What Will Happen to Targeted Ads Without Third-Party Cookies?

If you’re like a lot of marketers, your marketing strategy relies heavily on targeted ads. But have you thought about how your strategy will change when new privacy laws go into effect? If you’re in an organization that relies heavily on third-party data, it’s essential that you create systems in place to gather, analyze and store your own first-party data. Your future success depends on it.

We recently conducted a research study to find out how professionals view these changes and how they currently gather and use data. In today’s post, we’ll explore how respondents use targeted ads and what changes need to be made when third-party cookies are phased out of Chrome.

A Changing Data Landscape

Imagine you’re about to enter a new market, and you’re strategizing an ad campaign for the product launch. You can’t use third-party data to target ads. No Google keyword planner. No social media. You can only use your own first-party data stack to execute the campaign (like CRM, Excel spreadsheets, JSON files, etc.). Do you think you’d be able to have a successful launch?

If you don’t think so, you aren’t alone. Our research found that 80% of business marketers say their organizations’ target media buys are based on data parameters that organizations like Google and Facebook set. That means many marketers like you have yet to make the switch to first-party data.

Whether you realize it yet or not, the nuts and bolts of your marketing — from identifying and engaging prospects to closing a sale — will look different without third-party data. As a result, you’ll need to be more intentional with your segmentation. Instead of being limited by what the platform offers, the data you have in your own system will limit how you can market to prospective customers. Although there may still be targeting options on these platforms, a lot more is going to depend on the data you’ve collected yourself.

Successful targeted ads are relevant ads, meaning the right ad goes to the right audience at the right time. Today you can thank the third-party cookie for that. Without third-party data, you might show customers an ad for a product they’ve already purchased. If you don’t have good data, your ads can go to people who don’t want your products or services.

Without the relevant data to inform these decisions, advertising goes back to what it was like decades ago — a shot in the dark. When you lack the data to pinpoint who to target, you waste time, resources, and money. Because you won’t be able to use data from third-party cookies much longer, what data can you use?

The answer is capturing more data outside of the normal first/last name, email, and phone number. We know it can be daunting, but it doesn’t have to be. Getting someone’s first name is the literal first step. That information allows you to personalize emails directly to your prospective customers. That alone can increase your open rates by as much as 26% while decreasing bounce rates.

Next, devise a plan to get the customer to open the email, click on it, and fill out another form with an additional one to two more questions. Rinse and repeat. You are now on your way to collecting first-party data.

The State of Marketing Post Third-Party Data Collection

McKinsey’s data shows that programmatic advertising, which relies on third-party data, accounted for 78.4% of the US advertising market in 2020. If it was paid media, you can bet third-party data was involved. Here are some ways it’s currently affecting marketing activities within a typical digital media strategy:

Email marketing: Many marketers buy third-party lists for email campaigns.
Search engine optimization (SEO): Third-party metrics guide ranking potential.
Digital media buying: Advertisers buy digital ad space to target audiences with third-party data.

Our research shows that many business marketers’ daily activities involved third-party data in 2021:

• Two in three used social media marketing
• Two in three used email marketing
• Over one in two used online advertising
• Over one in two used SEO
• About one in three used programmatic media buying

Especially when these types of marketing activities involve targeted ads, third-party data is most likely involved. When websites store customers’ cookies, personal data, such as age, location, interests, and purchasing habits, become the ingredients for a targeted ad. These visitor profiles can then be used to send retargeted ads to past website visitors or even look-alike web profiles.

Frequency capping, limiting a consumer’s exposure to a single ad to prevent overexposure, relies on third-party data. Attribution also relies on third-party data to monitor ad performance across digital locations, tracking click-to-purchase rates (conversions).

Both will be gone with third-party data legislation.

The good news is that your first-party cookies are safe. You can continue to log your organization’s website visitor data, including sessions, usernames, passwords, products in the shopping cart, etc. And you can use your own data to create targeted ads going forward.

Use Your Own First-Party Data for Targeted Ads

Ask yourself: How do you feel about these looming data changes?

After conducting the research, three distinct attitudinal segments emerged: Independent, Data-Reliant and Concerned respondents. If your organization has a robust data stack and rarely uses third-party data, you may be like the Independent respondents. These marketers have a lot of confidence in their organizations’ data gathering and fewer worries about the future.

For those that rely heavily on third-party data, like Data-Reliant respondents, a custom-built data management system may need to be in the works. This group knows data is essential to marketing and that you need high-quality data to succeed. Therefore, finding other sources for data collection is essential.

Those who believe the best prospect lists are developed in-house think third-party data is risky and worry about their data privacy may relate to our Concerned respondents. These marketers know third-party data is going away and don’t think their organizations are prepared.

Once third-party cookies leave Google Chrome in 2024, marketing will no longer be business as usual. Marketers will need new methods to gather data asap. Upgrading your data gathering process isn’t impossible. It just requires thinking ahead, time, and a strategic mindset.

The Future of Targeted Ads

For years, third-party cookies have been the gold standard for targeted ads. While Ad tech companies are looking to fill the void, there’s no clear winner. The Privacy Sandbox is still in development. Federated Learning of Cohorts (FLoC) stalled and then transitioned to Topics, but no one knows where marketing will ultimately land.

The key takeaway here is to not wait for the industry to clear a path forward. Create your own data strategy to lead your organization into the future.

To learn more about the research study, check out our entire executive summary. And to explore the data yourself, check it out here.