By Vlad Gozman, a serial entrepreneur and founder & CEO of involve.me. Follow @vladgozman on Twitter.
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Ad spending in the digital advertising market could reach over $700 billion in 2023, and cookies have long been the lifeblood of the digital ecosystem. Cookies are simply a piece of data that a website can store in a user’s browser that allow it to remember information and preferences. The “crumbs” of data that cookies leave behind have enabled advertisers to track user behavior and serve targeted ads.
Many privacy advocates have long argued that cookies invade user privacy, and now their warnings are finally being heard. The three leading browsers—Apple’s Safari, Google’s Chrome and Mozilla’s Firefox—are all phasing out support for third-party cookies, as I’ve written about before, which means the cookie will soon largely be a thing of the past.
This means that businesses will need to find alternative ways to track user behavior and serve personalized messaging. One solution is to switch to zero-party data, which is data that users voluntarily share with businesses. (I offered tips for how to do this in a previous piece.) Let’s explore the implications of the death of the cookie and the opportunities that zero-party data presents for businesses.
State-Level Privacy Regulations
Federal regulators have tried—and largely failed, according to Axios—to pass stricter privacy laws. This has led to state-level laws like those described by Axios that dictate how companies collect, store and share consumer data. Virginia and California are the first two states to implement their laws, with Colorado, Connecticut and Utah close behind.
In California, for instance, residents can now sue companies for data collection violations, while other states allow their attorney general’s offices to impose fines in the tens of thousands of dollars per violation.
California’s new regulations are enforced by the California Privacy Protection Agency, which was founded in 2020. With such an agency, California has more muscle available than other states to enforce its privacy laws.
Privacy laws can often come to a head against large tech companies, such as Oracle and Salesforce. In 2020, Oracle and Salesforce were hit with a $10 billion GDPR class-action lawsuit for holding information that users didn’t proactively consent to share and other alleged violations, although the lawsuit was later declared inadmissible.
In another case, multiple complaints were lodged against Meta, as users say they have received ads targeted at their private health information, which the cases allege violate laws related to invasion of privacy and consumer protection. The current patchwork of state-level privacy laws is a difficult landscape for businesses to navigate. While big tech lawsuits make the headlines, small businesses that use cookies are no less liable under these regulations.
New state-level regulations are just one force driving the death of the cookie. Browsers are also playing a role in the demise of cookies with features such as Safari’s Intelligent Tracking Prevention and Firefox’s Enhanced Tracking Protection, which make it harder for businesses to track users with cookies.
A New Era For Personalization
The dramatic shift away from cookies doesn’t mean that businesses have to start from scratch when it comes to personalization. After all, foregoing personalized messaging means losing out on the opportunity to connect with customers.
Research from McKinsey shows that personalized messaging can improve business outcomes. McKinsey found that consumers were more likely to consider buying from brands that personalize and were more likely to make repeat purchases. Businesses will need to find new ways to personalize messages without relying on cookies.
Zero-party data offers a promising solution. Zero-party data is data that is voluntarily shared by users with businesses. For instance, you’ve probably seen BuzzFeed’s quizzes that ask you questions about your interests, whether it’s to find out “what Harry Potter character best fits your personality” or “what type of dog you are.”
These quizzes are a way for businesses to collect zero-party data. While the quizzes are entertaining and engaging, they also allow businesses to learn more about their users and serve better-targeted messages. (Full disclosure: My company offers an online quiz-making tool.)
A fashion company might create a quiz that asks you about your favorite colors, style preferences and what kind of clothes you like to wear. Or a car company might ask you about your driving habits and what kind of car best suits your lifestyle.
Then, the fashion firm might send you personalized emails with clothing recommendations based on your answers, while the car company might send you offers for cars that fit your lifestyle. Zero-party data is an opportunity for businesses to gain insights about their customers that could be more accurate than those they would get from cookies.
How To Succeed With Zero-Party Data Strategies
While interactive content can be a great way to gather zero-party data, merely having a quiz or survey isn’t enough to succeed. It’s important to make sure that the content is engaging and valuable enough to entice potential customers to participate. A practical way to do this is to map out the topics you want to cover, and then come up with questions that are designed to give you the data you need. For instance, a fashion firm might want to cover topics like styles, sizing and seasonal preferences, while a car company might focus on topics like vehicle types, lifestyle and budget.
From there, create questions that balance curiosity with the data you hope to collect. Instead of launching a quiz titled “What Car Should I Buy?,” a more engaging option might be “What Car Best Fits My Lifestyle?” Then, instead of purely informational questions like “Do you mainly drive on the highway or city streets?,” you can also include more open-ended questions like “How do you like to spend your weekends?” with answers like “I always take a road trip” or “I like to stay close to home.”
Including images alongside questions can also be a great way to make the process more visually appealing and interactive. By asking questions that are both informative and engaging, you are more likely to get customers to participate and provide you with more meaningful data than traditional methods.
Ultimately, cookies have been a mainstay of the digital advertising industry for over two decades, and their death will be felt in the coming years. But just as cookies are dying, new opportunities are emerging for businesses to personalize their messaging. Zero-party data is one such opportunity. Businesses can use zero-party data to create personalized experiences for their customers.
