How Cookie Restrictions Solve Key Data Privacy Issues and Offer a Great Opportunity for More Quality

For businesses that have operated with personal data as their bedrock, recent developments that have contributed to the demise of the cookie have been understandably earth-shaking. Due to heightened privacy-led restrictions, identifiers as we know them are changing or even disappearing, impacting cross-domain and cross-app targeting.

This change, however, is likely for the better.

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The digital marketing industry is entering the privacy-first era, where businesses must commit wholeheartedly to keeping trust and compliance at the center of their operations. Although this different approach might be disconcerting for some, a range of valuable solutions are emerging, which will enable marketers to tap the data insights they need and continue connecting with specific audience segments. With innovative tools grounded in first-party data, the industry can bridge the gap between data providers, agencies and brands, while progressing its privacy-conscious journey toward more effective and efficient advertising.

As the restrictions on cookies continue to rise, let’s take a deeper look at the potentially positive impacts this has on  current developments on the industry.

1. First-party identifiers to increase data quality

From heightened precision to cross-device targeting, first-party IDs offer access to quality data that increases the impact of digital campaigns. Businesses can take steps to leverage enriched first-party data, provided with consent from consumers, and activate it across channels.

First-party IDs can last for months or even years, which supports use cases that cookies never could – for instance with purchases that require longer consideration periods and changes to mobile phone carriers. The additional data points first-party IDs deliver can enhance tailored messaging and build a stronger, privacy-compliant advertising experience for consumers.

2. First-party audience onboarding delivers in-depth insight

To optimize campaign impact, digital marketers want the means to assess how receptive consumers are to particular products or services. First-party audience onboarding enables businesses to leverage in-depth knowledge of audiences, based on consumers’ response to previous campaigns, and apply these learnings to upcoming marketing efforts. Innovative customer data management capabilities now allow data sources to be combined without the need for common IDs, which protects user privacy. For companies, this also facilitates greater agility and faster insight generation, meaning they can respond to the latest consumer behaviors as they emerge.

3. ID matching is rapidly improving

When it comes to ID matching, poor data quality has historically led to match rates of 50% at best. With the digital industry now focused on matching IDs at scale, remarkable progress has been made to improve this. Data providers can now achieve significantly higher match rates as a result of anonymized, privacy-compliant processes and streamlined integration with other data platforms. Altogether, this progress enables scalability and adaptability while keeping user privacy central to data practices.

4. Unified ID initiatives advance data activation

Open-source and non-commercial, Unified ID 2.0 (UID 2.0) is The Trade Desk’s solution to the deprecation of third-party cookies. The identity framework utilizes sign-in data – which can be gathered with consent when a user visits a publisher’s site – then uses it to generate a hashed and encrypted ID. UID 2.0 operates with strict privacy controls to ensure regulatory compliance, but allows audiences to opt in to targeted advertising across a network of publishers. This solution effectively manages and activates valuable data using unified first-party IDs, providing cross-site targeting and attribution capabilities to rival that of third-party cookies – without breaching privacy regulations. A key challenge publishers and brands are facing right now is which solutions to test and how to efficiently map and activate them to be most relevant in the operational flow.

5. Granular audience profiles enable complex targeting

One concern around privacy regulations stemmed from marketers’ need for granular user profiles, which fuel personalization, scale, and sophisticated ad targeting. While some businesses have turned to contextual targeting to get closer to consumers, granular insight doesn’t necessarily conflict with current privacy regulations. Composite audiences, for example, are enabling businesses to inform ad targeting using multiple consumer traits and data points. Companies can now collate audiences, check for similarities and duplication, and align models to enable complex targeting. This is driving greater advertising efficiency while also safeguarding user rights to privacy.

6. Targeting cohorts provides a new alternative

Led by Google, targeting cohorts is another emerging solution that replaces individual IDs with group-based IDs. With its FLoC (Federated Learning of Cohorts) initiative, Google is developing anonymized audience profiles grounded in mutual interests or search history. In theory, this will provide accurate targeting and effective personalization. Google’s offering will be underpinned by its broad range of subsidiaries, Gmail, and of course its Search engine, which provide the tech giant with an unparalleled quantity of rich data points. While the initiative is still being tested and refined, the anonymity FLoC provides for users has high potential for privacy-compliance while delivering relevant advertising.

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Change is indeed sweeping through the digital landscape – but it is providing new opportunities for marketers to advance their first-party data strategies. By prioritizing privacy, the marketing industry is collaboratively moving toward more optimal solutions for reaching, understanding, and targeting audience segments. Although it will no doubt take a combination of approaches to achieve success, it is now in the hands of industry players to adopt, test, and optimize available solutions. As a result, businesses will be able to successfully tap quality data and sustain effective ad targeting, all while evolving beyond third-party cookies and the privacy challenges they posed.