In a digital world, data (after people) is the most valuable resource. A digital footprint is a traceable collection of activities, contributions and communications created on the internet or through digital devices. Data is acquired at an astounding rate in today’s environment and it is critical to the success of most digital marketing operations. However, increased consumer awareness of data collection, combined with many cases of misuse of personal data has led to a war for privacy, and as marketers it is important to understand what comes next.
The Demise of Cookies
In 2020, Google announced that third-party cookies will be removed from their Google Chrome web browser by the end of 2022, joining a growing list of browsers that have abandoned the controversial tracking technique. Since then, this proposition has been pushed back to 2023, due to Google’s inability to quickly produce a less intrusive alternative that works for consumers and companies alike.
Google is between a rock and hard place as it struggles to build trust with its users whilst also ensuring its advertisers are still happy. The company is also currently under investigation by the EU Commission and the UK’s Competition and Markets Authority (CMA). It is struggling to produce a replacement for its third party cookies that also ensures privacy as they aim to fully eradicate them and move to “viable privacy-first alternatives”.
What are Cookies?
As you probably know, cookies are basically files that websites create when you visit them. They simplify your online experience by storing browsing data on the device you are using. Cookies allow websites to keep you logged in, remember your preferences and provide you with material that is relevant to your location.
The site you’re visiting sets first-party cookies. This allows the site’s owner to collect customer analytics data, remember language settings and generally carry out useful functions that help provide a good user experience. Third-party cookies are added to your computer to enable organizations to promote products to you after you’ve left their property. Common uses for such cookies include cross-site tracking to detail a user’s full journey, retargeting (which targets ads and messages based on products and searches the user has previously shown interest in) and Ad-Serving, which collects data to help define the best moment to serve specific ads to a user.
What is Privacy Sandbox?
One idea that has been thrown around since Google’s announcement is the Privacy Sandbox. Privacy Sandbox is not a new technology that is going to replace third-party cookies, it is an initiative. The goal of the program is to develop web technologies that protect people’s privacy online, whilst also providing corporations and developers with the tools they need to grow profitable digital businesses, ensuring that the web remains open and accessible to everyone.
The Privacy Sandbox will lay the foundation for a safer, more sustainable and private web. In a statement Google announced that “Some of the information collected by sites and third-parties is necessary to provide the rich content and services you expect. However, the tools used to provide this have gone far beyond their original intent in their ability to recognise you, your online activity, and the devices you use.”
Google attempts to be on the sides of the consumer and the advertisers. They are attempting to please both – a hard job to do. They have three main goals:
- Prevent unnecessary tracking as people browse the internet
- Enabling publishers to develop websites that respect everyone’s privacy
- Preservation of the vitality of the open web
End of Tracking?
Let’s make it very clear, the death of cookies no way implies the end of tracking. Google ads generated $147 billion in revenue last year, accounting for more than 80% of Alphabet’s revenue. For more than a decade, Google has been the industry leader in digital advertising, with over 29% share of the worldwide digital ad expenditure in 2021. There is no way Google is going to let go of a piece of this pie, which also explains the continuous delay in taking that plunge.
Federated Learning of Cohorts (FLoC)
In March of 2021, Google announced its first alternative to third-party cookies was FLoC. As the abbreviation suggests, it will divide people into different FLoC(ks) based on their search history. To put it in Google’s terms “Federated Learning of Cohorts (FLoC) offers a new way for businesses to reach people with relevant content and ads by clustering large groups of people with similar interests.” Here, your search history would officially become a commodity that advertisers will bid upon.
On 25th January, Google announced Topics, the latest Privacy Sandbox proposal for interest-based advertising. You can call it an alternative to third-party cookies or FLoC, but with this feature Google makes sure information is not stored on any server.
“With Topics, your browser determines a handful of topics, like ‘Fitness’ or ‘Travel & Transportation,’ that represent your top interests for that week based on your browsing history. Topics are kept for only three weeks and old topics are deleted. Topics are selected entirely on your device without involving any external servers, including Google servers.” (Extract from Google Blogs)
Topics does not seem like a perfect solution (yet) as it leaves many unanswered questions. On what basis are the top five interests decided? How do we know that they are genuine? What if a person has more than five interests? What if the interests are short-term? This is paving the way for a particularly confusing and poor user experience. Topics is, however, still in the very early development stage, and it will take time before it is rolled out and optimized.
Apple Tracking Transparency
In April 2021, Apple released an update for iPhone that allowed customers to choose whether or not to allow advertising to utilise their device ID. All apps must now ask for user consent to track their activities, just like apps ask for permission before using your camera or location. Unsurprisingly, 62% of iPhone users are refusing to share their device ID. Only 4% of people in the USA consented to tracking their activities.
A device ID, which is better known as Identifier for Advertisers (IDFA), allows apps to track your activity between different apps. For example, you wake up in the middle of the night and find yourself on Amazon looking at chairs. The next morning you check your Instagram and notice ads about chairs, and then you find those same chair advertisements in every app that you use. This all happens through the magic of IDFA, as apps share your information through your unique IDFA number. This also helps apps identify your choices and target tailor-made ads towards you. Big brands like Facebook, Snapchat, Instagram all use this technology, and it plays a huge part in delivering their revenue.
As you might expect, this type of technology is essential for efficient digital marketing and the distribution of highly tailored advertisements. Facebook especially is worried about its $84 billion in annual ad income, which may be impacted severely by Apple’s decision.
What to do as Marketers?
Consumers are becoming increasingly sceptical of the messages they are being targeted with. As a result, digital marketers should brace themselves for stronger privacy regulations, which will change the way they track consumers’ activity. According to Gartner Inc., by 2025 80% of marketers who have utilised customisation will give up their efforts owing to a lack of ROI, the risks of consumer data management, or both. However, this is not going to be the end of data-driven targeted ads. There are of course so many consumer benefits to seeing relevant ads and in time we may see consumers getting frustrated with too much regulation or restriction, so user control will need to play a part.
We cannot deny the impact of privacy changes on methods of marketing, and neither can we resist this change. Instead of data, rely on transparency and an authentic customer experience. Privacy changes will be hard to accommodate but will bring with it a new era in technology and marketing, with more open and trusting relationships between consumers and businesses. This in turn will make building digital communities easier as they need to be based on trust. The world is moving towards an ethical and authentic experience for consumers, so make sure your strategy moves with it.