Google recently announced that it will be phasing out third-party cookies, and that it will not be building alternate identifiers to track individuals as they browse the web.
“As our industry has strived to deliver relevant ads to consumers across the web, it has created a proliferation of individual user data across thousands of companies, typically gathered through third-party cookies,” said David Temkin, Director of Product Management, Ads Privacy and Trust. “This has led to an erosion of trust: In fact, 72% of people feel that almost all of what they do online is being tracked by advertisers, technology firms or other companies, and 81% say that the potential risks they face because of data collection outweigh the benefits, according to a study by Pew Research Center.”
For retailers that rely on those cookies to identify and sell products to like-minded consumers, this announcement was likely hard to hear. But this doesn’t only affect the retail industry. It also affects the travel and hospitality industry which rely on tracking consumer data to market themselves to consumers.
However, tracking is not the only way to reap the benefits of digital advertising. To learn what other options are out there, and how this announcement will affect the hospitality industry, HT spoke with Matt Voda, CEO of OptiMine, a consumer privacy advocate and a nationally recognized expert in marketing strategy.
How will Google’s latest announcement regarding third-party cookies impact the travel and hospitality industry?
Google announced this week that they will not use individual tracking for advertising and that this change will take place when Chrome stops support for 3rd party cookies in 2022. Since Google represents about a third of the total digital advertising market, this change will impact just about every brand in a handful significant ways:
- Targeting: travel and hospitality marketers lose a significant channel for targeted ads with Google’s announcement. And targeting works because it reduces wasted spend, and improves performance through uniquely relevant advertising.
- Personalization: personalization capabilities also take a hit, and this will be felt in a loss of performance in retargeting and other programmatic efforts. But hotels with large first party data sets can overcome some of the potential hit on this dimension.
- Attribution: multi-touch attribution has been under significant pressure for quite some time. Cookie death, privacy-centric browsers, Apple’s ITP and coming soon- Apple IDFA – all have contributed to the death of multi-touch attribution. Google’s move just accelerates the death knell that has been underway for some time.
Do hotel marketers need to panic?
The hospitality industry has bigger issues to deal with than this Google change, and since it will impact all players the same way, this wouldn’t be the reason to panic. That said, the hotel players who’ve invested significantly in their 1st party data strategy will have an advantage, so if you are working with a brand that has under-invested in first-party data, you should begin to feel nervous sweat right now, and you should have been sweating for some time even before this major change. Brands with larger first-party data sets won’t take as large a hit from a targeting perspective and will have a better time building out second-party data partnerships and relationships to continue more targeted advertising.
What sort of alternative measurement capabilities exist that the industry should be aware of?
Google’s announcement, along with moves from Apple over the last few years, really have started spelling out the end of multi-touch attribution (or “MTA”), a technique that attempts to measure ad performance by tracking consumers and ads across all of their devices. MTA has gotten harder, more complex, and less accurate over time and brands relying on it as their primary marketing performance measurement tools need to find future-proof alternatives.
The great news is that there are measurement methods available that don’t rely on identity data to measure advertising performance. A traditional technique such as marketing mix modeling, with a modern, agile boost from AI and automation, can provide brands the ability to measure the incremental contributions of a marketing campaign without the complexity and costs of stitching together identities. And marketing mix modeling is unique in that it can be used to measure the entire marketing budget- both digital and traditional media, across online and offline bookings. And A/B testing is also a classic technique that can provide a read of lift for a campaign, and it is important to note that you don’t need an A/B testing software vendor to do it. All of the major advertising platforms, including from Google, have A/B testing tools you can use for free.
What kind of immediate changes should hotel marketers be making now to prepare for the phase out of cookies?
Hotel brands need to invest in formal, robust first party data strategies as such consumer relationships provide them the permission to perform individual targeting, and the ability to advertise 1:1 using low-cost methods such as email.
Secondly, hotel marketers need to find future-proof alternatives to marketing attribution. The reason is that identity-based attribution approaches have increasing gaps, holes and accuracy issues created by Google, Apple and others, and new state consumer data privacy regulations create new risks for the handling of such data. So, the time is now to look for future-proof measurement approaches because the identity-based attribution picture is going to get harder and harder over time. The problem isn’t going to go away.
What’s “old” is new again! Old-school techniques such as contextual targeting now offer an alternative to the gap created by Google. And so do affinity-based advertising buys that place ads on sites, shows and publications with travel-centric themes.
It should also be noted that Google’s search ads, while extremely competitive and expensive, are still “targeted” as they represent travelers near the purchase phase. Finally, Facebook, which hasn’t dropped its individual targeting, stands to gain from Google’s decision as they are the last major digital advertising player that hasn’t taken consumer privacy steps to eliminate such targeting.
Finally, Google has announced a cohort-based targeting solution called Federated Learning of Cohorts or “FLoC”. It is currently running tests to prove out the ability to target ads at groups of “similar” people, but without targeting individuals. Expect this: Google will tout the performance of FLoC, because of course they are in the business of selling ads. But brands should really prove their own performance with such methods before making a blind leap of faith with Google.
Matt Voda is the CEO at OptiMine Software, a leader in cloud-based cross-channel marketing analytics and optimization. He joined the company from United Health Group, where he led consumer marketing and analytics within the $40 billion Optum division, developing and deploying sophisticated analytics-driven approaches to yield significant gains in consumer engagement and ROI. Matt also spent 11 years at Digital River as vice president of product management, helping develop the world’s first cloud-based e-commerce platform.