Industry News

Life after cookies: Retailers test 4 targeting alternatives

The era of third-party cookies is finally coming to an end. So where does that leave retailers looking to deliver targeted, personalized messaging to their shoppers?

Apple's Safari browser and Mozilla's Firefox already block cookies by default. Google has pushed back its phaseout to 2023, and the search and advertising giant is working hard on a substitute in the meantime.

The main reason for the cookie's demise is privacy concerns. But even though consumers are uncomfortable with the ways cookies track them, they still want and expect online ads to be relevant.

Retailers are also concerned with relevancy. They want to serve ads to the people most likely to buy their products. The specificity of online targeting is what sets digital advertising apart from alternatives such as television and radio: Marketers don't waste money suggesting products and services to people who have no interest in them.

Given that, a host of companies are racing to develop new targeting options that will help sustain the online ad ecosystem. Retailers are starting to experiment with targeted advertising options beyond the third-party browser cookie, and the alternatives hold promise.

Here are a few that retailers are already testing:

First-party data

Some retailers are responding to the shift away from cookies by developing first-party data of their own.

For example, by collecting information directly from consumers, beer brand Heineken USA can develop personalized campaigns and gain greater control over customer data. This method leads to greater insights, Rebekah Kennedy, director of consumer insights for Heineken USA, told AdExchanger.

"The advantage of having a first-party data strategy is primarily just understanding more about consumers," Kennedy said. "And one of our goals for doing that was to improve media efficiency and effectiveness through segmentation and consumer engagement strategies."

Heineken is able to import data from agencies and centralize it for email marketing campaigns that build awareness and engagement. Although email marketing was not a focus for the beverage brand in the past, it is becoming more useful as third-party cookies are phased out, Kennedy added.

Boutique luxury handbag brand Caraa is also focusing on first-party cookies. Founder Aaron Luo told Glossy that collecting email addresses and shifting marketing strategy toward first-party data has improved the quality of its campaigns.

Google’s FloC

Given Google’s dominance in online advertising as well as the popularity of its Chrome browser, many retailers and marketers are waiting to see how the search giant handles the cookie-less future.

Earlier this year, Google announced plans to develop "federated learning of cohorts," or FLoC-based advertising that analyzes browsing behavior and groups people into categories that both provide marketers with a way to reach specific audiences and prevent them from having access to personal identifiers.

The company has touted this as a "privacy-first future for web advertising" that Google claims sees at least 95% of the conversions per dollar spent that cookie-based advertising does -- although many marketers are holding out for more evidence of its efficacy.

Some, though, have called it an appropriate middle ground that balances privacy needs with the value of targeting in digital advertising.

"If anyone was going to be able to figure out how to navigate a cookie-less future, Google would have been at the top of the list," Merkle Vice President of Analytics Jordan Cardonick told AdExchanger.

Alternative IDs

Several companies, including Lotame, Merkle, LiveRamp and The Trade Desk are developing alternative IDs that rely on first-party cookie data from publishing partners and ad exchanges to develop consumer profiles. The advantage alternative IDs have over third-party cookies is that they are device agnostic, so advertisers can understand consumers across the devices they use.

Shoe brand Dr. Martens recently worked with a publisher that serves the Hispanic community to promote its products to Spanish speaking audiences. The publisher used its first-party cookies, which are still allowed, and Lotame's Panorama ID as part of the campaign.

The experiment paid off -- the campaign was actually more effective than traditional online advertising, at one-10th the cost and 10 times the click-thru rate of a campaign based on third-party cookies.

"The audiences that they were able to build out, using that data, seemed like they were much more engaged with the ad content," Erika Clemens, digital marketing manager of paid media and search engine marketing for Dr. Martens, told AdAge.

Fitbit recently ran a Father's Day campaign using LiveRamp's version of an alternative ID, with similar promising results. The campaign that relied on high-quality publisher inventory achieved twice the return-on-ad-spend of a control group based on cookie targeting, and the cost-per-page-view decreased by 34%.

Retail partnerships

Walmart and Target are looking for ways to leverage their first-party data to help retailers reach consumers. In a pitch book, Target noted that while traditional third-party cookie data lets retailers reach consumers who are "likely married" or who fall within an age range, the big-box retailer knows customers’ specific ages, which stores they frequent and other precise data.

Meanwhile, Walmart is partnering with The Trade Desk to draw on past purchase data of its customers to develop predictive audience segments and anticipate shopper behavior at the brand level across channels.