Rumor has it, Amazon is the latest firm looking to capitalize on the death of cookies. So, that got the RetailWit crew wondering: what will the web (and digital marketing) really look like without cookies? How did we get here? Where are we headed and by when?
Get your history cap on: a Cookie 101 that doesn’t suck.
Cookies aren’t new. Introduced nearly 3 decades ago (1994, Lou Montulli) at Netscape, their goal was to strengthen customer relations. “Brick and Mortar has the advantage here”. Imagine that. Without cookies, websites were deaf, dumb, and blind when it came to understanding their customers—all users were anonymous and their experience would reset if they left the website.
Facebook saving your login credentials? Amazon’s Shopping Cart? Spotify remembering your last played song? The modern web? All possible because of Netscape and Lou.
A year later, the dot com explosion started. Cookies weren’t the only factor by any stretch, but this author would argue they contributed to the economic viability of web-related companies and subsequent investments.
Obviously, the World Wide Web survived and Tech companies are thriving to this day. Cookies gave rise to new business models, new capabilities. But, with great power comes great responsibility and not everyone has used it for good.
By the 2010s, a crackdown on data privacy began (see: GDPR, CCPA), with cookies in the crosshairs.
What’s currently happening with Cookies.
The story of a cookie-less future is really about privacy. For years, ad-tech companies have written checks cashed at the expense of a user’s personal information. Privacy is now a competitive differentiator.
There’s nuance, though. There is a distinction between first-party and third-party cookies.
- First party cookies – created, controlled, and contained within a specific website you visit. Saving your login credentials, shopping cart, or song? That’s the result of first-party cookies.
- Third-party cookies – allows data collection across different websites. Said plainly, it allows for advertisers to track users across the internet. It builds a more complete profile of a user to enable better personalization, relevancy, and targeting.
It’s the third-party cookies that are being phased out. Internet browser’s Firefox and Safari shut out third-party cookies years ago, 2013 and 2017 respectively. It’s been on the horizon for quite some time. First-party cookies are still in vogue.
The ‘cookie-less’ frenzy came when Apple announced iOS14 would crack down on user tracking across third-party apps or websites, prompting a response from Google phase out third party cookies.
Google, Facebook, and others have used targeting to build (filthy rich) empires. The third-party cookie is a hydra – remove one head, and others will take its place.
What does this mean for marketing?
- Expect more walled gardens. Firms will release their own ‘identifier’ that are silo’d within their ecosystem. Amazon (above), Google (FLOC, TURLEDOVE), Retailers (Retail Media).
The companies who depend on this as a business model are fighting back. Trade Desk is partnering with Nielsen, LiveRamp, Criteo, and others to develop their own ‘open-source’ identifier to “preserve the value of relevant advertising”.
Google has already said it will not support alternative identifiers. Others will follow. Firms with scale and ownership will win. Why give up the power?
- Gear up for contextual-based marketing. This particular flavor uses the context a user is in to serve up ads. User looking up the best whiskey (easy choice: Sazerac Rye) in town would get served an ad for the Bourbon Trail. Customer Insights and first-party data will take the center-stage to reach customers at key moments of research, inspiration, and purchase.
- Audience targeting isn’t going away, it will just look different. Google has said their FLOC conversion rate are >95% as effective in comparison to the current, cookie-based model (the jury is still out, by the way). Everything from attribution to measurement to retargeting will be shaken up—but, understanding where your customer is along the path to purchase (consideration, lapsed, potential, loyal) will be a necessity that Google (and others) are solving for.
And, here’s the top stories from last week:
- Costco, Sam’s bring back in-store sampling. Saturday lunch is back. A sure sign that things are returning to normal. CPGs, brands, and vendors have been hurt from the lack of in-store experiences like this – it could be an opportunity for upstarts to gain market share.
- Cyberattack on JBS, the largest meatpacker, could pressure margins on restaurants. The attack was likely from Russia (or, our bet: PCU’s Moonbeam). It feels like man-made ‘disasters’ are becoming more common than natural, and companies should be planning for ransomware recovery plans.
- Walmart launches private label beef. It’s Walmart’s first launch of it’s end-to-end (beef) supply chain program, established to meet customer expectations on transparency and sustainability. It feels tangential to their brand, but great move to capture changing sentiment and customers.
- Amazon ranked No. 1 Investor in America, says a new study by the Progressive Policy Institute. Great to see – and, the glass is transparent on who is writing the checks to fund the methodology.
- Instacart bets on Robots to shrink ranks of 500K gig shoppers. Instacart is in a tough spot—they’ve spent the better part of a year looking to utilize robots at automated fulfillment centers, but aren’t having luck finding a partner and have fallen behind schedule. Many retailers are looking to develop their own solutions. We see two options: expand capabilities as an ‘outsource partner’ or become a retailer. Either will be tough.