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Ecommerce Optimization Series #3: The third-party cookie ban and its impact on CXO

Written by Silver Ringvee

Third-party cookies track individuals across the web, allowing marketers to target, retarget and personalize ads. But consumer backlash regarding the use of their personal data has resulted in new data privacy regulations and the deprecation of third-party cookies. 

Browsers such as Safari and Firefox stopped using third-party cookies a while ago. Meanwhile, Google Chrome–the most widely used browser–has yet to implement the ban, delaying it until late 2023. 

While key players in the advertising industry are working on solutions to achieve a similar outcome without third-party cookies, none is available yet. Google’s first attempt at an alternative, Federated Learning of Cohorts (FLoC), was widely criticized for not doing enough to protect the identity of individuals. So the industry has been sent back to the drawing board to consider contextual targeting options. 

Why the third-party cookie ban needs your attention

While the ban won't impact A/B testing and Voice of Customer (VoC) tools, ecommerce optimization teams will feel the consequences in other ways. Here’s what I believe we’ll see happen to performance marketing and the knock-on effects for Customer Experience Optimization (CXO);  

  • Marketing Attribution: without third-party cookies, marketing attribution will become less accurate. Expect gaps in your data, especially for multitouch attribution. 
  • Targeting: marketers won't be able to target individual users based on specific behaviors but instead will target based on the context of the ad placement or broad preference data. It will also impact the ability to use retargeting ads for cart abandonment or re-engagement campaigns. 
  • Effectiveness of performance marketing: alongside less accurate targeting and reporting data, elements such as frequency capping of ads won't be possible, meaning your ad effectiveness will diminish and costs will rise. 

The above factors mean it will become harder to optimize performance marketing campaigns and understand the value different channels play in conversion journeys. For ecommerce brands, this will impact their acquisition strategy, conversion rates, and profit margins. In turn, we believe this ban will change the role and importance of optimization teams in ecommerce businesses.

The Opportunity 

The third-party cookie ban will disrupt some aspects of your acquisition strategy; it will also add pressure to make the most of the users and customers who visit owned channels throughout the user journey. With this in mind, here are my top 4 recommendations for ecommerce optimization teams to turn a challenge into new opportunities for their business; 

1. Focus optimization efforts across the whole customer experience 

For ecommerce businesses, margins can be slim. The third-party cookie ban means that paid advertising will likely become less effective and more costly. 

One of the best counter-strategies is to get ecommerce optimization teams to work on all your touch-points and channels (not just your website) throughout a user journey to eke as much value as possible. 

Consider experimenting with your product listings on marketplaces, social media marketing, emails, SMS messaging, customer service operations, and loyalty programs. While your experiment design will vary depending on the medium, the principles of experimentation apply to any scenario. 

2. Trial other marketing channels 

Experiment with alternative marketing channels. E.g., build direct partnerships with publishers who own a significant amount of first-party data, allowing you the wealth of targeting options that independent ad networks won’t be able to offer once the ban is in place. Other ideas include under-utilised (depending on your vertical) marketing channels such as direct mail, where A/B testing can be employed too. 

3. Implement strategies to gather first and zero party data  

We all know the value of collecting first-party data, such as customer purchase history or interactions on your website. But first-party data tends to be historical (what the customer did). To utilize this type of data requires us to make assumptions about what customers might do in the future. 

These assumptions can be ineffective. It’s why zero-party data has gained popularity. Users proactively provide zero-party data, sharing their preferences or attitudes. This rich data is more reliable and impactful when used to inform customer experiences optimizations. 

Consider experimenting with ways to gain zero-party data from your users during registration flows, quizzes, profile creation/preferences pages, interactive product tools, or post-purchase flows. 

The cookie ban means we will need to make the most of every potential user who lands on your website or interacts with your brand. Zero-party data can fuel personalization or customization of experiences and provide insights to feed into hypotheses for testing. The more you understand your user's wants, needs, and concerns, the better your hypotheses will be for testing. 

4. Build a concrete data infrastructure 

With a renewed focus on owned data about your customers and optimizing throughout the users' journey, it's necessary to have a solid data infrastructure that allows you to collate data from various channels to build a cohesive and valuable view of your customers

Data from your testing program, customer services, email marketing, and (if applicable) physical stores can all be collected and processed, providing you with an invaluable data source to draw insights. We’ve written previously about how you can gain buy-in from the c-suite for such initiatives. 

How does this all apply to your business? 

This is the third instalment in our nine-part ecommerce optimization series, where we are providing actionable solutions and guides to optimise your Ecommerce teams and processes against the latest challenges in the market. If you'd like to learn more about optimizing your customer experience and how we can help build the processes and methodologies alongside your ecommerce team, contact me at Silver@speero.com and I'd be to share our thoughts.

Look out for the 4th instalment of the nine part series next week.

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