What does the death of the third-party cookie mean for e-commerce?

Brahm Buck

The elimination of the third-party cookie will profoundly impact e-commerce. This shouldn’t be a shock. We were headed down this path long before Google announced that it would deprecate the cookie in Chrome in 2022. Perhaps more than any arrow in the marketer’s quiver, e-commerce’s targeting accuracy has traditionally been […]

The elimination of the third-party cookie will profoundly impact e-commerce. This shouldn’t be a shock. We were headed down this path long before Google announced that it would deprecate the cookie in Chrome in 2022. Perhaps more than any arrow in the marketer’s quiver, e-commerce’s targeting accuracy has traditionally been built around the cookie. However, Happy Cog’s Lee Goldberg says instead of viewing this scenario as dire, e-commerce players should view this inflection point in data-driven marketing as an opportunity to rethink it all.

During the era of the third-party cookie, the e-commerce community has fallen prey to the fixation on short-term sales conversions. As tempting as this paradigm is, over the long haul it can actually stunt long-term consumer engagement and limit lifetime customer value. The opportunity and challenge in 2022 and beyond is to flip this script – and get customers and prospects to voluntarily opt in. Yes, emphasizing lead gen over sales in the short-term doesn’t sound particularly sexy, but over the long haul it will actually increase ROI.

A more methodical, incremental approach will bear greater results. Instead of driving hard for a purchase, perhaps appeal to your customer base through softer engagement promotional activity that targets an email address or an account creation instead of a purchase. Facebook, LinkedIn and Google (through Discovery campaigns) all offer lead generation opportunities. By deploying a robust CRM platform (such as MailChimp, Klaviyo or Salesforce) to organize these emails for dynamic ad targeting, e-commerce brands can focus on establishing ongoing, positive relationships with both prospects and customers. If you have a compelling offer or value proposition, customers are generally willing to opt in.

By rewiring your priorities to place demand generation over sales, your brand will forge deeper connections with consumers. E-commerce marketers tend to get hung up on quick conversion metrics while losing sight of the RFM model (recency, frequency and monetary value). RFM modeling is an under-used marketing analysis tool to help companies better predict which customers are more likely to make future purchases, as well as to glean insights to turn occasional buyers into habitual ones.

Interestingly, there has already been growing pressure on e-commerce retailers to re-orient around first-party cookies, built by the collection of data from their own domains like user log-ins, passwords and shopping cart data. Google and Facebook have both been pushing this with their evolving product suites. Before third-party cookie deprecation picked up steam over the past few years, it had become readily apparent to anyone paying attention that dynamic retargeting through networks like Criteo and AdRoll were not long for this world. Both of these retargeting pioneers have now adapted and repositioned themselves for a post-cookie world.

The winners of the post-cookie world

While most of our industry was retargeting customers with abandon, Amazon was quietly off to the side for years amassing an enormous amount of first-party data. Amazon’s dominance in the paid search world will now pay off by orders of magnitude. It wouldn’t be at all shocking to see Amazon sunset its relatively nascent demand-side platform (DSP) despite the heavy investment. With the growing marketer interest in other formats such as connected TV (CTV) and connected audio, expect Amazon to reshape its DSP to meet these opportunities – much as players such as The Trade Desk have already done.

In a post-cookie world, the push towards first-party data will make it easier for brands to do their own attribution rather than relying on Facebook and Google. While true multi-touch attribution remains elusive, e-commerce folks will be able to attain a deeper, more nuanced understanding of full-funnel consumer behavior.

Life beyond the third-party cookie will be complex and there will be many new twists and turns, but a new paradigm will coalesce around stronger customer engagement. Privacy regulations like the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) have been the catalysts for change. While compliance may be a big motivator, ultimately an ability to maintain the big picture by putting engagement – not targeting – first is the secret to long-term success.

That lesson may not be resonating at scale yet, as evidenced by the continuing obsession with targeting within the context of new identity solutions like Google’s Privacy Sandbox, as well as in the conversations around first-party data utilization and contextual targeting 2.0. Unless we flip the script and focus on engagement first, the mistakes of the past will likely be repeated.

Lee Goldberg is co-founder and president, digital marketing at Happy Cog.

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