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Navigating a cookieless future with Google Privacy Sandbox

Google Privacy Sandbox points to the future of advertising on the internet: no more third-party cookies. We unpack how we got here, and new strategies for first-party data collection.
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On January 4th, 2024, Chrome began restricting third-party cookies for 1% of users with the intention of restricting third-party cookies for 100% of users by Q3, 2024. Third-party cookies, a foundational building block of the internet for decades, will be replaced with Google Privacy Sandbox: a new initiative intended to “protect people’s privacy online and give companies and developers tools to build thriving digital businesses.” 

‍What is Google Privacy Sandbox?

Google Privacy Sandbox is a set of technologies and proposals aimed at enhancing privacy on the web, while still allowing advertisers to deliver targeted ads. Think of it as Google's way of building a playground (or sandbox – get it?) where user privacy is protected by default. 

Instead of using third-party cookies, which track users' activities across different sites to gather personal data and preferences, the Privacy Sandbox proposes alternative methods. These methods aim to provide advertisers with the information they need to target ads effectively, but without compromising individual users' privacy. This means users can still see relevant ads based on their interests, but their personal information isn't tracked and stored by multiple websites as it is with cookies.

In a nutshell: Privacy Sandbox will limit cross-device and cross-site tracking and give advertisers new tools to target consumers that go beyond third-party cookies. 

Only time will tell whether Google’s new privacy initiative will be a hit with consumers and marketers. But in the meantime, one thing is clear: marketers must evolve beyond the third-party cookie and embrace alternative strategies for using data to personalize marketing campaigns. 

More on this topic: three major privacy challenges for retail & ecommerce brands

How are marketers taking the “cookie expiration” news? 

Badly. According to recent research from Adobe, 16% of marketing leaders expect their business to be “devastated,” and another 23% anticipate “significant harm.” 

In the constantly-evolving landscape of digital marketing, adapting to technology shifts is not just a best practice, it’s a survival strategy. This one is a doozy. But if marketers are good at anything, it’s adaptation. Armed with a (mostly) firm timeline from Google, now is the time for brands to shift their attention toward building a comprehensive and differentiated first-party data strategy to succeed in a cookieless future. 

Old first-party data strategies must evolve

Marketers lean too much on third-party cookies to achieve advertising results 

For years, brands have been wanting to have their cake (cookie?) and eat it too, as seen in the exponential growth of advertising technology and spend:

  • The Customer Data Platforms (CDPs) market is expected to near $6B by 2028
  • 45% of marketers spent at least half their budgets on campaigns and other activations reliant on third-party cookies. 

44% of marketers predict a need to increase their ad spend by as high as 25% to reach the same revenue goals in a post 3rd-party cookie world, according to data shared by Hubspot. So what gives? Why are marketers spending half their budget on an activation approach on life support, and failing to future-proof their targeting strategies? 

In two words: convenience and scale. 

Convenience is nice– but a steady pipeline of consumer data and insights is better 

A common benchmark for determining return on ad spend (ROAS) is 4:1. Spend $1 on advertising, generate $4 in new sales. For most brands, achieving and exceeding this ROAS benchmark is dependent on leveraging third-party data. No wonder we can’t quit it: these kinds of consistent results are hard to abandon.

However! There has always been one major downside of using third-party data: lack of differentiation. Say a consumer athleisure brand launches a new spring campaign, targeting female fitness enthusiasts living in a specific area. In a third-party data world, their largest competitor can easily pursue an identical strategy, purchasing access to the same pool of third-party consumer data and behavioral insights. In this scenario, it can be difficult for brands to personalize the campaign with unique flavor.

By comparison, first-party data enables brands with proprietary data and insights. It’s difficult for competitors to replicate. When brands develop a strong first-party data collection strategy, they unlock the ability to create hyper-personalized campaigns that are difficult for competitors to copy: 

  • Leveraging every digital interaction to capture additional behavioral data
  • Explaining your unique value proposition to facilitate data sharing
  • Using clean rooms to uncover new insights from partner data
  • Streaming fully-permissioned data into historical and Gen AI initiatives are strategies

To build competitive advantage, marketers must bring creativity to data acquisition efforts 

The beauty of third-party data is that it allows you to expand audience reach beyond your current customers and website / app visitors. To address their third-party data addiction, marketers need new strategies that respect user privacy while delivering scale. 

