The Importance of CDPs in a Cookieless World

Jeff Larche

The Importance of CDPs in a Cookieless World

If your business relies on digital advertising to drive leads and sales, you’re not alone. Last year, digital ads totaled more than half of all U.S. ad spending — nearly twice as much as the next largest category: television.

Spending will continue to grow in the coming years. According to research by Dentsu and Statista, U.S. advertising will grow by an adjusted 5% annually through 2025. But starting in the second half of 2024, the dollars you spend on digital advertising could deliver far fewer leads and customers.

The culprit? The need for improved consumer privacy and the departure of third-party cookies.

Until very recently, third-party cookies have been the only way ad networks were able to optimize the audiences seeing your ads based on conversion rates.

For instance, if Facebook sends visitors to your site, the platform drops a small computer file in a folder of your web browser or mobile device, identifying those prospects with a unique ID. That’s all a cookie is: an invisible identifier.

The problem is that every cookie needs to be tied to an owning domain. The fact that Facebook’s cookies have a Facebook domain instead of your site’s is what makes it third-party instead of first.

Privacy advocates have decried this practice for many years because whatever privacy policy visitors accept on your site cannot extend to third parties.

Farewell, Safari and Firefox — and Soon Google Chrome!

Since 2007, browsers that wanted to be privacy-friendly have gradually stopped allowing third-party cookies. This chipped away at ad audience awareness, reducing overall precision by roughly 10%. But when Google Chrome follows suit next year, something that has been merely a nuisance will become what is being called a cookiepocolypse.

Enter the customer data platform (CDP). These platforms don’t magically restore external cookie capabilities, but they perform two crucial functions:

Enhanced First-Party Insights

CDPs help grow understanding of known visitors and customers by collecting and stitching together data from a variety of sources. This follows the spirit of privacy laws in that it encourages ownership and governance of customer data instead of outsourcing to third parties.

Many other marketing benefits are related to this heightened customer awareness, including improved personalization, often executed in real-time and enhanced by artificial intelligence (A.I.).

The bottom line is that direct customer relationships are key to online success in the future.

Meeting Ad Partners Where They Live

To preserve their business models, ad networks are creating ways to optimize their offerings using server-to-server methods instead of cookies. These API connections are perfectly designed to communicate with CDPs. Some experts are even saying that CDP-driven ad efficiencies will greatly improve once we’re fully in the “cookieless future” because ad buys will be based on improved audience matching across hundreds of unique attributes.

Acquiring a CDP could become a competitive advantage. According to a recent IDC Infobrief, 41% of advertisers are “moderately to not at all” familiar with targeting methods other than third-party cookies. In online marketplaces, your far superior ad purchases may further drive down the costs of acquisition.

Other Reasons a CDP Should Be in Your Future

A customer data platform is a significant investment, so protecting the efficiency of your ad spending should merely complement other benefits. Here are a couple:

Consumer Expectations Have Grown

Your customers want assurances that their data is safe, yes. But they also want to know that you understand them and their evolving needs. CDPs deliver improved, personalized experiences -- both online and off, since the same awareness of customers can improve customer support encounters and many in-store use cases.

Regulation Will Only Increase

Making consent and transparency a habit now will benefit your business in the future as imperatives for consumer data choice and privacy grow.