What the loss of third-party cookies means for private equity firms

10 May 2023 Consultancy.uk 6 min. read

As the world’s most-used web-browser plans to end support for third-party cookies, marketers across all industries have been left scrambling to adapt. Dan Spicer, Global Head of Go-To-Market of private equity consultancy, Palladium, explains the impacts which business owners may encounter if their marketing activity does not find new tools for gathering data.

Google has announced that it will stop the use of third-party cookies in Chrome in 2024. Third-party cookies are one of many tracking technologies provided by a third party – often an adtech company like Google or Facebook – that your assets employ on their websites for the benefit of running analytics solutions, advertising platforms and technology integrations.  

Google Chrome is the dominant web browser with more than a 60% market share, so its move to block cookies will have a huge impact on the advertising and marketing industry. If the 2024 timeline holds, cookies will soon be rendered obsolete, marking one of the most significant changes in recent digital media history. Some argue that the reappraisal of cookies is long overdue and that as cookies are phased out, new, and better solutions will be born. Indeed, future solutions with higher privacy standards and better targeting capabilities are already in the making.

What the loss of third-party cookies means for private equity firms

However, private equity (PE) owners cannot afford to walk blindly into this impending change. There will be a demonstrable impact on businesses’ marketing activity which, if not addressed swiftly, could ultimately impact long term business performance and subsequent shareholder value. 

A wake-up call for businesses 

Pay-per-click (programmatic and social media) advertising and customer analytics are the most common use of third-party cookies. The data is used to create user profiles and then deliver personalised ads or provide intelligence around the user to inform business decisions. Google’s decision to block third party cookies should, therefore, be a wake-up call for businesses, who must break their reliance on third-party data. 

First-party, privacy-friendly datasets are richer and more impactful when it comes to improving campaign performance. They also strengthen the trust between customer and business. However, the true potential of first-party data is rarely reached, due to the accessibility of third-party data.  

The demise of third-party data won’t mean the end of marketing or cross-departmental customer experience. What it will mean, however, is that in order for your assets to scale engagement across all tools and channels— accurately and with consent— they will need to rethink the kind of data they are using; how they are collecting it; how it’s distributed and how it is kept secure. 

First-party cookies will remain and can help identify what a user did while visiting your website. You can see how often they visit it and gain other basic analytics. However, you can’t see data related to your visitor’s behaviour on other websites that are not affiliated with your domain. 

The biggest winners  

Google is launching its Privacy Sandbox initiative. This is an ad targeting tech stack which Google is proposing will replace cookie-based targeted advertising in Chrome by 2024. 

Walled Gardens such as Facebook, Google, and to a lesser extent, Amazon act as one-stop, first-party shop for advertisers, with inventory, audiences based on their own first-party data and measurement, all managed within their platforms. 

New cookie-less solutions will undoubtably be looked at by a number of vendors. Although it is probable that many will fail, we may see a number of solutions come to market that are successful. 

Publishers will find the disappearance of third-party data a huge boon for publishers, who will become one of few reliable sources of quality data about consumers. Many publishers have strong first-party data assets that are ready to serve to correlate sources of truth for targeting, attribution, and measurement, and marketers can increasingly access this supply directly via private marketplaces. 

Digital marketing is in a state of transition, and that presents an opportunity for marketers willing to pivot towards something better. The winners we have identified all have one thing in common: they can leverage their first-party data. 

The biggest losers 

Third-party data providers are one of the players taking the biggest hit are the ones who have built their entire business models around selling data collected using third-party cookies.  

Brands with limited first-party data maturity have the most to lose from a cookie-less ecosystem. Building and maintaining a strong first-party data set that can live and breathe as a critical enterprise asset.  

The Open Exchange is likely to lose much of its appeal without third-party cookies. In 2021, eMarketer projected that private marketplace spending would surpass the open exchange as early as this year. However, those numbers were crunched before Google made the Chrome announcement. 

Private equity has no time to waste 

Private equity firms must engage with their portfolio companies and the necessary advisers to implement the required technology and process changes. Creating a first-party data strategy to combat cookie loss is key. Switching a marketing and customer experience strategy to a first-party data strategy isn’t swapping out one set of data for another. It’s complementing this existing approach with richer and more strategically-aligned data that maps to the organisation’s revenue goals. 

Managing third-party data, the complexity of consent and various overlapping regulations is challenging. Developing a data governance process that implements consent management means that the resources required for complying with GDPR is drastically reduced which makes data auditing traceability scalable.  

As data volume, variety, and velocity continue to outpace many teams’ capabilities, organisations face the challenge of collecting, transforming and putting customer data to use while adhering to new and evolving regulations. Identifying and building the right analytics structure will ensures any new data strategy delivers accretive value to all stakeholders. 

Private equity firms also need to overhaul their digital due diligence immediately. Buyers must be able to analyse where a prospective target is in terms of awareness and action on this issue, while ensuring shortcomings and necessary investment are factored into underwriting. In the current economic environment, firms cannot afford to overpay. 

In short, it is vital that private equity firms act now to ready their assets for a new digital marketing environment and to ensure any new investments are well placed to adapt to the impending change. Without swift action, significant shareholder value could be lost.

Founded in 2015, Palladium is a London-headquartered consultancy, focused primarily on digital change management. The firm assists clients with transitions of operation, from implementation through to board level, where its input also helps support both the cultural and commercial impact of digitally led change.