Consumer Driven Commerce: What Brands Need to Know about the Deprecation of Cookies

First, Let’s Get Some Buzzwords Out of the Way

Personally Identifiable Information (PII): Any public or private data of a person that can be used for identification or to distinguish one person from another.
Consumer Data: An expansive category of data covering all stages of the customer journey gathered to help brands understand who their consumers are, how they shop, and what they buy.
- First-party Data: Data gathered directly by your company from your audience. Because you own the data, the collection, and the methodology, first-party data is powerful due to its relevance to your business.
- Third-party Data: Data gathered by sources that are not directly related to the consumers. This can be helpful to provide information on industry trends and supplement existing data, but can have limitations due to the gaps in methodology and sampling, and not being collected directly from your target consumers.
Identifier for Advertisers (IDFA): A unique identifier for mobile devices used to target and measure the effectiveness of advertising on a user level.
Cookies: Pieces of data stored on a device to track browsing behavior (ie. pages visited), remember form fills (ie. login passwords), and remember state information (ie. what has been added to cart).
- First-party Cookies: Created by the website you visit and powers useful functions like remembering user settings.
- Third-party Cookies: Created by domains that are not the website you are visiting, often used for advertising purposes and placed on a website through a script or tag.
Pixels: Pieces of code you can place to gather information on who is visiting your site and what actions they took. This is used to better target ads at relevant audiences.
Opt in vs. Opt out: Opt in requires a user to give explicit permission before tracking can occur, while Opt out tracks a user by default but gives the user the option to remove themself from tracking.
Audience Cohort: A potential alternative to third-party cookies, this method uses cohort analysis and clustering of consumer behaviors and interests to assist companies in targeting while allowing individuals to remain “in the crowd”. Google’s Federated Learning of Cohorts (FLoC) is one example of this solution. (Learn more here.)
Identity Resolution: A potential alternative to third-party cookies, this method creates an anonymized identifier to collect individual data without revealing identity. This allows privacy protection of the consumer while allowing them to determine how their data is being shared. The Trade Desk’s Unified ID 2.0 is one example of this solution that anonymizes the email a consumer logs on with. (Learn more here.)

A Timeline of the Shift Toward Consumer Privacy

From where consumer data is available to how it is being collected, technology, consumer sentiment, and legislation have been shaping and reshaping the way that brands receive the information they need to serve their consumers.

Historically, if a user did not want their data to be gathered and used, they had to explicitly opt out of tracking. What started to shift through consumer privacy legislation like GDPR is making the data supply chain more transparent to users. Today, this is why companies have cookie/privacy notices when you first land on their websites.

Soon, users will no longer need to opt out to be removed from tracking. Instead, users will need to opt in to tracking before certain types of data can be collected. This is not only happening on the landing page level, but also on a browser level and even device level. Ultimately, this gives consumers more explicit choice over how, when and why their information is used.

Here’s what hasn’t changed: As a brand, your ultimate goal continues to be using data to connect with and cater to your consumers. What is changing is how.

Let’s review some of the changes that have already taken place and what they mean for brands.

GDPR and CCPA

Adopted in 2016 in the European Union and made enforceable by 2018, the General Data Protection Regulation (GDPR) governs how personal data is gathered, transferred, and stored. This was one of the first major moves toward putting the control of personal data back into the hands of individual consumers.

Since the GDPR, many nations and regional governments have passed similar consumer data privacy regulations. The California Consumer Privacy Act (CCPA), adopted in June 2018, had a similar impact as the GDPR on brand marketers, but this time focused on consumers in part of the US. This became an additional US-centric enforcement of consumer data privacy, and an affirmation that this shift toward consumer driven commerce was here to stay.

As a brand marketer, you may remember revisiting your mailing lists and adding explicit opt in and opt out procedures. Content and creative was also created to be more targeted and engaging. Although an adjustment for many marketers, the implication of legislations like GDPR and CCPA propelled a trade off between the quantity of data and the quality.

For many brands, this resulted in a further move toward consumer centric marketing and better qualified audiences -- an ultimate win for both the brand and the bottom line.

Apple’s iOS 11 and iOS 14 Updates

Intelligent Tracking Prevention (ITP) is a feature updated in 2017 in the Safari browser by Apple with the release of iOS 11 and Safari 12 to address first-party cookies. First-party cookies have important functions like keeping a user logged into websites and apps while browsing. However, it also can be used by ad-tech platforms to track browsing activity after the user engages with an ad. Apple’s ITP allows the browser to leverage machine learning to determine when the cookie is a tracker, and block it. (Click here to learn more.)

