The Decline of Third-Party Cookies: How Retail Stores Can Reset the Digital Marketing Competition

Recently, the online retail world has been seeing the dawning of a new trend, which also marks the decline of an era: the use of third-party cookies on e-commerce websites. With this, retailers are expected to soon rely more on optimizing their own customer database, which will become the best way to transition to a post-cookie digital world.

In the digital context, cookies are small text files saved locally on a user’s computer when visiting a website. These files help the website to remember information about the user’s details, such as login information or cart items, before the page is accidentally closed prior to checkout. Meanwhile, third-party cookies are derived from somewhere other than the website a user chooses to visit. While they are helpful in many ways, securing user privacy is not [part of their functions].

Some popular tactics like retargeting, among many others, depend heavily on third-party cookies to reach people with ads and track the purchase conversation. As digital marketers cease to use third-party cookies and are no longer being able to identify the individual customer who left the site or bought an item, these tactics will disappear.

Yet, retailers will soon have many options to address the issues mentioned above. Noteworthy alternatives in the making include Google’s Federated Learning of Cohorts (FloC) model, first-party data tracking, and identity-based tracking. These solutions can continue to show consumers relevant ads and help measure the effectiveness of marketing campaigns without having to rely on third-party cookies.

Statistics show that it costs five times as much to gain a new customer as it does to keep an existing one. Therefore, with no third-party cookies showing relevant ads of their [products] to the consumer, retailers may actually have a higher chance of profit. They will need to work on keeping the consumer interested and achieving loyalty through marketing campaigns, discounts, and more.

Additionally, brands will be able to identify who their target audience is since they will be focusing more on loyalty and retention. Retailers will be able to leverage their own first-party data to better target their customers, which positions them to become more effective in customizing their ads and promotions.

Theoretically, having an agnostic identity that can continue to benefit brands and markets is key to protecting any consumer identity. Furthermore, the continuous rise and adoption of artificial intelligence (AI) and improved predictive consumer behavior data enable digital marketers and innovators to create better cookie alternatives.

Ultimately, the solutions that are being proposed as an alternative to cookies represent a step forward across not just the retail industry, but all other sectors. Even businesses and industries that have fallen behind in implementing third-party cookies may now have an opportunity to get back into the competition.

The diminishing of third-party cookies as an effective digital marketing tool holds a lot of promise in the sense that marketers will have an arsenal of targeting and intelligence devices while eliminating various privacy issues. This digital transformation will signal a bright future for retailers and the respective industries that they represent.