Looking Past the Cookie’s Demise: Advertisers Are Suffering from Signal Loss

Why Brands, agencies and publishers are scrambling for the highest fidelity data to drive actual business outcomes

Ignore the “waiting game” around the  “slow death of the third-party cookie.” Marketers looking to accurately target and derive insights from consumers’ shopping intent and activity are currently facing are many forms of signal interruption.

The advertising industry at large felt a reprieve when Google said it would delay the cookie’s phase out until the end of 2024. But that’s only on Chrome. The cookie has been depreciating for years, as privacy demands forced the industry to reduce the use of third-party tracking pixels for behavioral advertising efforts.

Marketers don’t care much about the kind of advertising tool at their disposal. They care about driving outcomes. In that sense, a focus on connecting privacy-compliant transaction data would solve most of the issues in connecting advertising to a real-world result.

There are a number of reasons for the signal loss advertisers have been experiencing. And the steady depletion of the cookie’s value, as opposed to its eventual dismissal, has obscured understanding and actions marketers need to take now to reverse signal weakness that makes their campaigns less and less impactful.

For example, worries about running afoul of privacy concerns has forced much of this data behind “walled gardens.” In the rise of retail networks, which are primarily a digital update of stores’ loyalty marketing programs, the lack of competitive data has put all marketers at a greater disadvantage than any time since the dawn of the internet.

The question for advertisers: can a full view of consumers’ spending be made accessible in a way that meets consumers’ equal expectations for personalized and then balanced with the necessary privacy protections?

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The Present Challenges to Driving Proven Outcomes 

First, the regulatory protections starting in 2018 governing Personal Identifiable Information (PII) and the European Union’s General Data Protection Regulation changed the game for online advertising completely. Websites had to alert and seek consumers’ permission to access their data for marketing purposes.

Those privacy changes made the third-party cookie a less worthy source of data. The shift was on and first-party data, which publishers and brands collect directly from their users, filled the void. But it could only accomplish so much.

Especially when brands recognized that owning that first-party data was too powerful to be left to agencies, ad tech platform companies and publishers.

The emergence of retail media networks in 2021 have since been adopted by major brick-and-mortar supermarkets, convenience store chains and ecommerce players such as Wal-Mart, Albertsons (and its pending merger party, Kroger), Best Buy, Home Depot, Target and Amazon.

Although the concept of retail media networks is merely an update of conventional loyalty programs at the point-of-sale with a digital twist, the advent has increasingly put consumer data behind walled gardens.

On the one hand, it makes sense that these brands get to keep control of an important asset — their customers’ marketing information. But the very act of keeping it to themselves ultimately limits and therefore degrades that data.

Why walled gardens offer no picnic to brands

We generally associate walled gardens with companies like Apple. The Cupertino tech giant zealously shares very little consumer data with partners. And it ensures that Apple’s iOS software system blocks any attempts to cross into its app stores or any part of its self-contained ecosystem without clear and paid permission.

But the retail media networks have cultivated walled gardens around consumer shopping behaviors as well. An Albertson’s customer activity is unknown to Wal-Mart — and vice versa.

When left with that uncertainty around attribution, marketers are apt to hold back spending across the board, further eroding the value of publishers’ sites and cheapening the ads consumers receive.

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Clean Rooms: An Answer With Limits

While data clean rooms have shown promise in offering anonymized, privacy-safe targeting and attribution opportunities in the programmatic space. Basically, these independent, third-party platforms synthesize and match two or more first-party data sets while making sure all personally identifiable information is not exposed. That allows marketers to build new audience or analytics segments, which are based on both sets of data.

Still, clean rooms are primarily a solution for those retail walled gardens that created the lack of visibility problem in the first place. In that sense, clean data rooms are not a replacement for the depletion of the cookie and the loss from other signals of consumer shopping behavior..

What about the rest of the online landscape?

Let’s be honest; no one will mourn the cookie. It was a simple, available tool for online ad targeting. It’s odd that in an industry constantly racing towards the latest optimization and innovation, the online ad industry embraced the cookie because it was just good enough. Its initial purpose was to end the tedious inconvenience web surfers faced of having to log in every single time they visited a publisher’s website.

The cookie is an artifact of the early days of the internet. That it worked for so long is a testament to the power of online media.

But we can do much, much better.

Access to consumers’ (anonymized, of course)  transaction data represents an asset that is integral for the accountability of media and advertising. Without it, brands, agencies, platforms and publishers have no sure way of understanding which ads work and which ones don’t.

Is this strategy more complicated than the cookie? Slightly, perhaps. But it’s so much more powerful. By advancing the analysis of transaction data, advertisers, agencies publishers, and consumers can realize the full value of maintaining the open web while diminishing wasteful advertising and obtaining the personalized, yet privacy-respecting  information, products, and services that represent the best promises of interactivity.

BONUS READ – Jon Miller, CMO at Demandbase chats about the evolution of ABM in this webchat with MarTechSeries: