What’s left when the cookie goes away?

COVID-19 is still dominating business headlines, but inside the digital marketing industry, the biggest story remains the coming demise of the third-party tracking cookie. Ever since Google made the announcement in January that Chrome would phase out the technology in two years, marketers, publishers, agencies, and data owners have been scrambling to prepare for this sea change.

It was always imperfect, but the cookie developed into a currency that allowed various marketing stakeholders to make sense of online and offline behavior and do business based on it. For example, being able to prove that a digital ad campaign led to a lift in brand awareness, new sales, store visits, and the others were made possible by syncing cookies across different data providers (for example, did the household who saw a Yoplait yogurt ad actually purchase more yogurt?). In turn, this gave confidence to marketers to invest in campaigns that were proven to provide sales and brand lift.

Many marketing tech companies are built on the faceless calculations of cookie-based tracking, targeting, and attribution. But as the general public came to understand how their data is being traded and used, their concerns sufficiently inspired regulators to come up with ordinances like GDPR and CCPA. Google’s decision to eliminate the cookie will make its own dealings with regulators easier, but it also forced a lot of companies who benefited from the ecosystem to rethink their own data practices from the ground up.

And so the demise of the cookie presents us with an opportunity – both for consumers and data-dependent organizations. What arises to replace the cookie in the coming years should lead to a more accurate, honest, and valuable digital ecosystem. Here’s why:

What’s changing for the consumer?

From a consumer perspective, the primary problem with cookies is a lack of transparency about their origins. Without the ability to know the source of the data, permanently opting out of cookie tracking was generally futile. The most promising new identity solutions rely on PII-based structures that make managing consumer consent much easier, allowing for more accountability throughout the value exchange.

To solve this, CCPA is now ushering in a radical change. Instead of anonymous identity graphs, which are impossible to manage and maintain for consumer opt-outs, the future of online identity will be tied to some form of personally identifiable information. Google is already operating this way, as they know your name and Gmail address, and so they can tie all communications, analytics, and advertising back to actual people. Consumers have given them that information in exchange for their free services.

And now the broader digital ecosystem is moving in the same direction. Publishers, marketers, data companies, and agencies will legally require identity solutions to provide their services while protecting consumers who both want to participate, and those who want a permanent opt-out ability. This is analogous to opting out of marketing emails by way of the CAN-SPAM Act, a regulation that has been largely effective at cutting down unwanted emails. Expect the same in all other forms of digital marketing going forward.

A better future for marketing technology companies

And while the new rules and requirements to protect consumer data will be more stringent and costly for marketers, media, and data companies, the new system will lead to better results for marketing technology as a whole.

Better data, analytics, insights, attribution models, and higher-quality target audiences are being ushered in. In fact, this is why Google waited so long to make this move because their identity solution (underpinned by billions of people with a Gmail address) was always a competitive advantage they shared with a few other market leaders (e.g. Facebook).

As real identity solutions become the new standard and easier to adopt, there are new opportunities to level the playing field for brands and those outside the walled gardens. There will be costly investments required, but this is ultimately a win-win for consumers and the marketing technology ecosystem. Right now there’s a lot of space for new ideas and innovation, and we should all embrace it.

Michael Hussey is President of StatSocial, an earned audience intelligence platform.