The Cookie Crumbles
A cookie (also known as HTTP cookie, web cookie, internet cookie, browser cookie) is a small text file saved in a user’s web browser directory. Cookies help sites to keep the user logged in, remember site preferences and create a personalized experience. Cookies are of two types — First party cookies and Third party cookies. First party cookies are generated by the site that a user visits and help improve site functionality and user experience whereas Third party cookies are generated by sites that a user is not currently visiting and are often used for targeted marketing.
With Apple’s recent announcement to grant users the choice to opt out of app level targeting or tracking, it is safe to assume that cookies have reached their shelf life. Lou Montulli, an employee of Netscape Communications, had first devised the idea of using cookies in web communications, way back in 1994[1]. Even then, a special working group headed by Lou himself had ascertained third-party cookies as a privacy threat in the group’s final publication in 1997[2]. Two and a half decade later, Google has decided to phase out third party cookies from its Chrome browser by 2022 citing user privacy concerns. This follows Safari and Mozilla’s decision to block third-party cookie tracking and data mining.
But the use of cookies has become way more ubiquitous than it was initially ideated for by Lou Montulli. Cookies now sit at the centre of many companies’ marketing strategy. At least 34% companies used cookies for identity-related data sources to personalize their marketing communication, according to a survey in 2015[3]. Advertisers have leveraged third party cookies data to create user persona and offer targeted promotions, achieve audience segmentations, attribution, campaign optimization and introduce many more ingenious marketing tactics. Thus, the advent of GDPR and CCPA restricting the ability of the organisations to collect, use and share consumer related data will directly affect the efficacy of marketing campaigns. This, in turn, will result in reduced conversion rate and upset company’s top line. Even with an option to opt-in for tracking for advertising purposes, 46% tech vendors and publishers felt that consumers would not provide consent to 3rd party tracking, as per a survey in 2017.[4] Not surprisingly so, a study by Reuters Institute for the Study of Journal in 2018 showed 45% news pages in UK abandoning 3rd party ad trackers.[5]
However, more than regulations and privacy concerns, third party cookies have themselves to blame for their downfall. For instance,
· Cookies target devices and not people. Multiple cookies may be allocated for the same individual on different devices and browsers, leading to inaccurate identification
· Cookies are time-bound and domain-specific, so synchronizing them for tracking is complex
· Web browsers on mobile devices and mobile applications are not effective for cookie tracking
Privacy concerns, stricter regulations and cookies’ own flaws have led to its lost relevance. But it may not be all gloomy for marketeers as alternative marketing tactics provide better targeting opportunities. In fact, 92% of executives from GDPR compliant firms say their organization has gained a competitive advantage after embracing regulations (Capgemini Research Institute — Championing Data Protection & Privacy).
Marketers and advertisers have the following alternative opportunities to create better digital marketing experiences for the consumers.
- Invest more in organization level systems such as real-time CDP
- Unify 1st party data assets and share them across organizations
- Activate through direct integrations with publishers
- Use AI/ML techniques for better audience targeting keeping privacy in mind
- Contextual targeting based on what users are consuming
These efforts will help marketers and advertisers in improving customer experience across various touchpoints and enhancing conversion leading to increase in the life-time value of customers.
[1] https://www.historyofinformation.com/detail.php?id=2102
[2] https://tools.ietf.org/html/rfc2109
[3] http://insight.venturebeat.com/report/customer-identity-marketing-capturing-storing-and-enriching-right-data
[4] https://pagefair.com/wp-content/uploads/2017/09/PAGEFAIR-consent-survey-charts.pdf
[5] https://www.statista.com/chart/15578/change-of-ad-tracking-techniques-since-gdpr/
