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Businesses need to gather a lot of customer information to personalize advertisements, but as Google plans to phase out third-party cookies in its Chrome browser by 2022, now is the time for companies to start considering other ways to collect data.
Third-party cookies provide marketers with better insight on their site visitors. While many businesses rely heavily on the data that third-party cookies collect for advertising, they should prepare their marketing, sales, e-commerce and product development teams and consider other tracking options for their post-cookies marketing strategy.
What is cookie-based tracking?
Cookies are small files that websites save onto user devices -- computers, cell phones and tablets -- when they visit certain pages and carry information from one website to another. The purpose of cookies is to exchange user information -- such as username, password, name and address -- between computer programs.
Privacy and transparency concerns among consumers are causing many businesses to reconsider their use of third-party cookies. Safari and Firefox have already blocked them, and Google plans to phase out third-party cookies in 2022. Google's decision to phase out third-party cookies may be frightening for some businesses, but businesses can consider alternative options in their post-cookies marketing strategy.
"It is important to seek alternatives to third-party cookies to ensure you are delivering the right content, at the right time, to the right user," said Griffin LaFleur, an independent marketing consultant. "For marketers, it's important to know more information about the individuals you are marketing to."
Companies can use various ID providers, first-party data, subscriber bases, device fingerprinting and contextual targeting as potential alternatives to third-party cookies.
1. Use ID providers
In order to compete with the walled gardens -- Google, Amazon, Facebook, Apple and Netflix -- a few companies offer IDs to identify online users without third-party cookies. Typically, a publisher or marketer works with an ID provider. When a person visits the publisher's site, they give the publisher permission to use their information. The publisher shares the user's consent with the ID provider, which creates an ID for that user for ad targeting.
LiveRamp IdentityLink enables organizations to better understand their end users by resolving hundreds of different identifiers from devices -- such as streaming media tools -- marketing platforms and their own internal systems, through LiveRamp's deterministic identity graph.
Beeswax, a demand-side platform (DSP) company in New York, partnered with LiveRamp to help onboard data -- or bring offline data online for marketing needs.
"They're able to say that this device at this time is definitely, for example, Ari Paparo in Manhattan," said Ari Paparo, CEO of Beeswax. "Through years of doing this, [LiveRamp] has a graph that is pretty big and accurate."
Then, LiveRamp pushes the corresponding IDs for a company to use. Customers can then buy an ad that matches those IDs to facilitate personalized marketing strategies.
2. Focus on first-party data
Businesses will lose access to third-party cookie data, but first-party data is still available to use for advertising purposes. First-party data includes names, addresses, phone numbers and any personally identifiable information that a business collects on its own. Brands that have been collecting this data all along will be in good shape when Google phases out third-party cookies.
Marketers should look at their own first-party data to gain greater insight about their existing customers, then base their targeting, measurement and knowledge of prospects on this consumer information, said Tina Moffett, senior analyst at Forrester.
Beeswax customers frequently want to use their first-party data to find the right customers and show them ads, so brands that work with Beeswax can also put a pixel on their website.
"That's kind of the simplest solution," Paparo said. "[By using a pixel] we're able to read that user's data."
Often, advertisers work with publishers or retailers to gather precise customer data that is comparable to the kind of information they previously found from third-party cookies, said Andrew Frank, research vice president and distinguished analyst at Gartner.
For example, let's say Delta worked directly with The New York Times for data sharing. Delta would anonymize their first-party data, then give it to The New York Times. Then Delta would use a third-party source to connect their own first-party data with The New York Times email list. That information would be The New York Times' first-party data, which it would append to Delta -- giving Delta richer customer data that marketers could use for targeting purposes, Moffett said.
3. Build a subscriber base
To collect valuable first-party data, companies need to have a strong subscriber base. Publishers, especially, should focus on this aspect.
When a publisher gives consumers content that they can trust, they develop a relationship with their readers. The publisher then reaches out to readers and offers weekly newsletters, the latest video content or featured stories, in exchange for their email address. If consumers trust the publisher and enjoy the content, they are more likely to share their email address.
Email addresses are an example of first-party authenticated data. If a publisher has a customer's email address, it can track their behavior on its website.
"A great example of [first-party authenticated data] is subscription-based clothes services, like Trunk Club," Moffett said. "They'll ask you, 'What size are you? What kind of patterns do you like?' That's their first-party data, and that's a goldmine for advertisers."
4. Consider device fingerprinting
Device fingerprinting is one example of a workaround that somewhat mimics the actions of third-party cookies.
When a person uses a device, such as a smartphone or a laptop, it communicates to a server. The server requires information such as the IP address of the device, web browser, language, time of day and location where the customer is using the device.
"A third party could take whatever information they get about a user and try to infer or deduce their identity, sort of like a puzzle, based on, for example, the customer's IP address or what browser they are using," Paparo said.
"The idea is to take all of that information that's available in that dialogue and use it to construct an identifier that's unique to that device, like a cookie," Frank said.
While this is an option for a third-party cookie alternative, there are privacy and consent concerns.
"Fingerprinting is generally frowned upon," Paparo said. "There is no consumer consent; the consumer is being profiled whether they want to or not."
5. Employ contextual targeting
Contextual targeting -- or contextual marketing -- is an option that doesn't require tracking customer data. Instead, it matches advertisements with the content, as opposed to matching with the audience, Frank said.
"Contextual is a very effective technique for targeting advertising that does not use consumer user data so is considered sort of future-proof against the demise of the cookies," Paparo said.
Businesses can use contextual targeting through keywords and topics, as well as general website themes. Contextual ads match the content that a webpage is presenting, and, as a result, do not disrupt the customer experience. For example, if a consumer is reading an article about coffee, then an advertisement for a coffee maker may appear on the webpage.
"The general challenge with contextual is scale, there's quite a lot of the web that you might want to advertise on, but [the content] doesn't have a lot of context," Paparo said.