Online Marketing: When the Cookies Crumble
Cookies are in the news lately—or rather, the diminishing influence of Web cookies. And it has some marketers wondering if they're going to be able to continue gathering the kind of data necessary to deliver targeted, relevant offers and messages online.
Today, almost everyone knows a cookie is a small nugget of data sent from a website to a computer user's Web browser (Internet Explorer, Safari, etc.). Stored in the browser, cookies contain information about users' activity on the website and can be read when the users return—offering insights into their interests, and fueling an explosion in highly relevant online advertising.
It is precisely this type of relevant advertising that provides value for both the consumer and advertiser. And as long as the advertisers are happy, they will keep funding the cost of all of the free digital content consumers love.
Now marketers are worried that cookies may be going away, thanks to rising consumer awareness and concern about privacy issues, and the explosive growth in mobile devices accessing the Internet (because they typically don't accept cookies).
Both of these trends are very real and, as a result, cookies are becoming less effective for certain uses. But that doesn't mean the end of relevant online advertising or the demise of digital.
To begin with, not all cookies are affected. When you visit a typical website, you don't get just one cookie; you may get a dozen, and often many more.
Cookies set by the website publisher are known as first-party cookies. Others come from ad networks that display banner ads on the site, or from providers of other sponsored content or services, and are known as third-party cookies. Still others—like those from social media companies, which are often initially set on the social media site but collect data primarily in a third-party context on other sites—occupy a strange middle ground, often allowing them to collect identified data in third-party contexts.
Third parties are the primary targets of "Do-Not-Track" technology. First-party cookies and other permission-based tools may remain largely unaffected, because the consumer has given consent to the first party. So marketers will still be able to accumulate data regarding the activities of their own customers when they visit the website, as long as the marketer has obtained the appropriate levels of consumer consent.
Virtually all digital marketers use a combination of their own customer data with consumer data from other third parties, such as ad networks, site analytic companies, website optimization firms, data providers and others. These are the companies whose third-party cookies are affected.
Moreover, some of these providers use their third-party cookies—delivered to users as they visit multiple websites—to track consumer activity across multiple sites. By doing so, they gain a more holistic and comprehensive view of the user's online interests and activities. This helps marketers deliver more relevant and engaging experiences for consumers, and to run their businesses more efficiently.
Saving the Sweets
Technologies are emerging that can gather anonymized data regarding online activities without cookies. One of the most promising is "statistical IDs," which combines multiple data points from any computer that is online.
These data points include details, such as the browser type being used, the computer's language settings, its IP address and the location of the Internet connection. Taken together, this data helps single out a computer so service providers are still able to gather data necessary for modeling and marketing.
Statistical IDs are not a complete substitute for cookies—there is some loss of fidelity. A cookie is specific to a single browser, and thus a single computer. A statistical ID, depending on the components used to create it, may appear identical across multiple machines. This means statistical IDs can provide more anonymity for the user, which is important to the survival of any audience-targeting technology. What has yet to be fully addressed is the transparency around statistical IDs, and simplicity and persistence for consumers to opt-out of use of this technology. Respectful marketers and their trade organizations are actively working to answer these questions.
A similar approach is taking shape for mobile devices, which often have unique device IDs. A number of manufacturers are exploring how to share that information with advertisers by offering consumers meaningful choices and having them participate in the value exchange.
There are three important take-always for marketers:
- The sky is not falling.
- The decline of third-party cookies does not mean the end of effective digital advertising.
- We are at a cross-roads where precision must be balanced with consumer transparency and control.
This is necessitating the introduction of different types of tracking technology, depending on the level of consumer consent.
For example, the most precise targeting, like a first-party cookie or mobile device ID, might be acceptable where consumers can be asked to opt-in to use of their known behaviors. Less precise targeting—like a statistical ID, IP-based targeting or geographical targeting—may be acceptable for other use cases.
Although the situation is not as dire as some make it out to be, smart marketers should take steps to ensure they are prepared for these changes.
1. Ask your service providers what they are doing to prepare for this new world. As noted above, new technologies are already in use—and they will certainly improve. Newer and better solutions will also emerge as we continue to reconcile the technology and consumer privacy discussions as an industry. But if the providers you work with aren't prepared to adapt and use new technologies, the value of the services they provide will decline. More than most industries, online marketing is subject to constant disruption by the emergence of new technologies and new providers, while older approaches and companies decline. Make sure your service providers aren't going the way of the horse and buggy.
2. Own your customer relationships—and your customer data. Like first-party cookies, first-party relationships and the data they generate are not subject to the same restrictions and limitations that govern third-party relationships. Thanks to your direct relationship with your customers, and their consent, you have greater leeway in gathering and using data about their activities. This latitude applies to all of your customers' digital interactions—including mobile apps and website visits from mobile devices, as well as conventional desktop or laptop browsing. If you have physical locations, it applies to offline activities, too.
3. Focus on improving the customer experience—from the customer's point of view. This is the most important take-away of all: Marketers simply must focus on using consumer data to address genuine customer needs in ways that can inspire and delight the customer. Otherwise, rising concerns about privacy will continue to affect the tools and technologies we use to gather and analyze this data in the first place.
It's a matter of striking the right balance—tempering the capabilities unlocked by online data with measured judgment about what is interesting, appropriate and exciting for consumers. If marketers adhere to this principle when using data and technology, no one will miss third-party cookies.
Keith Johnson is general manager, interactive, for Richardson, Tex.-based database marketing and digital advertising services provider KBM Group. Reach him at email@example.com.