Since then, Apple has continued its device level expansion of consumer data protection. In WWDC 2020, Apple announced its intent to require applications to explicitly ask user permission before accessing a user’s personal information via IDFA. In other words, users must opt in to have their data collected. Although enforcement was delayed to 2021, this directly impacts Facebook and Instagram ads presented to iOS users. Facebook expects up to 50 percent opt outs, meaning the scale of change could be broad. (Click here to learn more.)

Other platforms such as YouTube, TikTok, Snap, The Trade Desk, and programmatic media will be impacted as well, but to a lesser extent as they are less reliant on third-party cookies.

Not all brands will see an impact. In fact, many won’t see much difference at all. For those that do experience changes, the most likely areas that will be affected are what data is collected, the quantity collected, and the number of conversion events allowed. Changes like what has been released by iOS 11 and iOS 14 will continue to shift how some brands leverage consumer data, and the strategies and processes around data collection, further allowing consumers to drive their commerce experience.

It is also important to understand that for the consumers who opt out of tracking, they will still receive ads. However, they may have a lower quality experience engaging with the ads they do see. Brand marketers should take note while running campaigns and make intentional efforts to separate out what is targeted to qualified audiences and what is for general public consumption.

Google’s Cookie Deprecation

In 2020, Google announced that the Chrome browser would block all third-party cookies by default by 2022.* Although Chrome isn't the first browser to phase out the third-party cookie, it's the biggest. In late 2019, Google Chrome made up more than 56 percent of the web browser market. Chrome also accounts for more than half of all global web traffic. In March 2021, Google confirmed that it would not be replacing cookies with alternative user-level identifiers.

This hints at a future where up to 90 percent of all display impressions will have no ID attached to them. However, it doesn’t mean that there is no longer consumer behavior tracking. One alternative to third-party cookies is audience cohorts, providing anonymity through grouping individuals based on interests and behaviors. Google announced that its version of this technology, Federated Learning of Cohorts (FLoC), is at least 95 percent as effective as cookie-based advertising. Instead of third-party cookies, FLoC will use machine learning algorithms to learn web browsing behaviors and build audiences.

Meanwhile, companies are also exploring identity resolution as an alternative, with The Trade Desk leading the creation of Unified ID 2.0 as an alternative to the third-party cookie. Unlike Google’s FLoC, which ensures consumer anonymity through audience cohorts, Unified ID 2.0 allows for individual anonymity at the point of log in creation. This not only preserves a similar bidding mechanism for marketers and advertisers, but also allows the consumer to decide what information they would like to share and with whom. The Trade Desk has since handed the control of Unified ID 2.0 to Prebid, a neutral nonprofit organization.

As for brand marketers, while we are all still learning the details and implications of Google’s roll out of a cookieless internet, it is reasonable to expect not only changes to data sources, but also the tools available to gather them. To get ahead of this change and mitigate any internal anxiety, marketers should revisit their existing infrastructure around data collection and interpretation, assess any related dependencies, and make sure that they continue the two way communication between their brands and their consumers.

* This date has been pushed out to 2023.

Change Can be Good, and Here’s How to Prepare for It

Here’s the good news first: there is no need for anxiety. Change can be good, as long as we all learn the facts and prepare accordingly.

While cookies, pixels, and other tracking and measurement tools are gradually being limited and phased out, brands will continue to connect with their consumers. Larger multichannel brands have already been shifting their understanding of commerce into a mindset that is more complex, omnichannel, and consumer driven. In order to maintain relevance and consumer intimacy at a larger scale, successful multichannel brands have been amassing an inventory of consumer data from a diverse portfolio of sources, including their own first-party data. Many companies have also been allocating substantial budget toward brand building and eCommerce capabilities like shoppable media. These are the same practices that will ensure continued success in the cookieless future.

The immediate impact of cookie deprecation will be larger on smaller DTC businesses who rely solely on performance media. Given their size, available resources, and business need, these brands tend not to amass a data inventory. For them, targeting niche audiences through powerful platforms like Facebook and Instagram are often sufficient to generate the intimacy and loyalty they need from their customers. DTC businesses have the agility to look to new tools and technologies to continue their communication with their target audience.

Today, shoppers have more decision making power in their shopping journey. They can discover your product and be inspired to purchase from anywhere, buy anywhere, and have their orders fulfilled in any way they choose. With the rise of mobile and social commerce, the consumer online shopping journey has already become disjointed and disaggregated. Consumer driven commerce liberates marketers from a short term and linear focus to see their commerce ecosystem in its entirety.

How Can Brands Move Toward Consumer Driven Commerce?

The unchanging goal for brands is to use data to connect with and cater to consumers’ ideal shopping experience. Gallup analysts found that when businesses pay attention to consumer behavior, they outperform peers by 85 percent in sales growth. In fact, IDC suggests that by 2025, nearly 30 percent of data generated will be in real time.

