Digital Marketing vs Privacy

People can be passionate about online privacy. They can also be inconsistent in their online behavior regarding their privacy. The same person who disallows all iOS apps from tracking them might also post personal things to Facebook without locking down their page. Someone who would agree with the statement “Websites must disclose how they use my information” may also never read the privacy policies of the sites they visit.

It seems as though online privacy is vitally important… unless it’s inconvenient.

Digital marketers fall squarely in the middle of this paradox. On the one hand, people may complain that the ads they see online don’t align with their interests. But they’re also fearful of allowing sites to track them to allow for better ad targeting. This fear is born of consumer’s general mistrust of marketing, and since the advent of digital marketing, the situation has gotten worse, even though most marketer’s use of personal data could be considered beneficial to consumers.

It’s not that privacy shouldn’t be taken seriously. In the US, 33 percent of people have experienced some form of identity fraud in which online data has been stolen or gotten through phishing techniques. As a result, governments have taken steps, enacting laws designed to give people control over the data that’s collected online. In addition, they’ve called upon companies like Facebook and Google to address privacy.

In this post, we’ll discuss how marketers use the data they collect, the current state of online privacy, and how marketers can navigate the ever-changing landscape to get the best results.

Marketing’s Ability to Know Who You Are

There’s a simple adage in advertising. The best, most persuasive ad is useless if the wrong audience sees it. Putting an ad for maternity clothing in front of an elderly man probably won’t lead to a sale. But if you’re Target, and you see that a repeat customer has switched from scented to unscented lotion, and has also started buying zinc and magnesium supplements, you could correctly infer that the customer is a pregnant woman, and target her with the same ad.

This example, outlined in a New York Times article, shows how data science has progressed to the point where our secrets can be revealed to marketers with just a few pieces of data. This has led to a backlash and the subsequent measures listed below, as consumers began to feel as though they were being spied on and exploited.

Current Privacy Measures

The Death of Third-Party Cookies

Developed in 1994, cookies have become the most common way to identify you when you visit a website. They provide a way for sites to offer a personalized browsing experience, and almost all websites use them.

There are two types of cookies in use, first-party and third-party. Technically, they’re the same thing. They both contain the same pieces of information stored locally on a user’s computer and perform the same functions. The difference between the two types is in how they are created:

First-party cookies are set and stored directly by the website you are visiting. They’re mainly used to store preferences you’ve set for a site, like language settings, or useful functions such as keeping items in a shopping cart while you continue to shop. They provide a better user experience for website visitors.

Third-party cookies are created by domains other than the one you are currently viewing. They are almost exclusively used for tracking your behavior across websites, retargeting, and ad-serving.

Here’s how third-party cookies work in practice. If you’re part of the Google Display Network (GDN), when someone visits your website, Google writes a third-party cookie to their computer that’s associated with your site. The information in this cookie, which includes products the visitor had been looking at, is accessible by Google across all the websites in their ad network. This means that when that person later visits another site that’s also on the GDN, they could potentially see an ad for one of the products on your website. Because the GDN includes a huge number of sites, Google uses all the third-party cookies to create a detailed profile of you and your interests, which it sold to advertisers. This is why third-party cookies have gotten the most attention. Even though third-party cookies lead to more relevant ads, consumers saw the tracking across sites and devices as invasive, especially since it was done without their permission. Consumers eventually demanded that something be done.

The EU’s General Data Protection Regulation (GDPR) attempted to address personal information tracking, but the results didn’t solve the problem, as it only required pop-ups on websites that lead to privacy policies that no one read. it didn’t do anything to prohibit third-party cookie tracking. In 2019, Firefox began blocking third-party cookies by default, and by 2020 Safari had joined them. Chrome, the browser with the largest market share, finally announced that it would begin blocking third-party cookies in 2022. This doesn’t mean that Google can’t track you at all, because if you’re using any Google product, such as Google Docs, Gmail, YouTube, or Google search, first-party cookies can still be written to your computer, as all these properties are owned by Google.

To counter the decline of third-party cookies, some groups have proposed the creation of other, less invasive, identifiers to continue to target individuals. In 2020, IAB and IAB Tech Lab, a group that works to set industry technology standards, began Project Rearc, “an initiative to get stakeholders across the digital advertising and media supply chain working together to make the internet a better place for consumers.” Project Rearc is working with publishers and media companies to develop a new identifier that intends to satisfy both advertiser’s and consumer’s needs. In addition, The Trade Desk’s Unified ID 2.0 is building on an open-source ad ID framework and has lined up three partners (LiveRamp, Criteo, and Nielsen) to support the initiative, adding industry clout to the effort.

Google’s Response to Privacy

To replace some functions of third-party cookies, Google has created a new suite of technologies to target ads on the Web. Called FLoC (Federated Learning of Cohorts), it’s a way for Google to still target customers based on general topics without tracking individuals. The way it works is based on Google’s extensive knowledge of the web, gathered over the years via SEO and the data willingly provide to Google when creating a website, using the search console, etc. Google knows what any given website is about and the topics it covers. So by simply browsing the internet, Google can gather data on what you’re currently interested in. Except, in this case, your browsing history data isn’t put into a profile for you specifically. It’s collected and stored inside the Chrome browser and aggregated along with other people’s data into groups, or what Google calls cohorts.

For example, if you read a lot about hiking, you might be put into a cohort along with other people interested in hiking. Because people have varied interests, any given person will appear in many different cohorts. Advertisers will then place bids to have their ads appear to the cohorts they’re trying to sell to. From the visitor’s point of view, the implementation of FLoC may not be apparent. If they’re using Chrome, they’ll still see ads targeted to their interests, but perhaps not quite as targeted, unless Google’s cohorts end up more specific than first thought. Google has said that FLoC testing showed that “advertisers can expect to see at least 95% of the conversions per dollar spent when compared to cookie-based advertising.”

