If you are in the tech or advertising industry, you have probably heard of cookies. Even if you are not in these industries but have visited a website, you have probably been exposed to the pop-up that asks you to “Accept Cookies”. Cookies are a personalized relationship between a brand and a consumer. However, more recently this personalized relationship is starting to be viewed as an invasion of privacy. Therefore, as marketers and consumers we should start to get used to a “Cookieless future” and a safer online experience. We are here to tell you the what, when and why this is happening as well as how this affects your business.
What is a Cookie?
There are actually 3 different kinds of cookies; first party, second party and third party cookies. First party cookies are owned directly by a brand or company so they are collecting data from their customers first hand. For example, when you buy something online from your favorite clothing brand and enter your information, cookies will store that information to make your next transaction easier as well as provide accurate data of consumer behavior and marketing analytics for the brand.
Second party cookies are essentially like a partnership between two companies or brands. An example of this is when your favorite clothing brand for pants shares their data with your favorite clothing brand for shirts so they can figure out how to better market the products from both of those brands you are most likely to purchase from and analytically compare how similar this data is to other consumers like you.
Third party cookies are basically whenever you see an ad for something you may like but is completely different from the type of site you are currently on. In theory they are a cheaper way of advertising for brands because they produce more relevant ads than the other two so they can focus money on a specific audience. This is great for businesses but customers are starting to wonder whether this targeting is a form of personalized shopping or just an invasion of privacy.
Why are Cookies going away?
Even though they can target specific audiences, there is no guarantee that people are actually going to buy what is being advertised to them. Also, cookies are based around a user’s history so it can only track where someone has been rather than where they are going to click. This is a problem because even if someone has bought something before, it does not insure someone will buy it again depending on the product so the percentage rate of an inaccurate marketing prediction greatly increases.
Another drawback of cookies is that they do not update based on a consumer’s behavior. For example, if someone bought a shirt from a company because they saw an ad for it on a random website, cookies will continue to run ads for that exact same shirt even though the consumer already bought it.
Legislation has been the final blow for cookies for the main reason that the extent of the ethical and unethical data collection being done by cookies is becoming more transparent to the consumer. The “Accept Cookies” feature you constantly see on websites is a result of the General Data Protection Regulation (GDPR) which forced cookies to tell consumers what they are doing as well as give consumers the option to have their data collected. Some states have more strict laws in place for cookies like California, that has the California Consumer Privacy Act (CCPA) which gives consumers more control like actually deleting the data collected from them in some cases. This legislation is proof that people are becoming more and more worried about the ethics of personalized advertising as well as how their data is being collected.
What does this mean for your business/how does this affect your business?
Although cookies are disappearing, marketers are already searching for replacements.
Google has created the Privacy Sandbox and the “Federated Learning of Cohorts” or FLoC for short. “The Privacy Sandbox initiative aims to create web technologies that both protect people’s privacy online and give companies and developers the tools to build thriving digital businesses to keep the web open and accessible to everyone”. Essentially, the Privacy Sandbox is trying to be everything Cookies could have been and should have been but was not.
The FLoC is based around groups interested in a certain topic rather than targeting individual people. Google claims this approach is more strategic and private because the groups can be very large so people can feel less singled out. Also, these groups are constantly updated to better respond to a consumer’s digital behavior, unlike cookies.
Basically, data collection as we know it is changing in every way from brand and consumer relationships to email signup, so until there is a definite replacement of cookies, businesses need to start planning for the digital apocalypse of data collection and marketers are going to have to get creative when it comes to advertisements in the future.
When is this happening?
It is technically already in motion because Firefox started offering the option to block cookies all the way back in 2018 and Safari recently followed suit in 2020. Also, in January of 2020, Google Chrome announced that it would completely stop supporting cookies within a 2 year timeframe. This means you can expect cookies to be completely gone by the end of 2022, which is rapidly approaching. As a user, you can start to rest knowing you can navigate the internet with more peace of mind but as for the marketing world, we hope there will be a stable replacement soon. Subscribe to our newsletter to stay updated in the meantime.