical Advertising
It is a form of advertising targeting individuals based on the content they are viewing instead of relying on behavioural data about the user. For example, If you are a Non-Profit in the Mental Health space – you can partner up with websites that offer similar content.
Contextual advertising is also believed to improve user experience, as the ads users see align well with the content they are viewing. This, in turn, improves the odds of converting users by giving them more value. This is the least intrusive form of advertising as it serves ads based on real-time data constituting a user’s profile viewing content and targeting that profile with suitable ads.
The downside of this form of advertising is that the pool of digital spaces to showcase is very small, and if you are used to behavioural-based tracking, you will be disappointed by the reach of your ads.
Walled Gardens
If your organizations can benefit from advertising on platforms such as Google Adwords, Meta, and Amazon, which use data from logged-in users across different devices to serve them ads. In that case, it is one of the areas that the phasing out of third-party cookies will have the most negligible impact.
Next Steps
Until Google comes up with a robust replacement for third-party cookies, organizations need to start auditing their current advertising needs and traffic sources and start building a more omnichannel strategy.
If you already have a CRM system or are planning on investing in it, then you can start thinking about cross-selling and upselling within the CRM system and focus more on first-party data to reach your audiences. Organizations that don’t have an existing CRM system can look into ways to build direct customer relationships and partner with related organizations for contextual marketing. With social media and influencer marketing, the pool for contextual marketing is growing bigger and bigger. Traditional tools such as email marketing can help you reach your audiences as well.
