Analysis: How SMEs are strapping up for a cookie-less world

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As the deadline for the deprecation of third-party cookies draws nearer, companies are scrambling to find alternatives for a pillar in digital marketing that has been crucial to them since the dawn of the Internet. The move away from third-party cookies has shoved into the forefront the need for companies to beef up their first-party data. According to Merkle's 2021 customer engagement report which surveyed 800 marketing, technology and analytics executives, 88% said collecting more first-party data is a high priority in the next six to 12 months.

Although the report surveyed individuals in the US and UK, it is safe to say that the first-party will also be on the minds of companies in Asia, especially SMEs. Compared to MNCs, SMEs might not have adequate tools and resources to build up their first-party reserve. Also, Google's announcement earlier this month about not building alternate identifiers to track individuals across the web once third-party cookies are phased out, is akin to putting a dagger into the hearts of SMEs when it comes to digital marketing. 

Xin-Ci Chin, head of marketing for StoreHub, a Kuala Lumpur-based POS company which works with retail and F&B businesses, said the biggest losers from third-party deprecation would likely be SMEs, especially the smaller enterprises, which are not in the habit of owning or even collecting first-party data. While Chin does not foresee the change to heavily impact StoreHub's digital advertising business, she said the industry will need to change and adapt the way it advertises. "When they advertise, smaller businesses are more likely to be reliant on, for instance, interest targeting or audience segmentation on Facebook which will likely be heavily impacted by the third party cookie ban and even Apple’s iOS 14 privacy update," she added.

As with most tech B2B startups, StoreHub's own marketing budget is also heavily skewed towards digital, easily hitting about 80% to 90% of its overall marketing budget, and will likely remain so. While Chin did not comment on how it is building up its own first-party data, she said the deprecation of third-party cookies is not new news.

Among the list of more than 13,000 companies it works with across Southeast Asia include Big Blue Taxi, Shell Select, Pezzo Pizza, and Birkenstock. "We are mostly preparing our customers for the cookie-less world in a variety of ways, such as making it easier for them to collect their customers' information using technology, from store-enabled cashback and QR ordering to online ordering," Chin said.

Meanwhile, Malaysian restaurant chain myBurgerLab has spent the last seven years building up its CRM and is shifting towards anonymous data and focusing on returning customers. Head of marketing, Sasha Lim told MARKETING-INTERACTIVE that the company pays more attention towards to customers who are looking opt out of its loyalty programme and communication systems. "We are enhancing our data metric dashboard so we could monitor our active campaign and customer reactions towards our marketing campaign faster than ever," she added.

To prepare for the cookie-less world, myBurgerLab also embarked on a few in-app campaigns and offered a burger subscription plan prior to the pandemic which Lim said exceeded its expectations. MyBurgerLab also launched games such as Burger Hantu and on-going trivias to increase engagement so customers would launch the myBurgerLab+ app just to play its game and find out more about its promotional items and offers. According to Lim, more than 20,000 users now order burgers through the app.

Moving forward, it plans to build a content wall to ensure exclusivity for its customer base and implement a more seamless and easy process for consumers to find their favourite burger. This can be done by placing an order based on their last purchase.

MyBurgerLab spends an average of 10% to 20% on digital marketing and Lim said it is still too early to tell if the amount will change with the impending deprecation of third-party cookies. "It would take some adoption time and consumer behaviour today is unpredictable. We will decide case by case, based on our data and customer engagement," she explained.

MyBurgerLab is planning its next website revamp in the next two quarters and will implement Google's Consent Mode to support the effort to respect user privacy. A "Consent Mode" offering was also launched by Google last September to help advertisers achieve greater insight into conversion data while also making sure that the Google tags helping them measure conversions are reflecting users' consent choices for ads cookies. With Consent Mode, Google tags will be able to determine whether or not permission has been given for the brand's site to use cookies for advertising purposes for that user. If a user consents, conversion measurement reporting continues normally. If a user does not consent, the relevant Google tags will adjust accordingly and not use ads cookies, instead measuring conversions at a more aggregate level.

Also weighing in on the issue was Singapore paint company Gush's brand manager Kenneth Tan, who said although it does not foresee a major shift in its strategy or media splits, it is "definitely keeping an eye on the industry developments that will follow". Tan did not comment on the value of Gush's marketing budget that is allocated to digital. That said, Tan is of the view that Google is making the right move by addressing privacy concerns through the deprecation of third-party cookies. Last month, Google claims its Federated Learning of Cohorts (FLoC) proposal provides an effective replacement signal for third-party cookies.

The FLoC API relies on a cohort assignment algorithm, meaning a function that allocates a cohort ID to a user based on their browsing history. To ensure privacy, Chrome requires this cohort ID to be shared by a certain amount of distinct users. A cohort should comprise users with similar browsing behaviour and the cohort ID should prevent individual cross-site tracking, Google's whitepaper said.

"My first impression of FLoC is that it does sound like a viable alternative for interest targeting while retaining privacy, although it is limited to users of Google’s ecosystem. I am unsure of how users will respond as they are still being classified in groups according to their behaviour," Tan said.

With the noose tightening around companies' necks, Gush certainly is not resting on its laurels. "We do not focus on collecting first party data for the purpose of advertising. We have been investing in branding campaigns, content marketing, and community building to form a deeper relationship with our audience," Tan said.

According to him, this helps Gush to establish a healthy balance alongside its performance marketing efforts. At the same time, it has collated an email list, with the consent of consumers, to share consent updates via newsletters.

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Are you truly prepared for the cookie-less world?