Brian Meert is the CEO of AdvertiseMint, a Facebook Advertising Agency, and author of The Complete Guide to Facebook Advertising.
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Most people are aware of data usage for ad targeting and personalization purposes; the privacy concerns surrounding it have become international news. However, this conflict between consumers and major platforms is not an isolated event — it’s a battle within a much larger war that’s been raging for decades. The Data War is discrete, but considering its massive impact on advertisers, businesses and consumers, maybe it’s time we take a deeper look at its long past and fickle future.
Why Data Became Worth Fighting For
The Birth Of Cookies
When Lou Montulli created the concept of data tracking files in 1994, he intended to make the internet more convenient by enabling websites to remember users. It didn’t take long for companies to see potential in applying the same concept on ad-serving websites for better audience targeting, creating third-party cookies as we know them today.
Consumer opinions were mixed, but I think Solveig Singleton’s opinion piece from 2000 demonstrates how different even tech-savvy views were compared to now. She wrote, “The fact that many people have not yet heard of cookies does not mean that they are some kind of sinister surveillance, any more than is Caller ID.” One could say this rose-tinted outlook on cookies aged like milk.
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In her defense, Singleton couldn’t have anticipated how cookies would be used by tech giants like Google, Facebook and Amazon. In 2006, Google considered the “self-reinforcing online ads ecosystem” it could create by buying an online ads marketplace and using its aggregate data, which it did less than a year later. Facebook also appreciated this scatter-and-retrieve method for ads and cookies. The arms race began.
This cookie concept is the equivalent of offering security cameras for free in exchange for access to their footage. The more who accepted the offer, the more these tiny snapshots of user activity could combine to provide a deep, lengthy look at visitor traits and behavior. This massive arsenal of data provided ad targeting capabilities like never before, but in the hands of a few companies, it was beyond a privacy concern — it created digital superpowers.
The Death Of Third-Party Data
By 2010, the Wall Street Journal found more than 3,000 tracking files within just 50 websites. By 2011, the EU updated data regulations, requiring a policy of openness with users when websites collect third-party data. The newfound transparency only put a spotlight on tech giants’ morally questionable actions and intentions. Their cookie-tracking strategy was showing its first cracks.
By the late 2010s, consent laws, court proceedings, fines and public outrage ensured that cookies would never be as effective as they were before. In 2020, Apple’s iOS 14 update allowed consumers to reject third-party data collection, and Google pledged to phase cookies out entirely by 2023. These victories for privacy rights changed data objectives for ad platforms.
The Data War Gets Iron Curtains
Consumers’ newfound right to privacy has left entities like Facebook and Google with a big problem: Their ad-targeting empires were built using data beyond their borders. From their perspective, this isn’t a bid for consumer privacy; it’s companies like Apple cashing in on data that used to be shared. Facebook executives outlined this feeling of tension between once-friendly tech giants in their Q1 2021 earnings call Q&A: “We generally don’t think that this closed approach is the best one for the industry from an innovation perspective.”
It’s obvious why they would think this way — but are they right? There’s some nuance to this to consider. The shift away from cookies and open data sharing to first-party data has given rise to walled gardens — silos of user activity that fracture and stretch marketing strategies and might not be much of an improvement in user privacy. For consumers, they also might not be much of an improvement in terms of user privacy.
The Rise Of First-Party Data
Have you noticed that the list of retailers creating digital media platforms is getting longer? Retailers like Walmart and Kroger are sitting on gold mines of data for advertisers. First-party purchase data can be unbelievably accurate — Target used it years ago to figure out that a young woman was pregnant before her own family did, and Amazon built an empire with it. Now that advertisers are hunting for fresh data, practically any large entity with first-party consumer data can cash in.
TikTok is also leveraging the rise of first-party data for competitive advantage. Its data-collecting methods nearly got the app banned in the U.S. due to how invasive they are, but now they’re helping to expand TikTok’s advertising potential impressively fast.
Does The Data War Have A Winner?
We shouldn’t underestimate the massive shift we’re experiencing in the digital advertising world — Apple’s rollout of App Tracking Transparency has raised concerns for many businesses more than the supply chain crisis. Ad giants like Facebook and Google aren’t going away anytime soon, but the blow to their stronghold on advertising means that most marketing agendas probably just got bigger.
Tapping into data sources within the walled gardens of multiple platforms requires marketers to flip cookie-reliant strategies inside out. In other words, the list of channels used needs to become broader while individual campaigns become more platform-specific. Trust needs to go beyond messaging to become a foundation for strategy as brand safety increases in importance. Businesses large and small should prioritize growing their transparent and direct first-party data sources like newsletters, customer relationship management systems and loyalty programs to ensure that they have quality audience data collected with integrity.
For consumers, the death of cookies means they won a battle, but not the war. The death of cookies doesn’t make a major platform any less of a data mine than it was before. First-party data has the same privacy-invading potential in the hands of large companies as long as there is money to be made, and it is much harder for users to avoid handing it over. As our world remains digital, data will have value. The Data War, therefore, has no perceivable end — it’s just gotten colder.
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Author: Brian Meert, Forbes Councils Member
