The Way the Cookie Crumbles: The Future of Marketing in the New Era of Privacy

Contemporary marketing practices rely on interacting with identified consumers. The more comprehensive and nuanced the information an organization holds on its target audience or market, the greater its ability to sell to them. 

How this data is captured, processed, and ultimately utilized has become a regular part of the conversation about regulation, consumer rights, and new approaches to legislation in the era of digital rights. 

In the next few years, a triple-fold challenge to data-driven marketing will change the fundamental ways in which marketers, consumers, and technology companies interact. 

The Triple Threat to Data-Driven Marketing

1. Apple is rolling out fresh privacy updates to its market-dominating mobile operating system. As of iOS 14.5, updated users will have to actively opt-in to sharing their unique Identifier for Advertisers with apps. With mobile users opting out (or rather failing to opt-in), digital marketers’ ability to deliver highly personalized ads is severely inhibited. As a result, Facebook is uneasy that its $84 billion digital advertising revenues will take a hit, to name just one company.
2. Google will be scrapping its third-party Cookie program as soon as 2022. As a vehicle for e-commerce, subscription model business profits, and all-around growth, the role of the cookie cannot be overstated. Effectively there will be no more automatic website-visitor tracking, leading to industry speculation about email paywalls.
3. The final strike is legislative, with a raft of new policies becoming laws intended to limit the ability of marketing and tech companies to harvest data about users, sell it, and use it to tailor their adverts. From the GDPR in the European Union to California’s trailblazing CCFA, legislative bodies throughout the West are restricting how companies can track and snoop on users. These changes are a sea change in attitudes towards privacy and digital rights.

Industry Responses: Regional and Global

How the marketing industry will respond remains to be seen. Associations and trade groups will likely lobby against the laws, although there isn’t much they can do about the decisions already made by Google and Apple.

Another response to legislative changes will be to localize approaches based on a global patchwork of regulation. Interestingly California’s new policy suggests a state-by-state approach, while the GDPR is an EU regulation, applying to a block of 27 countries. California’s approach is interesting, as the state which headquarters most of North America’s large tech companies, the state legislature can make decisions that affect corporations and individuals all over the country. 

Data Pooling and AI

Another solution will be for marketers to take a Netflix-type approach, pooling data and applying strategies based on overall trends. 

The streaming service is well known for its ‘micro-clusters’ approach, which divides its 200 million+ subscribers into 1,300 ‘taste communities.’ Rather than tailoring film and TV recommendations to the specific viewer, Netflix has identified audience groups with the same broad preferences, each one being a pool of 153,000 viewers on average.  For marketing companies that rely on understanding and anticipating consumer behavior, there is growing confidence that AI can fill in the gaps, understanding the desires of the ‘herd’ rather than the individual. Of course, this will only be a life raft for specific industries; financial services and media are all ‘herd based,’ but for individualized sectors like fast-moving consumer goods, losing data to the specific customer will be devastating. 

Marketing Industry Takeaways

After criticizing Google’s decisions to end the cookie program, the overwhelming majority of marketers have articulated the same three responses. 

1. The biggest marketing challenge from 2022 onwards will be tracking correct and usable data.
2. Budgets will be radically different in the future, with spending on tracking website visitors skyrocketing from 5% to 25% to reach 2021 goals. Some companies have already reported a tenfold increase in spending required to track a customer, which is not a change that can be absorbed for the majority of industries. 
3.  Email marketing software is already becoming a major growth area as website visitors regain the anonymity of the pre- cookie era. 

Start Utilizing digital marketing with online optimism

Firefox and Safari have already phased out third-party cookies, but Google is tapering the program down and has claimed that it is winding down slowly to protect the established advertising network which relies on its cookie system. 

Despite the widespread criticisms of the deception, few leading marketers have been caught by surprise. With governments taking close looks at data analytics approaches, many marketing companies had long seen which way the wind was blowing.

Apple’s decision has already upended the industry, with advertising balance sheets showing large holes in revenue. Whether email paywalls become the norm, or a new system emerges for easy and low-cost tracking of website visitors, the industry looks set to enter a painful transition period. A lot of marketing professionals suspect that after years of consistently high growth, the days of low-hanging fruit are over. Certainly, if the costs of tracking visitors increase substantially, then it may well be that digital marketing becomes the preserve of high-value industries only, where higher consumer prices can absorb the increased costs. 

There’s never been a better time to engage with a digital marketing agency that prides itself on remaining ahead of the curve. From content creation to creative videos, Online Optimism is a full-service digital marketing agency, with a nine-year track record of delivering innovative digital marketing solutions for a range of nationally based clients. To learn more, make contact with us today. Using a data-driven approach, Online Optimism is ideally placed to achieve optimum results for our marketing clients to accomplish their goals.