Is the 'death of the cookie' a problem or opportunity?

The decades-old technology that tracks website visitors across the internet is dissipating.

M&T Bank in Buffalo, New York, has had its eye on this trend, the so-called "death of the cookie," for several years. Third-party cookies are files that website owners place on users' devices to follow their activity on other sites, typically for the purposes of targeted advertising. This practice has fallen out of favor as concerns about online privacy rise. Apple Safari and Mozilla Firefox have blocked third-party cookies for years, while Google Chrome has hinted it would do the same in Chrome since 2020. In December, it announced it would fully phase out third-party cookies by the end of 2024.

The $208 billion-asset M&T started piloting software from customer experience firm ActionIQ in 2022 that favored first-party data over third-party cookies to redesign its digital-media campaigns.

As state and federal governments enact more privacy legislation, "it was important to see the way the winds were blowing and [make changes] earlier rather than later," Chris O'Brien, senior product owner of marketing and customer experience technology at M&T, said in a recent interview. "Cookie deprecation encourages advertisers to prioritize building direct relationships with their audience. For us, this is an opportunity to lean into privacy and build even more trust with our customers."

Banks will have to rewire their digital marketing strategies. But experts argue this is an opportunity more than it is a problem.

"You would never find a lazy marketer but we do like to be complacent," said RJ Licata, senior director of marketing at marketing technology company Terakeet. "The third-party cookie has been such a steady stream of information that it's easier for us to set it and forget it when it comes to advertising."

Third-party cookies have been problematic for a while now, he says. They are vulnerable to ad blockers; web users' tendencies to ignore ads, or "banner blindness"; "click fraud," or the practice of competitors clicking on ads with no intention of follow-through; and people accidentally tapping on ads when scrolling on their phones.

In the end, "it tends to provide both diminishing returns and potentially bad data as far as how successful the advertising is," said Licata.

Moreover, banks are well positioned in a world without third-party cookies, because of their trove of first-party data, especially those with credit card programs. 

"You know who is spending on what. You can figure out by category the purchasing behavior of your clients," said Mark Kelley, managing director at Stifel. "If you anonymize it by region or demographic you have a sense for who is in the market for your products and what they are using your products for."

The advent of privacy-focused cookie replacements, of which Kelley estimates there are more than 50 in the market or in beta, mean "at the end of the day, not much is going to change," he said.

M&T continues to work with ActionIQ to personalize the customer experience using first-party data. One of its earliest use cases was suppression, or determining what types of messages should not reach customers. (For instance, that could mean not showing a customer an ad for an M&T checking account shortly after they've already signed up for a checking account.) It is refining customer journeys, which involves tying together sets of data to ensure that when customers have certain experiences, such as opening an account online, they receive relevant communications and suggestions based on their interests and their actions thus far.

M&T is also building what it calls a "global privacy and preference center" that will let customers make nuanced decisions about how and when the bank uses their data.

Discover Financial Services in Riverwoods, Illinois, is trying another tactic. A few years ago, the $152 billion-asset bank started contemplating the value of third-party cookies.

In other words, "Do we want to be investing in this technology as our primary way of measuring ads and performance?" said Matt Lattman, senior vice-president of card acquisition marketing. "It's an imperfect technology that has served its useful life."

The main way Discover now maximizes its advertising spend is by partnering with a small set of online publishers or media networks where people have created logins and given consent to how their data is being used. This lets Discover better identify audiences that will match well with its products.

"I want to reduce interactions where someone is clicking on an ad and gets excited, but we don't have anything to offer them," said Lattman. "We've put a bad taste in someone's mouth about our brand."

Ally Financial in Detroit, which has $186 billion of assets, has built an internal "digital agency," rather than relying on outside agencies, to "control our own destiny in a non-cookie world," said Kevin Howard, executive director of digital strategy and growth marketing, via email. It is also expanding its usage of first-party data and testing multiple non-cookie targeting products.

First National Bank of Omaha, or FNBO, in Omaha, Nebraska, is proactively diversifying its advertising methods.

"As we have been planning for a cookieless future, we have been investing in our first-party data and the technology to identify and respond to the evolving needs of our customer," Kimberley Kaschke, managing director of enterprise marketing strategy and planning at the $31 billion-asset bank, said via email.

Licata feels there is an opportunity for marketers to "take a deep breath, recalibrate and bring back creative marketing instead of relying so much on data and analytics," he said.

In the case of banks, that means underpinning the entire "customer journey," rather than serving customers only at the point of transaction, he said. For instance, they could publish the kind of personal finance advice that more often lives on sites such as NerdWallet and Bankrate, analyzing consumer search behavior on Google to see what is top of mind as well as investing more in first-party data collection.

"Google is the world's most honest focus group," he said.

Community banks are unlikely to feel a big impact, because they generally did not rely on third-party cookies in the first place, said Lincoln Parks, chief digital officer of marketing agency Lincoln James. They tended more toward community-based tactics.

"Marketers at community banks have so much on their plate," he said. "For the most part they don't have those individuals to dig deep on the technical side."

But they too should lean in to first-party data and a privacy mindset. Parks recommends that banks notify visitors to the website that the bank will be collecting certain data points; software such as CookieScript can help articulate this. They should deploy tracking tools such as Google Analytics to monitor how customers are interacting with their websites and apps; gather contact information by having customers fill out online forms with their details to receive more information about, say, a mortgage or a home equity line of credit; and track calls to the bank using software such as CallRail.

This will help the bank accrue data about customers or prospects on the back end, tag or categorize them into buckets based on their interests and ensure marketing campaigns are more personalized. Customer relationship management tools such as Salesforce Customer 360 can build a unified view of one customer and help analyze what they are interested in.

"Community banks have been using website forms and tracking phone numbers, but not in a process," said Parks. "It's where a lot of community banks drop the ball."