January 17, 2024 | 5 min read

Warning signs: Third-party cookie deprecation is already hurting your marketing

It's not a future state — there is significant signal loss today making advertising more expensive and less effective.

We’ve all been hearing about third-party cookie deprecation for a long time, and it often felt like a far-off problem as Google repeatedly kicked the can down the road. 

The truth is, you’ve been feeling the effects of signal loss for years, even as everyone assured us there was still enough to work with. It just hasn’t been immediately obvious what was causing it: critical changes in the way the ad ecosystem works.

For digital marketers, AdTech is a lot like a car: you don’t need to know what’s going on under the hood in order to drive it. It’s designed to be user-friendly, so that people can operate without needing a deep understanding of the technical details. 

The problem is, what’s under the hood is broken. 

Warning signs — have you felt any of this pain?

When you hear something rattling in your car as you drive, you may not know what the problem is (I know I wouldn’t), but you'd know something is off. 

It’s the same thing with digital advertising — things have been getting harder to track and more expensive, though the reasons why have not been clear. In speaking with paid media specialists across industries, here are the persistent problems we discuss:

  • Customer acquisition costs are up, while customer lifetime value is down. This is happening even though there is more first-party data than ever. Wasn't data supposed to solve all our problems?

  • At a more tactical level, this manifests as: 

    • Lower match rates, which means decreasing audience addressability 

    • Unreliable measurement, making marketers lose confidence in their legacy measurement tools

    • Decreasing effectiveness in paid channels when using tools like Data Management Platforms (DMPs) and tag-based Customer Data Platforms (CDPs) 

    • Audience activation taking days or weeks instead of hours, with too many device & cookie match tables and middlemen hobbling the data supply chain 

    • Fewer insights that take longer to generate, despite all the-first party data available to advertisers

These warning signs are the result of the significant signal loss already present. As long as advertisers use tools that depend on third-party cookies, audience fidelity decreases, and business results decrease along with it. But as challenging as it has been to date, by the end of Q3 2024 when Google fully phases out support for third-party cookies, it will get worse.

Brands are told to install the new tool, activate in the new channel, replace the agency, test the next audience strategy — but acquisition costs are still up and lifetime value is still down.

Why has it been hard to identify the root of the problem?

Simply put, the scale and perceived complexity of the AdTech ecosystem obscured the underlying problem of signal loss when working with cookie-dependent tools. Let’s dig into a few of the areas of obfuscation…

More data, fewer insights 

Cookies going away?  No problem, just collect more first-party data!” I bet you’ve heard this before, and these days brands have more customer data than ever. Despite the prevailing wisdom, the results have not followed. This is because data that isn’t unified or accurate isn’t sufficiently useful. Brands looking to solve this have invested millions of dollars on tools that made big promises, but failed to deliver.  

Proliferation of marketing & media channels

With so many different places to advertise, it can be tempting to think that the problem isn’t the data, it’s that your audience is just on a different channel. TikTok, Snapchat, Facebook, Google, connected TV, Spotify, and others all position themselves as having the audiences advertisers need. In fact, they probably do have some of your customers, but how do know you where to put the next dollar? Measuring the effectiveness of spend across these channels creates optimization headaches, and without an owned customer dataset, it’s difficult to know what is working hardest for you.

Warning signals are positioned as “normal”

AdTech identity providers and onboarding services have a habit of telling marketers that everything is alright, even amid decreasing signal fidelity. I’ve had conversations with brands who regularly see audience match rates on paid channels range from 30% to 120%+. When they question the results, they’re told everything is fine and this is just the way matching works due to device graphs and active profiles and signal quality and data syncing times and… and meanwhile they’re wondering how a 120% match rate is even possible.

Until now, there has been too much noise and not enough signal to address the fundamental problem and risk disrupting normal business or KPIs. Instead, brands are told to install the new tool, activate in the new channel, replace the agency, or test the next audience strategy.  

They’ve tried the various fixes, and the truth holds: acquisition costs are up and customer lifetime value is down.

What you can do about it: Own, don’t rent 

Advertisers’ pain has reached a tipping point, and the market is ready for the next evolution of customer data for media and marketing.  

It started as a rental economy 

Digital marketing started with third-party pixels and tags on a website. Then DMPs came along and tied first-party website data with aggregated third-party data to expand digital audiences. As cookies faded, DMPs were replaced by CDPs using tags or rented third-party graphs, promising a unified customer foundation. This worked for a while, but their time has now passed, because each of these tools has a fundamental flaw: using third-party identities to unify first-party data.

Now it’s time to own your advertising

Regulatory pressures are making third-party cookies and identifiers obsolete. The data rental economy is over and brands have an opportunity to take control of their data processes.

Here’s what it looks like in practice:

  1. Own your customer data and identity graph. 

  2. Own your audience segmentation.

  3. Own onboarding to the ad environments.

  4. Own measurement. 

The early movers that we’ve worked with to eliminate outsourcing are thriving in the new advertising ecosystem. It starts with making first-party data usable and then unlocking its potential for an end-to-end flow of insights, activation, and measurement. 

Based on what I’ve seen when brands make this change, it yields greater success — stronger return on investment, lower costs, more accurate personalization — and provides an answer to the pains of signal loss over the past 18-24 months as major changes slowly but surely took hold.  

By moving from renting to owning, you’ll be advertising on your own terms, and getting better results. 

Learn more about the changes in the ad ecosystem and how shifting to an owned, first-party strategy leads to better outcomes.