Over the past year there has been an increase in conversation and expected impact of the upcoming industry changes when it comes to privacy and consumer data. Google and Apple are just a few organizations who have made headlines for their commitment to ensuring consumer privacy. These changes will have a large impact on the marketing strategies and how brands will engage consumers.
For years, consumers have been advocating for more privacy and control of their data and how organizations are both collecting and using that information. Government policy as well as leading tech organizations are driving industry change to help support consumer privacy and data protection. Organizations like Google have announced that within the next few years they will move away from third-party cookies which track consumer behavior. Brands are then able to use that third-party data as a way to identify and segment specific audiences for advertising. Google’s commitment to eliminating the third-party cookies is another step to protect consumer data and ensure privacy, which will limit advertisers ability to target highly segmented audiences. Along with Google, Apple has announced the launch of their iOS14 updates which gave consumers more control over how their data is being collected and used. The industry is seeing a shift to empowering users to opt-in, or more often the case, opt-out of data sharing. This gives the power to the consumers to decide when and how their data is collected and shared. These changes and movement toward consumer empowered data protecting is forcing the rest of the industry to accelerate their own privacy and data protection strategies.
The good news is that these changes and challenges are not entirely new. However, the questions remain: How can your organization prepare for the changes to come and what strategies can you implement to help support your marketing efforts? MogoSME’s latest Webinar discusses industry changes and strategies to help your organization prepare as we head into a “cookieless world.” To support that discussion, the blog format will help support the webinar based conversation.
What big shifts are going on in the digital space?
Currently, consumer data is being collected by Cookies, which are a bit of code that enables brands and advertisers to target and track consumer behavior. Brands have used that information to personalize online experiences, tailoring offerings and messaging to online users based on their preferences. Cookies now seem invasive as consumers become more aware of how much information is publicly available and that their data is often resold for purposes they are not always aware of. In response, lawmakers are implementing data privacy laws and regulations to prevent advertisers from viewing and using data without consumer consent. As mentioned tech companies like Google and Apple are implementing additional privacy standards to adhere to regulations like GDRP and CCPA. This is just the beginning as there are additional plans to include more privacy features by 2023.
Already most search browsers, to a varying degree, prevent cookie-tracking by default. Users would have to actively opt-in to tracking by changing the settings on their browsers. These browsers assume that most online users would prefer to not share their data. The industry is to move away from unclear data collection and sharing practices in favor of more consumer consent models of data sharing.
When are we expecting to see these changes take place?
As mentioned before, some of these changes have already taken place. Firefox, Safari, and Microsoft Edge were early adopters and limited third-party tracking on their browsers. In fact, by the end of the year all current browsers will have tracking disabled by default. Apple now requires app developers to build in pop-up prompts in order to get explicit data sharing opt-ins from users. Google, by 2023, will remove all third-party tracking from their Chrome browsers. This will have a big impact on data collection as Chrome accounts for around 70% of all browser use (Statista, 2021). With opt-in rates as low as 5% and as high as 25% (Bloomberg, 2021), the industry is anticipating a real shift in how brands and advertisers target, track, and measure digital media initiatives.
To support these changes, Google is currently testing out multiple, often competing, solutions in order to find the best approach to enable privacy and support advertising initiatives. Their goal is to standardize consent across all platforms, browsers, and apps, using a shared IF across these environments to enable tracking, targeting, and measurement. This would still ensure a consumer has the right to opt-in or out at any time. The two biggest solution options are UID2.0 and Liveramp ATS. Both are in the testing phase, but what we do know is that each is proposing email addresses become the identifiers for consumers and their opted in or out status. This means that email addresses will help identify consumer data privacy preferences and either enable or disable data tracking and sharing.
There is still a lot of testing to identify the right solution. However, we know that privacy and security is nothing new for these technology companies who have already taken steps to prepare themselves and brand using their services for the changes to come. Google is still helping to define a unified approach with the goal to support a cookieless environment starting early 2023.
What will happen once these changes take place?
Once these changes go into effect, consumers will have more control of their digital footprint and what data they will and won’t share. This will put more responsibility on consumers to manage their opt-in or opt-out status, but will ultimately provide consumers more control over their data and give them a personalized approach to data sharing.
For advertisers, on the other hand, they will need to embrace a consent-based strategy to reach their audiences. Organizations will have to find the right privacy management solution to support consumers ability to opt-in (or out) of data sharing. Advertisers will also have to be more transparent on how they are using their consumer data, so looking for and exploring ways to speak to consumers about data utilization transparently and respectfully.
Along with finding the right privacy consent solution, advertisers will rely more heavily on their first-party audiences, where there is already a relationship between consumer and organization. Managing and supporting these audiences with personalization and quality content will become a big part of a brand’s strategy.
There is still a lot of work to do to find the best solution, which creates an opportunity for creativity and testing once these changes take effect. Brands and advertisers can test our new strategies to message to their audience or new targeting approaches based on the industry-wide solution that Google will embrace, which means there will be some disruption as the industry challenges and vets new best practices.