While historical customer acquisition tactics like lookalike modeling and referral programs still have their place, one of Google’s new solutions with Privacy Sandbox, the Topics API, promises to deliver marketers the scale they need while preserving users’ privacy. The Topics API is intended to “enable interest-based advertising without the use of third-party cookies or tracking user behavior across sites,” instead opting to leverage data stored against individual users’ browsers. 

While the Topics API sounds promising, marketing teams should avoid the “shiny toy” syndrome as a solution to this long-term challenge. Marketers must pursue a customer acquisition approach that marries a test and learn approach to new strategies, while maximizing the data-capture potential of their most important digital asset: their website. 

The key to cookieless success: give consumers the confidence to share their data 

So now you know: if you’re not already maximizing first-party data collection on your digital properties, you’re behind. How do you start catching up? 

The challenge with first-party data strategies is that most slapped-together attempts result in a terrible user experience. Think about visiting a website for the first time, only to be bombarded with intrusive pop-ups for cookie consent or marketing preferences. These kinds of experiences are annoying, and often lack context! Consumers need you to help them connect the dots to see why sharing their data for behavioral advertising or analytics is a true benefit. 

Legacy marketing preference centers, which are clunky and difficult to find – footer links anyone? – haven’t materially changed in the last twenty years. Throw in a highly visible data breach or privacy violation, mix in some vague language about how consumer data is processed, for good measure, and it’s no wonder that 83% of consumers are concerned about sharing personal data with brands and 72% would stop buying from a company due to privacy concerns, according to research from Salesforce.

But first-party data isn’t just critical to your personalization and retargeting efforts, it’s critical to the future of your organization.  This is the data that will fuel your Gen AI strategy, next-best-action initiative, ability to participate in clean rooms to uncover new insights, and so much more. 

Six best practices for building a better first-party data acquisition strategy 

So, how do you give consumers confidence to share personal data with your organization? To start, ensure that your organization has adopted the following best practices: 

  1. Deliver an on-brand consent experience that looks and feels like the rest of your website. Spend the time to personalize the experience by matching brand fonts, colors and logos; shoot for a consent opt-in rate of 90%+ which is best in class. 
  2. Create a marketing preference center that people want to interact with. Make it user-friendly and update consumers’ marketing choices across your MarTech and AdTech stack which builds long-term customer trust.
  3. Stream consumer consent choices directly into your activation systems including customer data platforms. This gives marketing teams the confidence to use data without the fear of privacy violations which can increase digital marketing ROI 1% - 5%.   
  4. Capture privacy and marketing preference choices in the context of the customer journey, leveraging a just-in-time approach.
  5. Ensure that your PrivacyTech, MarTech, and AdTech are optimized for website performance. Many legacy privacy vendors leverage a synchronous approach to cookie management which prevents webpages from loading and can reduce eCommerce revenue 7% - 20%. 
  6. Build trust with consumers through clear and transparent notices that explain how you use data, leading to increased consumer willingness to share. 

Embracing the future: navigating privacy and personalization with confidence

As the digital world braces for a cookieless future, the shift is less about navigating around obstacles and more about embracing a broad spectrum of tools that promise a more private, yet still personalized, internet experience. Among these tools, Google's Privacy Sandbox is important, yet it's just one piece of a much larger puzzle. This evolution in digital marketing and data privacy is a collective push towards innovation, where diverse solutions like Ketch play a crucial role in ensuring a smooth transition. 

Tools like Ketch can help marketers and privacy owners adapt to new privacy norms while maintaining the effectiveness of their growth efforts. It's about harnessing the power of first-party data and new technologies to foster deeper, trust-based relationships with consumers—without compromising their privacy. This movement towards a cookieless future is an invitation to rethink and innovate, to blend respect for user privacy with the undiminished potential for targeted, impactful advertising. 

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Read time
7 min read
Published
February 23, 2024
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