Google’s recent announcement to retain third-party cookies is a significant shift, highlighting ongoing debates around privacy and digital marketing strategies. Here’s what happened on the death row walk for the third-party cookie and how brands should be thinking about the future of marketing moving forward.
Google’s Privacy Sandbox: An Unsuccessful Venture
Google’s initial ambition to phase out third-party cookies by 2022 faced multiple delays and experimental setbacks. The Privacy Sandbox, intended to replace third-party cookies, failed to adequately protect consumer privacy or empower advertisers, and it negatively impacted the publisher’s path to monetization.
Google’s recent pivot to maintaining third-party cookies underscores a recognition that giving consumers choice is essential. The lingering question is whether Google will genuinely empower consumers or obscure their ability to make informed privacy choices, similar to Apple’s approach with its iOS privacy settings. Will choice be an easy thing for consumers to manage, or will Google hope for a “click-and-forget” scenario?
The Role of Regulatory Bodies and Google’s Strategy
The U.K.’s Competition and Markets Authority (CMA) and the Information Commissioner’s Office (ICO) are scrutinizing Google’s practices regarding third-party cookies and the Privacy Sandbox. Recent tests of the Privacy Sandbox tools revealed significant issues, suggesting that Google is far from developing an effective replacement for cookies. This regulatory oversight has likely influenced Google’s decision to maintain third-party cookies while continuing to develop the Privacy Sandbox. More to come in this department, but it’s clear pressure is on Google to increase its privacy practices and the third-party cookie is squarely in the sights of regulatory bodies, globally.
The Shift Towards Privacy and Its Implication
Despite retaining third-party cookies for now, the good news is that Google is expected to continue shifting towards more privacy-focused practices. This transition will likely follow a path of providing opt-out options, encouraging blocking, and eventually requiring explicit opt-in for third-party cookies — probably at a per-website level via web browsers. This shift will reshape digital advertising, complicating efforts for brands relying on third-party data for retargeting with ads.
Potential Long-Term Strategies and Uncertainties
Google’s decision may reflect a strategic pivot, drawing parallels with Apple’s App Tracking Transparency (ATT) framework. A browser-initiated prompt offering opt-in or opt-out choices for third-party cookies, depending on jurisdiction, seems likely. If that path is adopted, marketers should look to the opt-out figures ATT has garnered since its inception. Generous estimates show only 25% of consumers actually opt-in for tracking via ATT, and most reports show as little as 10% accepted. When given clear calls to action for sharing their most intimate data with browsers, apps and websites, consumers have clearly shown that an opt-out is their answer. Even with a stay of execution (for now?), the third-party cookie’s relevance and adoption will continue to decline rapidly.
The Strategic Advantage of First-Party Data
Progressive brands have anticipated the decline of third-party cookies and invested in building robust first-party data strategies. First-party data, collected mainly via brand websites and consumer transactions, allows for hyper-personalized messaging across owned channels like email and text. This approach has been shown to outperform traditional third-party advertising significantly, driving higher engagement and building stronger customer relationships. In fact, many research reports show that an email beats a banner ad by well over 100% when driving a click-to-purchase scenario.
It’s Clear, Consumers Want Direct Relationships With Brands
The future of digital marketing will be defined by trust, privacy, and personalization. Brands that embrace these principles and invest in first-party data will navigate the changes more effectively. This shift towards a more sustainable, consumer-focused approach will benefit brands and consumers alike.
No consumer is asking for a better third-party driven ad, they want better relationships. In fact, 85% of consumers want brands to treat them as an individual and 82% prefer brands that strive to develop a relationship with them. To achieve this requires owning a direct line of communication with your audience making it the preferred way to transact, for both parties. Much like human marketers communicate with their friends and family, the healthiest and most loyal brand-to-consumer relationships use personal channels such as email and text to stay connected.
Third-party cookies, by definition, keeps an intermediary third-party in the middle of your relationship. Consumers have been clear this is not their preference. Marketers who continue to lean heavily on third-party data run the risk of losing their potential customers to their competitors who lean into first-party data and personalization via intimate channels such as email and text.
A Wake-Up Call for Brands
Google’s decision to retain third-party cookies serves as a wake-up call for brands to adopt more sustainable, consumer-centric marketing practices. Either by a date-driven beheading or a slower, opt-out death at the hands of consumers, its reign is coming to a close. By leveraging first-party data and focusing on building direct relationships, brands can not only survive but thrive in the new digital marketing era. The emphasis on trust, privacy, and personalized marketing will ultimately drive stronger consumer loyalty and better business outcomes.
Wunderkind has always been committed to providing brands the ability to build stronger relationships with their addressable audience. From sophisticated first-party data list growth tools to personalized triggered email and text messages that convert, we’ve moved our customers closer to theirs with privacy, always at the core of our solution. With the Wunderkind Identity Network consisting of 9 billion devices, 1 billion opted-in consumers and 2 trillion events observed annually, we’ve protected consumer’s data while empowering relationships with the brands they love. It’s our rich, contextualized consumer data that accelerates this relationship build between consumer and brand. We’ve been delivering over $5 billion in guaranteed revenue per year for brands and future-proofing marketing strategies that lead to higher CLV while reducing reliance on third-party cookies, and even lowering remarketing advertising budgets.
Google’s decision to keep or kill third-party cookies does not change our vision, our value or our strategic recommendations for brands. Relationships are what we foster for our brand clients everyday and something third-party cookies can not deliver for your brand.