In January of 2020, international media streaming giant Netflix dropped an absolute bombshell on the world of advertising. “The Social Dilemma”, a 94 minutes documentary film directed by Emmy award-winning filmmaker Jeff Orlowski exposed the world of digital advertising to ordinary laypeople in a dramatic storytelling approach.
Before the release of The Social Dilemma, the formula for delivering precision-targeted personalized ads on your Facebook newsfeed was a lesser-known secret to a smaller percentage of people who were directly involved in the digital advertising industry. Ordinary people always wondered how Facebook precisely knew what they were shopping for; they even thought sometimes Facebook is listening to their conversations through their device’s microphone. Orlowski’s documentary broke the Facebook algorithm into pieces. It explained to the world how the social networking giant is using our browsing behaviours to target personalized ads to modify our actual behaviour. Facebook responded to the Netflix documentary, saying that it was only a partial truth about their algorithms.
A few months later, Apple Inc. dropped another bombshell on Facebook, waging full-scale war between the two silicon valley giants. In the Worldwide Developers Conference organized by Apple in June 2020 Apple made it clear that “cookie-based ad personalization” has no future within their ecosystems. They announced that the all-new iOS 14 operating system designed for next-generation iPhones would block any 3rd party tracking pixels (cookies) unless the trackers are intentionally permitted to track the user behaviours on the device. In addition, Apple stated that they intend to increase their users’ data privacy by limiting apps’ access to Apple’s Identifier for Advertisers (also known as IDFA or Advertising Identifier).
Of course, the biggest victim of Apple’s new changes would be Facebook and Google, which heavily relied on their tracking pixels (cookies) to collect behavioural data of internet users across multiple apps and websites to deliver personalized ads.
Facebook responded by accusing Apple of unfair competition, and they warned the industry that this could end up having significant limitations on business owners’ ability to reach their consumers effectively. In addition, Facebook stated that this could be disastrous for small business owners who heavily relied on cookie-based adverting to maintain higher ROI on their ad budgets. However, Apple’s response was saying that their prime concern is the data privacy of their consumers.
What started with a Netflix documentary and Apple’s iOS 14 launch created an industry-wide debate about using 3rd party cookies to track behavioural data of consumers to deliver personalized ads to them. The world was clearly divided into two camps; one was arguing for the death of 3rd-party cookie and ad personalization, while the rest argued for the benefits (for both the businesses and for consumers) of having relevant and personalized ads on the internet than being bombarded with advertisements which pushes you to buy the things that you don’t have any interest in.
As an outcome of this debate, the tech giants of silicon valley came to a consensus of killing the 3rd party cookies by the end of 2022.
Apple (Safari), Google (Chrome), and Mozilla’s Firefox browsers agreed to move to a cookieless world in a phased-out manner. Apple Safari and Mozilla Firefox have already started blocking 3rd party cookies on their browser since 2019, while Google pledged their support by announcing a phase-out plan to remove 3rd party cookies by the end of 2023. This means a cookieless world will genuinely come to effect only in 2023, as Google’s Chrome is the world’s most used web browser with over 70% market share.
If you read thus far and still wondering, ‘what is a cookie?’, in simple language, a cookie is a small computer code used to collect internet user data on web browsers. When you use a web browser to visit a particular website, the website is programmed to drop a small code into your device, which can be accessed only by the browser you used. Initially, these cookies were used by websites to personalize user experiences and speed up the subsequent website visits for the same user. But later, digital advertising companies used this same technology to collect cross-website behaviours of users, hence the birth of the term “3rd-party cookie”. Facebook’s famous “Pixel” is a perfect example of a collection of 3rd-party cookies. For example, when you visit the website abc.com, the owners of that website will include the Facebook Pixel in their code. This will help Facebook (the 3rd party) to collect your browsing behaviours on abc.com, subject to the condition that you are permanently logged on to your Facebook account on that same browser (this explains why Facebook wants you to remember your account on the browser, even after you logs out from Facebook itself). Imagine you next visit a different website xyz.com, which also uses Facebook Pixel. Now Facebook can connect the dots and know that the same person saw the two websites. Imagine one of the websites is for a “pregnancy calculator”, and the other is a “baby name generator”. From your Facebook profile data, they know you are female, 28 years old and got recently married. This information is more than enough for Facebook to profile you as an “expecting mother”. The next thing you know is, seeing ads for “pregnancy clothing” and “maternity hospitals”. If you have updated your relationship status as married to your husband’s Facebook profile, then that’s sufficient information for Facebook to target health insurance ads at him. Using Facebook’s social graph information, this could go even further by targeting personalized ads to your friends, siblings and your parents. To stop this precise ad targeting capabilities for Facebook, all it takes is removing the ability to connect the two cookies dropped on your browser by the two websites you visited (making them 1st party cookies only).
Whether the decision to kill the 3rd party cookie is good or bad in general is a topic for discussion for a whole new article like this. But all we can know now is that by the end of the year 2023, the ability to personalize your ads based on user behaviours of the internet is going to get significantly limited. We will no longer be able to use some of the advanced digital advertising targeting options such as affinity targeting, look-alike audience targeting, and real-time programmatic advertising. This will result in a significant reduction in the accuracy of your ad targeting, hence decreasing the ROI of your advertising budgets. Eventually, we are going back to the old days of advertising where you would know “only half of your advertising money is working for you, but you can’t guess which half works for you exactly”.
As consumers, we will start seeing more and more irrelevant ads everywhere we go on the internet, reminding us of the TV advertising era in the 1990s.
However, as marketers, we cannot just sit and wait until all this happens. We have to use the next two years in our hands to make our brands ready for the cookieless world of digital advertising.
While there are numerous ways of making your brand ready for the cookieless world, I will give you just three tips for the future.
Number one; stop depending too much on Facebook for your advertising. Facebook is becoming a big brother of the digital advertising world, and if you put all your eggs in Mark Zuckerberg’s basket, you will never know when he decides to drop your basket into a river all of a sudden. Instead, expand your brand’s digital presence on other digital platforms relevant to your audiences. If you don’t have a website of your own and still depend on your Facebook fan page or Instagram account to do digital marketing for your brand, drop everything and start building your own website as the first thing in 2022.
Number two; start collecting as much as first-party data of your customers and potential customers. This is where it becomes having your own website is mandatory. Invest in a proper CRM (Customer Relationship Management) tool like Hubspot or MailChimp and collect as much as “consensual data” from your customers. Then, run promotions and create value offers to collect their names, email addresses, and mobile numbers with their explicit consent to be contact ed by your brand.
Number three; invest in marketing automation. Once you have your CRM and first-party customer data in place, you need to invest in technologies that can analyze that data and automate email and SMS communications with your customers. For example, advanced tools can identify customers in your CRM who are in different stages of the buying decision-making process and then send them the right message (email / SMS) at the right time. If you are in a service sector business (banking & finance, education, hospitality etc) this may be the only thing you need as a marketing solution once you build your database!
What you have read up to this point is no science fiction from a Steven Spielberg movie. But, unfortunately, this is real. If you feel that this information is not relevant to your business, you probably are light years behind in adopting digital into your marketing efforts. All that was mentioned in this article will affect any brand that plans to do “digital marketing” in 2022 and beyond. Therefore, you should probably start by giving your team the right digital marketing skills and competencies as a top priority this year.