The Rise of New Kind of Agencies in Post-Cookie Era
How the elimination of third-party cookies points to a return to old-school techniques – and a new kind of agency
Google’s decision to eliminate support for third-party cookies in its Chrome browser in 2024 will require e-commerce companies to fundamentally rethink their strategies. After all, the sector depends on effective targeting and measuring of digital advertising as a huge part of its marketing effectiveness.
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You’d expect a flurry of activity towards this deadline, but things feel a little less urgent than that. According to a study from Adobe, 75% of marketers still rely heavily on third-party cookies. Over three-quarters of business leaders expect the end of third-party cookies will hurt their businesses. Indeed, marketers are expected to experience loss of targeting capabilities alongside much less visibility into user behavior, making it far more challenging to personalize digital advertising.
That’s a problem, because the consumer continues to demand highly-personalized experiences.
According to Smart Insights, 63% of consumers will stop buying from brands that use poor personalization tactics – and 83% of consumers are willing to share their data to create a more personalized experience, according to Accenture.
The Adobe data outlined above reveals high levels of concern about how to respond to this challenge, and that says something important about the prevailing approach to marketing campaigns. Since the pandemic, e-commerce firms have focused on short-term performance marketing solutions aimed at generating sales today, but giving less consideration to the issues of tomorrow. Many e-commerce businesses have invested large amounts of their marketing budgets in PPC (Pay-per-click) campaigns and built their customer base with Google and Meta’s advertising services, while reducing investment in more strategic ‘upper-funnel’ marketing approaches such as branding.
But marketers need to start thinking in more strategic terms again. It is crucial for e-commerce companies to prepare their strategies in advance of this new dawn. They need to give significant thought to their marketing data strategies and what they need their marketing partners to do to help.
Technological solutions
Let’s consider how technology might reduce the impact of the challenges. One option is server-side tagging. This offers a solution to Google’s decision to eliminate support for third party cookies which are placed in the user’s browser. Instead, it uses a server-side script to manage the tracking and analytics tags on a company’s website. Data is collected and processed on the server, rather than on the user’s browser, which reduces the reliance on third-party cookies. By shifting their tracking and analytics processes to the server-side, marketers can continue to collect valuable data and deliver personalized advertising without relying on third-party cookies.
This, however, does not appear to be a magic bullet just yet. Server-side tagging requires more technical expertise and infrastructure than traditional client-side tagging, and it is proving more difficult for it to provide real-time visibility into user behavior. Server-side tagging can also limit the ability to share data with third-party vendors, since all data is processed on the server.
Other technical solutions include contextual targeting, whereby advertisers target users based on the content they are viewing rather than their behavior. Alternatively, Unified ID 2.0, an open-source, community-driven solution, creates a standardized and interoperable ID that can be used by all stakeholders in the advertising ecosystem.
There is also FLoC (Federated Learning of Cohorts), a new privacy-focused solution being developed by Google. Instead of tracking individual users, FLoC groups users with similar interests into cohorts and allows advertisers to target ads to these groups. The idea behind FLoC is to preserve user privacy while still enabling relevant advertising.
Probabilistic tracking is another solution being discussed. In this approach, advertisers use statistical modelling and machine learning to infer user behavior based on available data. While not as accurate as deterministic tracking, probabilistic tracking can still provide useful insights for targeting ads.
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Sadly, none of the solutions can meet the accuracy, reach, or ease of use offered by third-party cookies.
Back to basics
If tech doesn’t yet offer any magic bullets, the 2024 deadline should be seen as a reset moment for e-commerce marketers. They need to relearn the classic marketing techniques, while also pushing for more from the agencies that support them. They need to put in more effort into using traditional methods of reaching out to customers to gain a deeper understanding of their complex needs, and they need to get better at gaining real time market insights to help build a clearer understanding of total market demand and evolving customer needs.
In the run-up to the 2024 deadline it is a smart idea to build up the largest possible prospect database built with first party data, by investing heavily in lead generation. This can be achieved with a range of channels including CRM marketing, affiliate marketing, checkout marketing and insert campaigns.
CRM marketing programs can also stimulate repurchasing. Brands must get much better at focusing on the relevance of their products for specific parts of the customer base. They need to look at their acquired customers and see what kind of products they have bought, and what kind of similar products are relevant for them.
But we also need a return to the lost art of branding.
Since the pandemic changed everything, brands forgot that it’s not all about the bottom of the funnel – driving demand to the e-commerce store and converting visitors into customers. They also need to think about the top of the funnel too, and invest in the early stages of the customer journey. The old adage remains strong – invest 60% of the budget in branding and 40% in performance marketing.
Anybody can start a webshop – but after that, it’s all about building the brand.
Training and preparation
To achieve all of these changes, e-commerce startups and scaleups need to focus on making sure there is a budget available for employee training. Some members of your marketing team won’t be prepared for this back-to-basics approach, and they will need to be brought up to speed quickly.
New developments and innovations in the world of marketing are happening quickly, and that can mean that the requirements that marketers have to meet are changing constantly. Indeed, in 2022, training top talent was the top challenge marketers were focused on, according to research from HubSpot.
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That’s why brands need to invest in employee training while building an agency ecosystem that can provide the expert knowledge needed to build and maintain a data driven branding and marketing strategy, and acquisition machine.
Mindset change
Ultimately, the issue of third party cookies requires a mindset change. For small and medium-sized companies, they should be focusing on brand building. They need to win consumers over by building brands that people love and trust. They need to ride out the wave while keeping an eye on the technological advances that bigger companies and agencies are developing.
Meanwhile, large companies need to focus on technological advancement. They may choose to build their own data warehouse, or buy one from another source. But they also need to invest in branding with the aim of becoming the brand leader for their category.
But e-commerce companies also need to gain new levels of support from marketing agencies. The traditional agency model, with its focus on creative ideas and big campaigns, needs to evolve. Webshops will need agencies with entrepreneurial mindsets, ones that demonstrate a deep understanding and inquisitiveness about the technological issues, because the value of the solutions being presented will need to be calculated in real time. To support such decision-making, agencies will require real-time insights, to understand total market demand alongside changing customer needs.
By testing, investigating and gaining a cutting edge understanding of the situation as it evolves, the best agencies may be able to guide e-commerce firms through the turbulent year to come.
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