Automotive industry faces online cookie disruption

10 May 2021

Car dealers and manufacturers face further disruption as Google plans to bring a halt to the use of third-party cookies on its platforms in 2022. Online activity is used by businesses to identify potential customers, but as the internet giant attempts to increase privacy standards, businesses will find targeted advertising more difficult.

Last year, the automotive industry was brought to a standstill by COVID-19. This year, production and sales continue to be hampered, with the semiconductor shortage only complicating matters. Next year, a fresh hurdle will be introduced as Google clamps down on the use of third-party cookies. Born out of pandemic-generated necessity, the automotive industry is still getting to grips with e-commerce options. This upcoming shake-up will undoubtedly add an extra layer of complexity to how these businesses advertise and operate online.

Automotive advertising

Automotive content and e-commerce company Autovia, warn that the car retail industry has not yet woken up to the imminent challenges this creates. ‘We have been surprised at how little comment there has been in the automotive industry to date, considering that this is one of the biggest changes to hit the world of digital marketing for many years,’ said John Webb, managing director, automotive data, demand generation and commercial operations at Autovia.

COVID-19 effectively pushed an increasing number of car sales online as showrooms remained locked down. This means that when third-party cookies are pulled, dealers will be put at a disadvantage, and in particular, smaller companies that may not understand the potential impact of the change.

‘These changes will present real challenges, in particular for those businesses who do not enjoy the kind of scale that enables them to build new digital tools and methods to engage with customers,’ said Webb. ‘The fact is that the option of attracting highly engaged car buyers directly will be made more challenging by Google’s decision.’

Cars and cookies

A lot of marketing departments and dealer-promoting businesses currently use these lines of code to identify consumers who are in the market for a vehicle, allowing them to push targeted advertising. So, Autovia is urging dealers and manufacturers to start creating alternative approaches to reaching customers online.

‘Dealers, for example, should be asking their marketing partners and platforms how they plan to respond to the degradation of third-party cookies and what solutions they’re putting in place to accommodate these changes,’ Webb explained. Working with partners who have explicitly opted-in databases of in-market buyers will be key. This will look to replace the ‘follow-me’ practices of re-targeting.

This change might even spell an opportunity for some of the larger businesses capable of throwing their weight behind a new solution. ‘There is little doubt that some manufacturers and biggest dealer groups will already be honing their future strategies to make the best of this new world, seeing the bonus of an opportunity to get ahead of less nimble competitors when the door closes on most third-party cookies,’ Webb said.

The way the cookie crumbles

Simply put, cookies are usually small text files with ID tags that track user movements and preferences across a site. First-party cookies are stored on the domain being directly visited, allowing the website’s owners to collect analytics and data like language preferences. Meanwhile, third-party cookies are created by external sites and are used for cross-site tracking and advertising.

So, if Google plans to do away with what might be considered by some as a vital advertising tool, how will retailers attract potential customers? The internet giant introduced its ‘Privacy Sandbox’ initiative last year, which looks to both protect people online while providing companies with the tools to build a digital business.

A cornerstone of this initiative is the Federated Learning of Cohorts (FLoC), which provides businesses with a way to reach consumers with relevant ads and content. While this sounds a lot like third-party cookies, a fundamental distinction is that FLoC clusters large groups of people with similar interests and effectively shields individual privacy, according to Google.

Simulations built by the company to test this new system found that in terms of generating interest-based audiences, FLoC can provide an effective replacement for third-party cookies. ‘Our tests of FLoC to reach in-market and affinity Google Audiences show that advertisers can expect to see at least 95% of the conversions per dollar spent when compared to cookie-based advertising,’ said Chetna Bindra, group product manager, user trust and privacy. ‘The specific result depends on the strength of the clustering algorithm that FLoC uses and the type of audience being reached.’

Wider tech trend

Google’s decision follows a wider trend for greater internet privacy. In February, Global Witness commissioned a YouGov poll of over 2,000 social-media users in France and Germany about their attitudes to the personalisation of their online experience. A majority of respondents (57%) said they do not want to receive any personalised advertisements. Only 11% said that they were happy with their personal data being used to target them.

Apple recently updated its iPhone operating system to include a new tracking and transparency feature, which forces developers to give users a choice about how they are tracked across apps and websites. As consumers become more aware of how their data is collected, stored and used, automotive companies will need to ensure their practices also stand up to scrutiny.