Cookies Will Soon Be Permanently Out of Stock: The Future of Retail Advertising in a Data-Deprecated World

It’s an interesting time for the relationship between brand and consumer. The travails of 2020 changed the mindset of the shopper immensely and consumer expectations about the shopping experience are permanently altered. The world was forced to adapt to a digital-first customer journey, which not only accelerated the opportunity for retailers to engage and interact with shoppers in more ways than ever before, but also increased customer demand for personalized experiences both in-store and online.

This year alone, retail sales are expected to grow 8 percent to $6 trillion; and of those sales, over $5 trillion will occur in brick-and-mortar stores, while e-commerce sales will represent $933 billion. It’s no surprise that retail advertising is also on the rise. With $47.5 billion in spend, retail advertising will account for almost one quarter of all digital ad spend in the U.S., and the most spend (23.8 percent) in the mobile advertising market.

The technology available to marketers today provides brands and retailers with the ability to meet growing expectations for omnichannel shopping experiences from customers. While this may appear on the surface to be a win-win for the brand and consumer relationship, concerns about Big Tech and consumer privacy are at an all-time high.

Today, most marketers use third-party cookies to target and retarget ads, build audiences, provide ad personalization, as well as for measurement and attribution. After Google’s announcement to remove third-party cookies by 2023 in response to consumer privacy concerns, it’s safe to say that many marketers are in a panic about losing the cookie and fearful that data deprecation is going to greatly impact digital advertising as we know it. Between privacy laws, browser and operating system restrictions on data collection, and consumers opting out of third-party tracking, many marketers and advertisers will have a difficult time collecting and activating consumer data at scale for advertising purposes. According to Adobe’s Digital Trends, six out of 10 senior executives say that adapting to the requirements of the cookie-less future will have a "disruptive effect" on their marketing.

AdTheorent and Digiday surveyed more than 100 brand and agency executives to better understand how programmatic marketers are approaching strategies, budget, technology and partnerships. Specifically, as data deprecation looms, how brands and agencies are future-proofing their approaches. Not surprisingly, only 13 percent of marketers said they feel very well prepared, with the vast majority admitting that they’re somewhat or not very well prepared. What makes all of this more daunting is the uncertainty — as addressability solutions are being vetted and tested — as well as the lack of control over the outcome.

With the holiday season coming up and COVID still an issue, bridging physical relationships with consumers isn’t always possible. The question now remains: How will all of this impact the way retailers connect with consumers? What should retail marketers do now to prepare for this new normal?

Take Control of Your Own Destiny

Many marketers seem to be waiting with bated breath to find out what Google and others will do, but the most important thing that marketers can do is to deal with this head on and not be held captive by the wavering decisions of those in the industry. Marketers should take advantage of Google’s announcement that it has delayed phasing out the cookie until 2023, and use the time to test new partners and approaches.

Build Your First-Party Data

In the AdTheorent-Digiday Survey, when asked what additional steps they're taking to adapt programmatic efforts to the post-cookie future, 53 percent of marketers said that they're developing or partnering for first-party solutions such as site sign-ins and email newsletters. Given the increasing importance of first-party data, this is a great idea. Marketers need to create a real value exchange with the consumer through consent-based first-party data. With this data, marketers can deliver a better and more personalized experience that will meet consumers’ expectations while being privacy compliant.

Utilize a Privacy-Forward ML-Based Approach

Brands and marketers need to align their brand now with privacy-forward solutions to set themselves up for success despite the ongoing developments. The good news is that there are approaches that marketers can and should take advantage of now to have a modicum of control in a very uncertain future. These approaches will help marketers future-proof their approach now without sacrificing performance. Machine learning (ML) and predictive targeting doesn't utilize cookies or individualized IDs and is more effective than cookie-based methods. This approach is centered around ingesting and using aggregated and statistical data for modeling and targeting, and drives return on investment and results for advertisers while providing privacy advantages.

Look at Alternate Methods of Measurement

Tying back any marketing initiative to a business outcome is key for all marketers. As the cookie is phased out and retail marketers are trying to measure store visits and advertising’s impact on sales, it’s crucial to find measurement partners that have integrated alternate IDs for measurement moving forward as well as alternative identifiers to cookies and mobile device IDs such as Unified ID 2.0.

Keep Reading and Stay on Top of All the Developments

This situation is changing daily and marketers need to stay abreast of the changes and follow the developments of the Google Privacy Sandbox. Furthermore, they should ask their partners how they’re leveraging cookies today and what their plan is for the future. Some good things to regularly reference include industry organization news and reports like the Interactive Advertising Bureau (IAB) and IAB Tech Lab, as well as the Association of National Advertisers and the 4A’s.

While there’s no set time frame for the collapse of the cookie, it’s critical for brands and retailers to understand how to connect with consumers in a noninvasive or creepy way. Bridging relationships with shoppers is crucial, especially as the world continues to shift online.

Melanie Berger is the vice president of marketing and communications at AdTheorent, a company that uses machine learning and data science to deliver real-world value for advertisers and marketers.