Third-Party Cookies Restrictions: What're the Alternatives for DTC?

Digital advertising has always been an efficient channel for direct-to-consumer (DTC) brands because of its ability to target consumers based on explicit and implied behavior and to measure attributable sales directly. It was brought to you by digital identifiers such as cookies or Mobile Ad IDs (MAID), which connect consumers to their browsers and/or devices.

Now, thanks to Apple and Google placing tighter restrictions on user tracking, this type of ad targeting is on its way out, and brands experience the need for new targeting and measurement strategies.

In this article, we review the three most effective alternatives to third-cookie tracking—server-side tracking, media-mix modeling, and first-party data collection that are gaining momentum with the 2023 sunset of third-party cookies.

New Customer Tracking Methods and Solutions

DTCs have begun exploring alternative measurement forms 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 respect 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 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. Media-mix modeling 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.

Opting for the First-Party Data Collection Strategy

Many brands are increasing their focus on first-party data strategies, using their own data more across marketing channels. First-party data is information that brands collect directly from customers and prospects with their consent. It can include personally identifiable information (PII) such as email addresses and phone numbers, purchase data, browsing, demographics, interest, and more.

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).

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From Advertisements Directed for Sales to Brand-Building Campaigns

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 (for example, connected TV), creating altruism strategies, or celebrity endorsements.

Continuous Improvement Process

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. However, the advantage that many DTCs have is their agility and willingness to move faster. These brands should adopt alternative analytics solutions to restore tracking and measurement to their old acquisition channels. They should also start testing new marketing strategies to acquire, retain and grow higher valued customers.