DTCs: Effective Alternatives To 3rd Party Cookies
(Article first appeared in Multi-Channel Merchant)
Digital advertising has always been an efficient channel for DTCs because of its ability to target consumers based on explicit and implied behavior, and to directly measure attributable sales. This result has been brought to you by digital identifiers such as cookies or MAIDs (Mobile Ad IDs) which connect consumers to their browser and/or devices.
Now that this type of ad targeting on its way out, thanks to Apple and Google placing tighter restrictions on tracking with the 2023 sunset of third-party cookies, brands will need new targeting and measurement strategies.
Adopting New Forms of Tracking, Measurement
DTCs have begun to explore alternative forms of measurement in order to restore their advertising performance and attribution capabilities. Server-side tracking and media-mix modeling are two of the more interesting alternatives.
Server-side tracking sets a pixel from the hosting web server, which browsers are respecting because these cookies are often essential to website implementation. When a customer visits a brand’s ecommerce site, the cookie goes back to the server in application page requests, where it can be linked to the same ID from prior visits, and/or tracked through to the ID making a purchase.
This information provides brands with first-party, server-side click tracking, which they can then link to URL identifiers like Urchin Traffic Monitor (UTM) parameters, crunching the data to create estimated attribution models for both UTM tracked and non-UTM tracked traffic. This kind of customer interaction does not track users across website visits.
Media-Mix Modeling (MMM) uses statistical methods to help brands measure the impact of their marketing and advertising campaigns. MMM models the way impressions from all channels relate to clicks and conversions, and uses regression analysis and causal experiments to determine the relationship between a marketing activity and a sale. Because MMM is based on the collection of aggregated data vs. customer level data, it only requires reports from the advertising channels and UTM tracking. MMM models can also be used to create performance optimization models.
Historically, MMM solutions take many months of data to create valid models. However, speedier iterations of MMM are coming into use. These versions require a smaller amount of data, and can deliver analysis in days vs. months.
Focusing on First-Party Data
Many brands are increasing their focus on first-party data strategies, making greater use of their own data across marketing channels. First-party data is information that brands collect directly from customers and prospects with their consent. This can include personally identifiable information (PII) such as email addresses and phone numbers, plus purchase data, browsing, demographic, interest, etc.
Such information can support various marketing activities:
- Ad targeting: Brands can upload their customer file into media platforms, such as Meta and TikTok and target these audiences
- Cross-selling, upselling: DTCs can use their data to personalize website experiences to cross or upsell different products
- Loyalty: Brands can promote personalized incentives based on customer behavior to increase retention and customer lifetime value (CLV)
Focusing on Customers
With the pressure to grow a customer base, many DTCs focus marketing efforts on campaigns that generate awareness and convert sales quickly and cheaply (such as every Instagram ad you’ve ever seen). DTC marketers typically optimize the daily average cost of acquisition to the average daily gross profit.
Now DTCs are working to build greater brand equity by aligning their messages more tightly with the consumers that actually buy and use their brands. Unlike acquisition tactics, brand-building campaigns target wider audiences aligned with messages and landing pages likely to resonate with their brand. These strategies include experiential marketing, getting into physical retail, using influencers, using branding channels (i.e., connected TV), creating altruism strategies, celebrity endorsements, etc.
Continue to Adapt
The impact of the cookie restrictions from Apple, Google and others on ad tracking is by no means limited to DTCs; all digital advertisers face the same challenges. The advantage that many DTCs have, however, is their agility and willingness to move faster. These brands should start adopting alternative analytics solutions to restore tracking and measurement back to their old acquisition channels, but also start testing new marketing strategies to acquire, retain and grow higher valued customers.