Around 55% of companies are not prepared for a cookieless world: Study

The changing customer preference for privacy is prompting businesses to decrease their reliance on third-party cookies and shift towards first-party data, according to a new research.

Although mostly an irritation for web users, third-party cookies have long been a popular way to target online ads and enable other marketing strategies. This gave rise to privacy issues time and again, a reason why browser makers are phasing out third-party cookies by the end of 2023. (Firefox and Safari have already blocked third-party cookies and Google Chrome intends to do so by the end of next year).

Customer engagement platform Twilio’s third annual global State of Customer Engagement Report showed that while companies need to adapt quickly to a cookieless world — with majority still reliant on third-party cookies — very few are prepared for this looming challenge.

For example, more than half of companies in the survey showed (55%), say they are not fully prepared for this imminent cookieless world. Moreover, 42% of companies predict that the impending changes will lead to lower ROI on ad spend and decreased ability to measure campaign efficiency. In other words, deprecation of cookies will cause great difficulty for brands that rely on such cookies to identify and track visitors to their websites if not carefully planned and implemented.

Also read: Google trackers collect more data on Indian users than anyone else

Ved Antani, Vice President, Engineering and Managing Director, Twilio India, said, “Today brands are losing market share and loyalty to digital giants due to the changing technologies, diminishing value of third-party cookies, and high customer expectations. Hence, it is time for businesses to shift to first-party data because it is the right thing to do and because it won’t be a choice soon. With regulations maturing worldwide, data protection and consumer trust are increasingly gaining prominence.”

Studies have earlier shown that first-party data, which is collected from consumers directly, is the most reliable and relevant for identifying your audience, how they engage with your brand, their path to purchase and the best way to reach them. This data is made up of customer interactions and touchpoints across your marketing, website and apps. When third-party cookies are phased out, emails addresses and other people-based, durable identifiers will need to be used — which is more suited for business needs than device-based tracking.

Moreover, consumers today are more aware and concerned about how businesses use their data and are keen for more transparency from brands. The same report shows a trust gap between consumers and brands. While 69% of consumers want greater data privacy from brands, only 50% of Asia Pacific and Japan (APJ) brands believe this is what consumers want, the report showed.

Adapting to this shift is imperative as the research shows 85% of consumers want brands to make use of only first-party data when creating personalised services. Hence, companies can no longer delay preparing for this cookieless world to make smarter business decisions and offer more personalised experiences to customers.  

An EY report published in June 2021, said, “With first-party data, brands can be better equipped for predictive modelling, in which artificial intelligence scrutinises a consumer’s information to predict their next steps — for instance, by understanding how they use your organisation’s app and what they’ve purchased in the past. They will see advertising and marketing that appears more personalised and relevant specifically for them.

Antani said, “By embracing digital, personalising every interaction, shifting to first-party data, closing the trust gap, and avoiding engagement fatigue by increasing the quality of interactions, businesses can win in today’s digital world.”