On January 4th, Google depreciated third-party cookies for 1% of Chrome users (30 million users)
As part of a test phase for the eventual purge of all third-party cookies from its Chrome browser (currently slated for Q3 2024), Google just deprecated third-party cookies for 1% of its users.
What does this mean for you?
Understanding Google's Privacy Changes
Google's Privacy Changes refer to a series of updates and policy shifts aimed at safeguarding user privacy while maintaining the effectiveness of digital advertising. The most significant change in this regard is the deprecation of third-party cookies in the Chrome browser. Third-party cookies have long been a staple of digital advertising, enabling advertisers to track users across websites and deliver targeted ads.
Third-party cookies are small pieces of data stored in a user's web browser by websites other than the one the user is currently visiting. These cookies are typically used for tracking user behavior, enabling personalized advertising, and gathering analytics data across different websites and online services.
However, concerns about user privacy and data tracking practices have led to a shift in the industry's approach. Google's decision to phase out third-party cookies aligns with this shift. Here's a brief overview of the key aspects:
Deprecation of Third-Party Cookies
Google's decision to deprecate third-party cookies means that advertisers will no longer have access to this tracking method to target users. This change will affect how advertisers collect and utilize data for ad personalization. Instead, Google is emphasizing the use of first-party data and privacy-focused solutions like the Privacy Sandbox.
As advertisers adjust to the deprecation of third-party cookies, several impacts are expected.
Paul Bannister of Raptive already reported that early data is showing uncookied Chrome users may monetize approximately 30% worse than those with cookies (While this is still better than the 60% observed with the Safari privacy changes, it's still significant). The results are still very preliminary, but the actual result may be worse. Bannister made a point to note that we likely haven't reached the full 1% yet.
How are businesses preparing for the cookieless future?
Surprisingly, most companies are still blazing ahead as if nothing is changing.
According to 33Across, Cookies were still used for 78% or more of US programmatic ad buys across industries as of late 2023. Are these companies banking on a smooth transition to Google's Privacy Sandbox?
(As Google has already slipped in their commitments on other offerings and only started rolling out their Privacy Sandbox APIs mid-last year, this probably isn't a safe bet.)
A better option: Leveraging first-party data
While new customer acquisition has long been the darling of companies' growth strategies, the market is starting to see a strong shift towards prioritizing existing user retention. There are several reasons why. Here are a few:
You have first-party data on existing customers
Any time a customer interacts with your site or app, you are collecting meaningful data on them that could be used for personalization and more advanced analytics. This data is not affected by these changes, so it can continue to be used and is less likely to be affected by future privacy regulations.
Existing customers convert at higher rates than new customers
It costs 5x less to keep an existing customer vs. attracting a new customer, it’s over 3x more likely to complete a sale with an existing customer vs. selling to a new customer, and repeat buyers spend an average of 67% more than new customers.
Most new customers churn
Harsh but true. According to BusinessofApps, The average app loses 77% of its daily active users (DAUs) within the first 3 days after install, and research into worldwide retention rate shows that the average retention rate across 31 mobile app categories was 25.3% on Day 1, before falling to 5.7% by Day 30.
You read that right — almost 95% of the users you acquired are gone after the first month.
That said, most of your existing customers are inactive
Aampe's internal research on over 30 million app users found that, at any given time, only about ~5% of an app's population was considered "active" (having completed a conversion event in the past seven days). This means over 90% of the users we tracked hadn't done anything on the app in the past 14 days.
So, instead of looking outside to new user acquisition to sustain growth, companies should start by looking internally into methods for reactivating their own customer bases.
Why aren't more companies mobilizing their first-party data effectively?
Forrester Research found that between 60 and 73% of all data within an enterprise goes unused for analytics.
It's a more complex topic than we could address here, but a large part of the problem comes down to infrastructure.
While most companies have a data warehouse that contains their customer data, the data often isn't cleaned or formatted in a way such that it can be used, and even if it was, the process to get it to the tools where it can be used is complex and involves effort from multiple teams. Once the data is in a place where it can be useful, it's usually used incredibly inefficiently (e.g. building a single segment at a time.)
This is where AI-based applications like Aampe hold promise.
Aampe directly ingests your event data, your user properties, and even things like your Content Management System (CMS) and uses AI and Machine learning to match users with the offers, copy, and message timing with the highest probability of increasing your key KPIs, and uses the data collected from messaging to enrich the data in your existing data sources. You can read more about how Aampe works here.
Go boldly into the cookieless future
The early insights into Google's privacy changes provide valuable food for thought, but it should also make us ponder if we've become overly dependent on new user acquisition to sustain growth.
While challenges lie ahead, marketers who leverage first-party data effectively and stay adaptable will find opportunities to thrive in this new era of privacy-conscious advertising. There's an incredible amount of opportunity right under our noses, in the user populations we already have.
Stay tuned for further developments, and be ready to pivot as the digital advertising landscape continues to transform.