As Cookies Crumble, Can Location Data Pick Up the Pieces?

Marketers have relied on third-party cookies for targeting, remarketing, and attribution for nearly 25 years. But in 2017, Apple introduced Intelligent Tracking Prevention, signaling the beginning of the end for third-party cookies.

Firefox followed Apple’s lead, and in January of this year Google announced that it would phase out Chrome support for third-party cookies by 2022. That sent the industry scrambling for alternatives. There are now multiple initiatives and methodologies being discussed as cookie replacements.

Google is promoting an approach that seeks to balance user privacy and ads personalization by targeting groups rather than individuals. Publishers are being encouraged to develop their first-party data (first-party cookies aren’t going away). Some vendors are pushing identity graphs that rely on persistent identifiers (i.e., name, address, phone number, e-mail) that could be hashed for privacy but shared across the digital ecosystem, offering the benefits of third-party cookies.

There are a number of privacy-related challenges with this approach. For example, CCPA defines these identifiers as personally identifiable information (PII), and its successor CPRA includes “precise geolocation” in the category of “sensitive personal information.” Though these statutes are opt-out, building a new data ecosystem around persistent PII could be both highly problematic and short-lived.

Location data’s benefits

Another potential and promising alternative to third-party cookies is location data. Captured from mobile users as they move through the physical world, location data can be used for a range of purposes and personalization.

Real-world visitation patterns offer clues to user identity, brand affinities, and purchase intent. Putting aside that Covid-19 has radically upended movement patterns for the time being, regular airport or hotel visitation can identify business travelers, routine presence in a gym suggests health-consciousness, and weekly fast-food visits implies the opposite. Someone visiting car dealerships is probably an “auto-intender,” and so on.

Location data can also connect the dots between digital and even traditional media ad exposure (e.g., direct mail, TV, out of home) and offline conversions. It can even build audiences for online retargeting: for example, people who’ve visited a Best Buy or Target in the past 30 days. These are basic examples; the things marketers can do with location data get much more sophisticated.

Advertising identifiers on Android devices and iPhones anchor all of this. They can be reset but rarely are and so become persistent IDs that can be matched to multiple other data points for targeting, remarketing, and attribution. This versatility and utility make location data a great candidate to replace third-party cookies.

Location data’s challenges

The challenge that publishers and marketers face, however, is two-fold: Acquisition of user location requires consent and, in the case of iPhone users, sharing the ad identifier (IDFA) with third parties will soon also require user “permission to track.” Previously, app developers and publishers that captured location were able to resell or provide that data to third parties for the use cases above.

Next year, Apple devices running operating system 14 will compel publishers to provide much more privacy information to users and gain their permission to track them “across apps and websites.” Apple delayed implementation of this policy, which was originally set for this year, to give “developers time to make necessary changes.” It will now happen in early 2021. (Though Google hasn’t committed to a similar permission-to-track approach for Android, it’s possible it ultimately will.)

Many marketers assume Apple’s new opt-in tracking permission will radically reduce the availability of IDFAs and location data. That assumption isn’t entirely unfounded. Indeed, since the rollout of Apple’s iOS 13 and its more granular location privacy controls, data provider Location Sciences saw a 68% decrease in the availability of always-on background location data.

However, consumer survey data suggests that consumers are potentially open to persuasion. A recent survey of more than 500 mobile users found that 60% would be open to sharing their data – in other words, allowing themselves to be tracked – if there were a sufficient reason or incentive (e.g., discounts, rewards).

Transparency about data sharing with third parties may also yield higher opt-in rates than expected. And some number of consumers are likely to be persuaded by the promise of more personalized ads and experiences if they allow themselves to be tracked.

So, in principle, location data could readily substitute as a third-party cookie alternative. For this to work in practice, it will require much more work in the form of opt-in consumer consent. But we should all get used to it; opt-in is the direction in which most digital marketing is going.

Greg Sterling is VP of market insights at Uberall.

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