What impact will we see with paid digital marketing campaigns?
In terms of digital marketing impact, brands will have to shift their approach to targeting, optimizations, and measurement. The removal of third-party tracking, along with expected drops in first-party opt-ins, will result in a loss of conversion attribution. Conversion attribution accuracy will decrease as we will lose our ability to measure the impact of an ad against a direct outcome like formfill, ticket purchase, or product purchase. Overall, we will see lower conversions, higher CPAs, and will have to establish new benchmarks to help evaluate performance.
Another impact will be on targeting. As the definition of a targetable audience will shift to only represent first-party and opt-in audiences, we do expect to see a decrease in retargeting audiences and a limit on how to target non-opted-in audience segments (that we can do today, but won’t in the future). This is one of the things Google is testing now. One approach they have is that Google will create groups or cohorts of users that are large enough to make it impossible to identify individual characteristics, behaviors, or patterns. These cohorts AKA Google’s FLOC (Federated List of Cohorts) will be available to advertisers to expand their targeting outside of their first-party audiences. This will provide consumer protection, decrease an advertisers ability to personalize ads toward a smaller audience segment, but still allow advertisers the ability to engage with prospecting audience segments. How this will work is still being defined by Google and their web standard partners like W3c (World Wide Web Consortium), which are working to define cohort audience segments.
Along with audience size and target availability, optimizations and measurement will be impacted. As third-party cookies are removed, the industry is bracing for a loss in conversion data. This is due to the inability to track targeted audience across multiple environments like websites, apps, and platforms. The limitation in tracking will be reflected in measurement and performance metrics that advertisers report on. Brands will have to be more reliant on conversion modeling to help contextualize performance. Platform algorithms will no longer have the 1:1 correlation between ad and action the target audience takes. There will be a shift back toward more traditional correlated performance indicators used by methods like Media Mix Modeling to help understand advertising impact. Organizations will have to lean into their agency partners to build out new measurement solutions, benchmarks, and standard to correlate performance to their digital media efforts.
Due to these impacts, current KPIs will no longer be valid. Cost per Acquisition will increase as attribution decreases. Due to these limitations we know we will not have full visibility into performance, which will increase all cost-based metrics, decrease in attributed conversions, and will require a new perspective to evaluate digital media impact.
How are agencies or advertisers minimizing the effects from the loss of third-party cookies?
It will be critical for organizations to lean into first-party audiences. Building strategies to increase and engage with opt-in audiences are going to be foundational strategies going forwards. Brands need to think through how best to personalize online experiences to engage these audiences.
Agencies will need to be an integrated partner to best support their clients. This will include partnering to build out measurement and analytic models as a framework for performance evaluation for their digital channels. An example of measurement model might look like taking media channel allocations and looking at ticket sales for the given campaign period vs. a period when the campaign was not active. Since we know attribution is limited, we would evaluate if there is a lift in ticket sales during the active campaign period to help look at correlated impact of the digital investment. This will require more collaboration between agency and brand to build a measurement framework to evaluate performance, make data-driven recommendations, and optimizations.
On social channels, despite the limitation on third-party tracking on performance, there is still an opportunity to measure impact on your owned channels. Looking at campaigns to drive engagement or follower growth can help brands better evaluate the power of the social channel and support additional investment in those channels.
Another consideration is that social platforms are building out their own solutions to better support measurement for their advertisers. Facebook has introduced their Conversion API connecting an advertiser’s CRM, website, ecommerce platform, call center, mobile app, etc directly to Facebook bypassing the need for cookie-based audiences. Pending privacy policies, this will enable advertisers to customize and personalize their marketing messaging with consumer engagement with the online brand. The API enables organizations to share data directly from servers without cookie-based tracking.
While we know measurement, data sharing, and organic engagement are all strategies that are being explored, the key area of focus for most brands will be on how to build and sustain their first-party audiences. Brands will have an opportunity to look for more innovation in how to drive value, measure performance, and understand the impact of their digital efforts.
Advice for organizations and industry leaders
There are a few opportunities organizations can take to get ahead of the impending changes. The first and foremost is for advertisers to spend time vetting and evaluating the right content management solution. Brands can spend time thinking about the right solution to help manage consumer privacy, communicate data transparency, and to deliver and engage the right content to their first-party audiences.
Secondly, advertisers must remain flexible when it comes to measurement, audience targeting, and performance evaluation. Investing in your first-party data and especially your content strategy across paid, owned, and earned media channels. Finding ways to engage first-party audiences will be the foundation of their digital media strategies.
Finally, advertisers can turn to their agencies and digital partners to take on a more strategic role. We know there is still a lot of uncertainty, but one thing we know is that agencies can support in redefining KPIs, evaluate current measurement strategies, and define new ways to look at and measure success for digital efforts. Look toward your agency partners as an extension of your marketing team to help navigate the impending changes.
To listen to this conversation, you can watch our recording here.