‘Cookie apocolypse,’ IOS changes disrupting advertising

Data privacy changes have been a hot topic of discussion for digital marketers. Google recently extended until 2023 its deadline to phase out third-party cookies tracking from the popular Chrome web browser. That announcement followed Apple’s launch of App Tracking Transparency, an iOS 14 feature that requires apps to get user permission before collecting and sharing their data.

Both changes have seismic implications for advertisers who have long depended on third-party cookies and iOS tracking data to connect with their target audiences and measure campaign performance. Let’s look at the the changes, what they mean to you today, and what you can do to get ready for a cookie-less future.

Cookies extension adds time to prep for ‘apocalypse’

Third-party cookies are a piece of code embedded into a browser by an outside domain or data company. When a user visits a site that employs third-party cookies, a snippet of code is added to their browser to collect data on browsing behavior.

It’s important to note that cookies do not collect personal information such as name or email; rather, they take note of search query history, behaviors and interests. Once cookies are in place, users will see more relevant ads popping up when they browse the internet. For advertisers, the extra information gathered enables you to retarget and behaviorally target specific audiences — two of the most efficient digital tactics for many campaigns.

Third-party cookies have been the primary tool for audience targeting for the better part of 20 years, making the impending phase-out a massive disruption to the way advertisers serve ads to customers. The transition is so significant to the industry that it acquired the nickname “the cookie apocalypse.”

While Apple’s Safari and Mozilla’s Firefox have already discontinued use of third-party cookies, more digital marketer eyes have been on Chrome, the world’s dominant browser with 60 percent of usage globally. Advertising challenges associated with a move away from cookies include:

• Targeting tactics such as retargeting and behavioral retargeting at the individual level will be eliminated.
• Campaign measurement and optimization will need to be updated, with changes to goals, benchmarks and how to achieve success.
• Ad experience will not be as personal. While some may think retargeting is “creepy,” it really offers a more personal and relevant user experience.

iOS 14 update limits behavior tracking

Starting with the iOS 14.5 operating system, Apple implemented App Tracking Transparency (ATT for short), requiring apps in the App Store that engage in ad tracking to show users an opt-in prompt. The vast majority of iOS users are choosing greater control over how their behavior is tracked, with more than 90 percent opting out. This placed significant limits on marketers accustomed to robust ad personalization and performance reporting capabilities.

Impacts of opt-outs on advertisers include:

• A Facebook verification requirement: Advertisers must verify their website with social media platform Facebook so they can optimize conversions and view conversion data for Facebook and Instagram.
• Performance decreases: Year-over-year performance numbers will dip due to changes in the way data is tracked and reported.
• Lost customer journey data: Advertisers lose the ability to track the entire customer journey.
• Landing page limitations: There are now limitations on measuring landing page activities as well as other high-value site activities.

The other big change iOS 14 brought was a significant reduction in the ability to target iOS 14 users based on location, as well as to track foot traffic to retail locations where that is relevant. Any campaign that relies on mobile device location tracking will miss the majority of the iOS 14 audience — nearly 50 percent of all mobile users. Location-based tracking was one of the most tested and promising alternatives to cookie-based targeting, and about half of the potential audience was gone overnight.

Our recommendation: Turn focus to first-party data

The ability to track campaign performance has already begun changing, and there will be additional shifts as cookies are phased out. Advertisers will have to accept less personalization of both targeting and tracking, and a move to cohorts or groups of like users. This is similar to traditional advertising; think about broadcast advertising running on a radio station or during a specific TV show based on high concentrations of types of viewers.

At Performance Marketing, we’re working with clients to evolve the way we target their customers. We strongly recommend taking this opportunity to shift focus from third-party data to first-party data that can be leveraged in future campaigns. The sooner advertisers begin building a strong database, the better they will be positioned to pivot as targeting and measurement options evolve into 2023 and beyond.

If you have any questions about how these data privacy changes might impact your business or would like to start developing an alternative digital media plan, reach out.

This article was written by Andi McIlwee, Media Director at Performance Marketing.

This article was published before January 2024 and does not reflect the consolidation of Performance Marketing, Vector Haus, and Blue Traffic into Anthologic.