With Google announcing that it’s phasing out third-party cookies, how are companies preparing to collect customer data that will help them continue to target their audience?
After the invention of cookies in the mid-1990s, a small piece of code stored customers’ data and preferences every time they accessed a site. Rather than collecting the data via specific tools such as customer relationship management (CRM) or sales force automationsoftware, search engines had direct access to customer data. Examples of data they collect include name, address, and shopping cart contents. Cookies make it easy for web servers to tailor information to match a user’s requirements when the visitor is accessing the site.
Boom, privacy, and regulation in the 21st century
With time, each website would create first-party cookies that would collect data from users. First-party cookies are exclusive to each site so they would gather information on users’ personal interests, location, and behaviour, meaning they would be able to personalise each user’s experience based on their own data.
However, the arrival of the General Data Protection Regulation (GDPR) in Europe and the European Economic Area (EEA) and the California Consumer Privacy Act (CCPA) in the US, both implemented in 2018, meant websites had to ask users for consent. Visitors could refuse the cookies — and still be allowed to navigate the site.
First-party cookies are set directly by the website’s owner and stored directly by the website. Third-party cookies are set by third-party vendors and are mainly used for tracking and online advertising purposes
Companies were now looking at a number of tools to make sure they were compliant and respected their users’ data privacy without breaking the law.
Some of the new software categories created to ensure companies safely managed data were:
In recent years, search engines, such as Safari, have also changed the way they handle customer cookies. Apple has removed third-party cookies and now only keeps first-party cookies for a week. Google intended to phase out third-party cookies by 2022; however, it recently announced a delay of the ban until 2023.
What will be the impact for marketers and advertisers?
The phasing out of third-party cookies will mean companies won’t be collecting as much personalised information from customers, leading to incomplete customer mapping and inaccurate measurement of the full user journey.
Although 45% of respondents admitted not knowing the likely impact of the update, the new policy will bring challenges to marketers and advertising companies. In fact, for 41% of respondents the biggest challenge will be tracking the right data, followed by less accuracy in personalised advertising (15%).
61% anticipate a change in marketing spend due to the new policy
Training employees (14%), new budget allocation (10%), and reforecasting (9%) are three major concerns for marketing and advertising companies to comply with the new policy. In fact, 61% of them anticipate a change in their marketing spend due to the new policy — with 44% foreseeing an increase of between 5% and 25% to reach the same targets as 2021.
Looking at the right tools to help collect customer data
So, with no access to third-party cookies, companies risk having an inaccurate measurement of campaign performance and a potentially inefficient marketing spend, since they don’t have the full picture of the user journey.
‘In any post-cookie scenario, marketers should expect substantial and sustained disruption to digital advertising to last through the first-half of 2023, or longer.’
Collecting first-party data becomes the key strategy
Only 4% of the surveyed professionals consider that the biggest challenge from the new Google policy is finding the right software to collect first-party data. Another 5% will be investing in CRM software to collect customer data. This figure seems very low in comparison with other types of tools. For example, 23% of the marketing experts surveyed are planning on investing in email marketing software and 17% are planning on investing in analytics.
When third-party cookies are phased out by Google in 2023, organisations will need to rely on first-party data to get the most information on their audience. Companies can collect first-party data from:
- Social media
- Customer service interactions
- Direct mail
- CRM systems
CRM software integrates organisational processes across marketing, sales, and customer services and allows companies to have all customer interactions and information in one place. This type of data, which is gathered directly from consumers, is the base (and perhaps the most reliable method) on which to identify an audience and build audience segmentation.
Preparing ahead of the phasing out of third-party cookies
Despite some companies looking to upgrade their systems to collect and leverage first-party data, over half of them (51%) don’t know yet if they will have to invest in new software.
Having the right systems and strategy in place to collect first-party data will become essential from 2023. Companies will then rely on the data they have collected, therefore it is vital they start planning ahead of the policy coming into place to avoid missing out on potential new customers.
To collect the data for the GetApp Cookieless Data Survey, we conducted an online survey in August 2021. Of the total respondents, we were able to identify 150 UK respondents that fit within our criteria:
- UK resident
- Over 18 years of age
- Full or part-time employed
- Field of expertise in marketing