Monthly Marketing Moment: Cookies, Double-Chip Edition

et’s talk about cookies again. Not the delicious kind, the digital kind.  As a previous Marketing Moment blog discussed, digital cookies are data files that track users’ behavior across the web.

This type of data aggregation has, until very recently, been the core of digital advertising. Cookies gather information on the websites you visit, the music you listen to and the goods you buy. That information is then transmitted back to advertisers allowing them to choose the audiences they want to target.

Data tracking also enables advertisers to conduct retargeting, showing a smaller audience group more specific ads. That’s what happens when you look at a particular product on one website and then see an ad for that product on another site. Or sometimes, you add items to your online shopping cart but don’t finish the purchase. Suddenly, there’s a coupon from that retailer in your email inbox.

All of that has changed.

Apple and Alphabet

Apple finally released its much-discussed iOS14 update in April that will now require all apps (if those apps want to remain in the Apple App Store) to use Apple’s App Tracking Transparency (ATT) prompt asking users if they want to opt-in or opt-out of third-party tracking. This is heralded as a big win for consumer privacy.

What is not widely spoken about is the unfair competitive advantage this gives to Apple’s own products “given it will still be able to track people in its ecosystem at levels rival platforms cannot.” Consumer tracking and targeting continue, now exclusively within Apple’s family of products.

Alphabet, the parent company of Google, also plans to phase out third-party cookies in its products by 2022. Google is additionally pioneering a Federated Learning of Cohorts (FLoC) program as well as a “Privacy Sandbox” that will create new best practices for aggregating data in a way that prioritizes privacy but still enables advertisers access to detailed targeting data.

The Response

Many consumers are understandably excited for what they feel is greater control over their digital footprint. However, the move towards increased user privacy may have unexpected ripple effects on how the Internet as we know it will function.

A recent Digiday story explains, “When someone sees the ATT prompt, all the nuance around the decision they’re making gets whittled down into a binary ’yes’ or ’no’ situation. But the reason why someone is being tracked is lost in the messaging. They won’t always know that by saying no to being tracked, they could make it harder for their favorite app to continue on. Trade-offs are a fundamental part of how advertising works, and yet for many Apple users, the concept is vague at best.”

The current model for Internet use is quid pro quo: Users get free access to hundreds of websites, but in return, those users consent to their data being used to fuel advertising that in turn pays for all the content on all these free websites.

There is a strong likelihood that more and more websites will be forced to move towards subscription-only content to make up for lost ad revenue. The paywall trend first started in the early 2010s as adblockers rose in popularity and content creators first felt the sting of the consumer privacy movement (Mashable, Digiday, Forbes).

Marketing professionals, on the other hand, are concerned about the future of their industry.

Clients are ever mindful about their bottom line, so without the rich data sources advertisers use to create specific audiences to serve tailored ads, ROI for ads will most likely drop. This, in return, puts a burden on advertisers to develop new methods to deliver the same results.

Lacking detailed ad targeting and the increase of subscriber-only content, marketers will have to find new ways to reach audiences and convince them to take meaningful action. Consumers may find themselves bombarded by websites continually asking them to sign up, subscribe, donate, support, register, and the like.

Overcoming consumer fatigue – as well as creating enough compelling content to persuade users to pay for what they used to be able to get for free – seriously disadvantages content creators.

Inc. reports, “Though the end of third-party cookie tracking is a big win for consumer privacy, companies that have been reliant on the marketing technology are in for a big adjustment. The transition will be even harder for small companies, which tend to have fewer resources to weather shocks.”

What’s Next

Consumers may be surprised at what content and services will no longer be available to them.

Social media users, particularly on Facebook and Google, are accustomed to using their social media profiles as a single sign-on option across a host of third-party platforms (at the time of this writing, the author is signed into eight websites using her Facebook profile). Chances are those options will be phased out because of their reliance on the exchange of third-party cookie data.

The question of individual responsibility comes into play. Social media feeds are determined by an algorithm, yes. But that algorithm is formed by data based on user interactions within each social media platform. The content users are fed is directly influenced by the content they engage with as well as their behavior both on the social media platform and outside websites.

This effect is magnified every time consumers use a social media profile to sign into a third-party site. For example, when individuals use their Facebook profile to sign into the Candy Crush app on their phone, that’s one more source of behavioral information informing the Facebook algorithm. When users link their Facebook profile to Spotify, Giphy, Venmo, Yelp, and so on, they’re adding more information to that data pool.

This is not a secret. From your Facebook homepage, it takes four clicks to navigate to the tab where each user can see exactly what other sites are linked to your Facebook page. A single additional click takes you to your ad settings. And all of these settings are 100% customizable and controllable.

Digital literacy and personal privacy deserve a broader yet more nuanced conversation– both in general and specifically about social media and advertising.

Third-party cookies are a tool much like any other—they have a defined purposed but can be misused. Again, there’s the personal responsibility factor. The tools needed to control your digital footprint are widely available. But users prioritize convenience and entertainment over data privacy and information security while marketers have wholeheartedly adopted the tools available to them. That is a choice. The consequence will probably result in a net negative shift for consumers and marketers alike. In short, users are trading increased privacy in favor of a seamless browsing experience.  Additionally, advertisers will now have to spend more money to reach audiences that are actively ready to purchase.

Lots to stay on top of here in the ever-changing world of digital media. Have questions? Contact us for a conversation at hello@fulltiltconsulting.com.