Today, consumer data strategy is one of the key areas where brands are competing to grow and protect their market share. The gradual deprecation of tracking and measurement solutions like pixels and cookies is challenging brands and marketers to think more holistically about the role consumer data plays in the customer journey.

The potential slower growth of data sets is by no means a doomsday scenario for multichannel brands. However, there are ways that they can be preparing to ensure the accuracy and optimized use of data they do collect.

Here Are Some Ways to Stay Ahead

1. Assess your current data strategy

Start by taking a look at your existing data strategy and data inventory to see where the deprecation of tracking tools may impact your organization. It’s common to feel anxiety when changes are happening, but chances are you may find that you already have some systems and processes in place. These changes won’t take place overnight, either. (We’re here to help too!)

One key question to ask yourself during this internal audit is the extent to which your media strategy relies on third-party cookies and pixels. For retargeting? Closed loop attribution data?

Once you have conducted your audit, make sure you communicate the findings and next steps to your organization. Consumer driven commerce requires agile organizational alignment around reliable consumer data.

2. Ensure consumer data accuracy and media diversification

Understanding your consumers means making attribution and investment decisions that are accurate, and there are many sources a brand can use to do so. You can ensure accuracy in consumer data by diversifying your sources and investing in third-party measurement tools.

Diversification means to invest in different types of consumer data and looking at it in an aggregated dashboard to ensure resilience and accuracy of your data inventory. For example, over 80 percent of MikMak clients allocate media budgets to multiple channels, so changes to one social platform would not impact their entire media portfolio. Diversify your consumer data sources with a mix of platforms such as YouTube, Programmatic, Paid Search, and Amazon -- or even search terms and last mile data! Make sure you are including third-party data sources in the mix to unify and enrich your data set.

Third-party measurement tools (like our MikMak Insights) are a way for brands to gather their own first-party data. Not only can brands ensure that it is their consumers who are being measured, but they can also get a holistic end-to-end view of the shopping experience.

The most important thing? Third-party measurement can serve as a valuable “North Star” data set to sanity check other consumer data sources for directional accuracy. It is important to have an unbiased source of truth grounded in first-party data to “grade” data sources as you invest in and incorporate them into your inventory.

Every platform reports differently, and thus measuring effectiveness of media running through Facebook may not be the same as Pinterest or Search. Having a third-party measurement source can also be used to provide a unified dataset by which you can make apples to apples comparisons between otherwise disparate data sources in the eCommerce ecosystem.

Commerce data isn’t limited to cookies and pixels, and data strategy includes the ability to use first-party and third-party data together effectively. Having millions of email addresses (first-party data) without the ability to understand and target results in spray and pray efforts that are ineffective and brand dilutive. When enriched with billions of third-party data points, however, consumer profiles and meaningful dimensions emerge. That’s when your data strategy comes to life.

3. Keep investing in your brand and in frictionless commerce

The most successful brands know that consumer acquisition and loyalty are long games, and that branding matters a lot. When you combine brand media with frictionless eCommerce experiences, you can achieve incredible and measurable results.

We have seen this success story with a leading candy brand that has invested in creating a seamless shopping experience for its consumers. Previously, the brand had designed their commerce experience to respond to consumer impulse consumptions, in addition to impulse buys. When one of its products was featured in an ad that went viral, this brand saw a nine percent increase in their page views but a 39 percent lift in conversion in just one week, signalling that the shopping experience they have curated for their consumers was successfully capturing the viral attention. Due to their end-to-end visibility, the brand was also able to learn that there was a 30 percent increase in shoppers buying through Instacart, signalling their success in reducing time to consumption. This is the magic of brand visibility when coupled with a truly consumer driven experience.

Talk to Our Team About Your Consumer Driven Commerce Strategy Today

Successful brands have adapted to every expansion of consumer driven commerce, developing new capabilities to grow their business and protect their market share. Giving shoppers the ability to determine when and how they want to provide that data is the next expansion of consumer driven commerce.

MikMak has been preparing for this for years, and we are continuing to learn, adapt, and partner with our clients to ensure their ongoing success. We will continue to partner with the leading providers in this space to ensure our clients have the most up-to-date information and recommendations (like those enclosed in this piece).

Want to learn more about what consumer driven commerce means for you? Contact us today!

Consumer Driven Commerce: What Brands Need to Know about the Deprecation of Cookies

Consumer Driven Commerce is Here

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1. Assess your current data strategy

2. Ensure consumer data accuracy and media diversification

3. Keep investing in your brand and in frictionless commerce