As Third-Party Cookies Fade, Brands Get Personal

A quarter of a century after they first became ubiquitous, third-party digital cookies — those hidden bits of code that allow marketers to track all your web activities — are set to begin disappearing next year from the browsers of more than 2.5 billion users of Google’s Chrome. With 65% of the browser market, the company has been promising to phase them out for several years but has delayed the end several times while it tries to figure out a substitute. (Safari and Firefox have already stopped tracking users via third-party cookies.)

The end of such tracking via cookies is a big deal in the nearly $700 billion digital ad business.

According to a survey done in 2020, 80% of advertisers have relied on third-party cookies to micro-target ads. Tracking has been an efficient way to reach consumers, but not without some quirks. Buy socks online and chances are good that for the next week, you’ll be seeing ads for socks.

The end of third-party cookies has been long in coming.

What comes next is already reshaping the marketing landscape — voluntary first-party cookies (sometimes referred to as zero-party).

It turns out that people like sharing their activities as long as they are asked by brands and retailers they trust. What’s old is new.

Author and customer experience consultant Blake Morgan wrote a column a couple of years ago listing 50 statistics that “show the power and potential of personalization.” The list included:

91% of consumers say they are more likely to shop with brands that provide offers and recommendations that are relevant to them. – AccentureACN

80% of consumers are more likely to make a purchase from a brand that provides personalized experiences. – Epsilon

90% of U.S. consumers find marketing personalization very or somewhat appealing. – Statista

83% of consumers are willing to share their data to create a more personalized experience. – Accenture

90% of consumers are willing to share personal behavioral data with companies for a cheaper and easier experience. – SmarterHQ

The other major trend affecting the digital ad business is the growth of advertising on retailers’ websites, known as retail media networks.

Third-party cookies may have been the easy way to acquire new customers, but it has gotten expensive. Customer acquisition costs in the consumer space have risen by about 60% over the past decade. Clicking on ad links is no longer an efficient way to “buy” customers.

Retailers like Walmart, Target, Best Buy, and others have entered the advertising business, competing with the majors by offering “sponsored” ad space on their websites for vendor merchandise. Amazon was a leader in that category, and by 2021 its ad business was generating an annual revenue of $31 billion, a 100% increase in one year.

Consumers haven’t liked third-party cookies, and it turns out neither have some advertisers, and that’s given a boost to ad spending on retail media networks. In a recent article on MarketingDive.com, Brian Gioia, director of product strategy at the e-commerce specialist agency Scrum50 observed, “At the very least, I trust that people are visiting Kroger’s website and visiting Amazon and Walmart’s website. I know real people are seeing my ads.”