Why the phasing out of third-party cookies will see digital marketing become more collaborative

Vihan Sharma is European managing director at LiveRamp.

If 2020 was a year of rapid change for the digital marketing landscape, 2021 must be one of transformation. The events of the last year or so, from the deprecation of third-party cookies to the announcement of changes to Apple’s IDFA, have deeply impacted the way much of digital marketing works, but rather than worrying about these changes, we should ask ourselves how we can move forward in a way which puts consumers first and creates a better adtech ecosystem for everyone.

Although third-party cookies underpin so much of digital marketing activity, they are fundamentally flawed, and have long been this way. Third-party cookies were not necessarily designed to be consumer first, and in combination with the fact they are tied to devices, rather than people, making it harder to target consumers precisely or across devices, it has long been time for a better way forward.

If we want to address the challenges presented by third-party cookies and their deprecation head on, we must look for a solution that is more accurate and addressable, but that also puts the consumer and their privacy front and centre. Taking a people-based approach, building identifiers that are centred around individuals, work across channels and are neutral and interoperable, goes a very long way to addressing these concerns.

Yet in a world where competition is stronger than ever, and a market dominated by tech giants whose walled gardens give them deep data insights into their customer base, brands need to go further – they need to collaborate.

In the coming years, data collaboration is likely to see an uptick as third-party cookies are phased out and brands rely more on their first-party data to understand their customer preferences. In fact, a recent report by specialised management consultancy provider Winterberry Group – Collaborative Data Solutions: Data and Identity in the Era of Permission – found that the post-cookie rethink of digital marketing was driving a surge of innovation in collaborative data solutions, to optimise brands’ revenue and deliver consistent consumer interactions without third-party cookies in play. Data driven solutions have also been accelerated by the pandemic; in reaction to the difficult climate, brands hit hardest by the effects of the virus, for example in the travel or hospitality sectors, have begun to collaborate to offer a better value proposition in the years ahead.

Winterberry Group’s research demonstrates that with increasing solution flexibility and the drive towards scale and accuracy, data partnerships will become a requirement, and not simply an option. It also predicts that brands and media owners will implement multiple solutions to fill the gap left behind by third-party cookies, and that data collaboration will be important in bridging the gap between data ‘haves’ and ‘have-less’.

So in addition to building a better framework to reach customers in the first place, and connecting their own first-party data across their systems, brands need to look beyond themselves and form partnerships to deepen and enrich their data capabilities. If this is done in a privacy-first way that puts the customer at the heart, it can transform a brand’s digital marketing, allowing them access to insights that can help to level the playing field and increase their competitive advantage, in addition to improving the overall customer experience and reaching them with the most relevant advertising.

In practice, this might mean a supermarket and a shampoo brand can work together to enhance their data understanding. A shampoo brand might be able to connect their first-party data with a supermarket to understand their sales demographics and the impact of a new campaign. The supermarket may then work with the brand to set up a new deal for consumers to move slow-moving inventory – for example, offering a conditioner at half price with the shampoo.

This benefits the brand, who gains deeper insights into their consumer behaviour; the supermarket, who drives sales and can draw on a deeper understanding of the shampoo brands’ customers; and most of all, the customer, who based on this insight, gets better and more relevant deals and experiences while shopping online or in store.

As we see the end of third-party cookies and the adtech ecosystem evolve, it is partnerships and collaboration between these kinds of businesses, who are not direct competitors, that will become more common. And as collaboration becomes more important to the industry at large, we are likely to see a much more diverse and richer network of connections arise, which allow brands to make the best use of their first-party data while also putting the consumer and their privacy front and centre.

As the Winterberry Group report suggests, collaboration is highly likely to become a much more prominent feature of the landscape after third-party cookies. These seismic shifts in the industry have afforded us the opportunity to come together and recreate a fairer, more open and stronger ecosystem than the one we are leaving behind, and as we work towards a more privacy-first, accurate and better way to reach customers, collaboration will be key.

Photo by Grayson Smith on Unsplash

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