By David Lockwood, Co-Founder, Insight Director, The Tapestry Agency

With third-party cookies being phased out completely by the end of 2021, now is the time for multi-channel retailers to find alternative ways to keep that all-important connection with their customers. Together with data protection and marketing expert, Julia Porter from Data Protection Network, we explore the implications of the end of the cookie and explain how brands can prepare.

Which type of data should you be collecting?

First-party data tends to be the most accurate and reliable data across a business, as it comes directly from customers and prospects. As such, retailers are already beginning to place more focus on building their own first-party data set. Meanwhile, second-party data is the information you might share with close brand partners – with user consent – on a one-to-one basis. Finally, third-party data can include a wealth of personal information which has been shared across several disparate platforms over time. This means it can be hard to track down where the information came from, or whether the consumer gave specific permission for their details to be shared. 

Why are major platforms switching off cookies and how will it affect retailers?

Once cookies are switched “off” by default, a large proportion of online audiences are likely to become invisible. This is because most online advertising is carried out programmatically, meaning advertising inventory is bought and sold automatically through Demand-Side Platforms (DSPs) and Sell-Side Platforms (SSPs). Between these platforms sit sophisticated Data Management Platforms (DMPs). Over the years, these platforms have developed technology such as machine learning to harvest and segment huge volumes of consumer data without necessarily having the right permissions in place to do so. Not only is data compromised, but it also prompts over a third of consumers (36%) to use ad blockers to ward off irrelevant or repetitive messaging. In response to this, Apple, Mozilla, Microsoft, Amazon, and now Google, are switching off their cookies.

Ironically, this means that smaller brands who advertise on these large tech platforms are now being forced to spend more of their advertising budget to gain full visibility into their campaigns and maintain a direct connection with their customers.  

Another pressing issue is that much of the chat functionality on retail websites is currently reliant on third-party cookies, as well as retail services and channels such as Twitter, Trustpilot, Global-e, Vimeo or Stripe Payment.

So how can multi-channel retailers pivot away from the cookie?

1. Build your own customer database

Not only does first-party data give you accurate insight from those most likely to be interested in your brand, but you can also be confident that you’ve obtained the relevant permissions to use their data. Customers who understand why their data is being collected are far more likely to allow you to use it. Building your own Customer Data Platform (CDP) can be daunting. However, partnering with a specialised customer insight agency such as Tapestry can help remove both the technical and strategic burden of collating and segmenting your data.

2. Perfect your pop-ups

To win over customers, you need to be explicit about the benefits of sharing data. As the ICO’s cookie guidance from 2019 states, anyone who hasn’t updated their cookie notices or privacy notices needs to do so. When you’re drafting or updating your cookie pop-up, make sure you use easy-to-understand, jargon-free language. Likewise, don’t make your privacy policies or sign-up forms too complicated.

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3. Add anonymous data into the mix

Pseudonymised data refers to data from individual real-time user profiles which has been stitched together along the customer journey and then made anonymous so that no personal information remains. By collaborating with a third party such as a marketing personalisation agency, or a data cooperative, brands gain access to “clean rooms” comprising millions of addressable yet pseudonymised customer profiles. They can then use this behavioural insight to enrich their own first-party data sets and deliver much more relevant messaging.

4. Consider Contextual Advertising

In contrast to behavioural advertising (i.e. based on user behaviour), some advertisers and publishers are beginning to move towards more contextual solutions. This involves tailoring advertising creatives towards the environment – or context – in which they appear. For brands who have already worked hard to segment their first-party database, creative optimisation (i.e. tailoring adverts according to context) is relatively straightforward.

5. Embrace ‘edge’ technology

One of the latest developments is ‘edge computing’, where all of a user’s data remains on their device as they consume content. This means the data doesn’t actually need to be moved or shared with any other party, while the brand gains a real-time snapshot of how their users are interacting. As one of the most privacy-friendly ways of accessing data, edge computing is likely to be widely adopted over the coming years.

Whether you decide to ‘go it alone’ when building up your database, or opt for more collaborative solutions, it’s important to bear in mind that bodies such as the ICO will be looking to make sure companies are sharing permission-driven data safely. 

As we approach the end of the third-party era, the most important advice for all retailers is to understand the change that is coming, evaluate the data you already have, and determine how reliant you are on third-party cookies. From there you can start to enrich your data sets and retain those all-important connections with your customers.

By David Lockwood, Co-Founder, Insight Director, The Tapestry Agency

Published 24/03/2021

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