Apple’s Response to Privacy

With iOS adoption hitting a record high in terms of new activations in 2020, reaching a record 44% of market share, what Apple does in terms of privacy is of particular interest to marketers. Responding to pressure from their customers regarding data sharing, Apple stated they would be implementing additional iOS privacy and location permissions, called the Apple Tracking Transparency Framework, with its iOS 14.5 update. These changes have a notable impact on the US advertising and marketing ecosystem and were not well met across the board. Facebook, a vocal opponent of Apple’s privacy changes, criticized the move by Apple in full-page newspaper ads in December 2020, indicating the adverse impact on small businesses.

One of the privacy changes in iOS 14.5 includes expanded consumer controls over their precise location. Turning off the precise location feature in the Settings app means that apps can only get a vague sense, roughly 10 square miles, of where you are in the world. This affects any marketer that uses geofencing to show ads based on location because it relies on precise location to deliver targeted ads. Anyone who has their precise location setting off essentially doesn’t exist. The good news is that for apps like Google Maps to work, precise location needs to be on, which should dissuade some people from turning it off.

The larger concern for marketers is in the way Apple is now handling personal data sharing via access to the IDFA (Identifier for Advertisers). Each Apple device has a unique “advertising identifier” that is used for ad targeting and tracking. The new feature in 14.5 requires all apps on iOS devices to request permission to track users through the use of a popup that appears when the app is launched. If the user opts out of tracking for a particular app, the IDFA can’t be accessed and the app can’t track you.

Note that this only applies when tracking your activity outside of the company’s apps. Facebook can track your activity across the Facebook or Instagram apps without asking, but if those apps want to know what you’re doing on other companies’ apps, or to track you across websites you visit, it must first ask for your permission.

Not surprisingly, because of people’s innate mistrust when it comes to privacy, the majority of iOS users have begun to opt out of tracking after the 14.5 rollout. This has caused a certain amount of “blindness” in reporting metrics, especially from Facebook ads. Facebook has said that we should expect a decrease in Audience sizes and delays in performance reporting, along with other difficulties.

What Can a Marketer Do?

It’s important to remember that targeting was never the perfect tool for marketers. People installed ad blockers, cleared their cookies, and shared their browsers with other friends or family members. This left the data incomplete and/or full of noise which made targeting more difficult. Furthermore, bots designed to create false ad traffic, and therefore fraudulent revenue, proliferated, making the data sometimes unreliable. In addition, cookie syncing, the process by which information in cookies from different AdTech companies are consolidated around a particular individual to create a more complete picture of that person, is only around 40-60% accurate. This leads to inaccurate profiles of potential customers. But regardless of these limitations, targeting was still seen as profitable by AdTech companies, it became a tool that marketers convinced brands to invest in.

With the latest changes regarding privacy, it’s easy to see why people might be in a panic. But the sky really isn’t falling, and marketers will still be able to make a living. It’s critical that we understand the implications of the recent and upcoming changes, and plan our strategies accordingly, which includes going back to traditional marketing techniques. Here are some ideas that can maximize your marketing efforts.

Make First-Party Data Gathering a Priority

With the loss of third-party cookie data, first-party data becomes critically important. Taking the time to invest in building out first-party, permission-based information is necessary to retarget users across media properties and devices. First-party data also enables marketers to target individuals with a high degree of refinement, because it tends to be the most accurate data. This includes predictive targeting and 360-degree consumer intelligence, which is the idea that with enough aggregate data from various touchpoints, a more comprehensive view of the customer can be gleaned. It’s also important to build first-party networks and partnerships outside of platforms that don’t share data with other companies, like Facebook. These long-term relationships provide marketers and advertisers the ability to track individuals with increasing accuracy, without the need for third-party cookies. For more information, check out our post on first-party data strategies.

Use Contextual Ad Targeting

Before the existence of third-party cookie tracking, contextual ad targeting was the only game in town. This is the process that matches an ad to websites whose topics are relevant to that ad. Google AdSense was ironically the first major contextual advertising network to leverage this method, inserting JavaScript code into a web page that matched ads to consumers based on keywords. With third-party cookies going away, contextual advertising could become the equivalent of the cookie for many advertisers. It has the benefit of providing relevant ads without the fear-inducing tracking of behavioral targeting. This may shift the focus to publishers and content instead of ad networks, because of their ability to identify target markets more precisely.

Choose Your Friends Carefully

Believe it or not, Google and Facebook aren’t the only ad networks out there. They are of course the biggest and most important, and most publishers and brands work with them. They’re also the ones most able to deal with privacy changes as they happen. However, you may be doing business with one of the lesser-known networks, especially if you’re a small publisher or brand. If that’s the case, it may be time to reassess those relationships. Because the elimination of third-party cookies as an information-gathering tool leaves smaller ad networks in the dark, their ability to service your needs may be hampered. It’s important to ask these networks what steps they’re taking to ensure that you’ll still be able to achieve your business goals using their network. If they can’t answer, or don’t have a sufficient plan in place, it may be time to switch to Google and/or Facebook.

Utilize UTM Values for ads

To decrease any sort of blind spot for channel performance after the change, make sure that Google Analytics is being leveraged to serve as an additional view of channel performance. If you are not already utilizing UTM parameters on your URLs while advertising on Facebook, this is a perfect time to make sure your Facebook tracked metrics are also populating in Google Analytics.