Closed-Loop Measurement for a Cookieless World

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The marketing landscape is undergoing a significant transition with the deprecation of the third-party cookie.

For marketers, those cookies have been the backbone of digital advertising for years: fundamental to tracking and targeting, enabling unprecedented accuracy in the measurement of KPIs and attribution.

First-party cookies are created and controlled by the website you are visiting, and they are used to store information on your shopping basket or site preferences on the website you are browsing.

Third-party cookies, on the other hand, are created and controlled by a third-party, such as a social media company or ad network, and they are used to store information across other websites (not just the one you are browsing) and can be used to deliver targeted advertising and measurement of those adverts.

A Cookieless World and Its Impact on Marketing Measurement

The "imminent" death of the cookie has been a drawn-out process, with multiple deadlines coming and going, including Safari's various iterations of ITP and Google Chrome's impending deprecation of third-party cookies.

In a world without third-party cookies, the golden age of measuring the precise effect of digital advertising campaigns is under threat, presenting marketers with a significant challenge.

Fortunately, there is also good news.

One opportunity for marketers to combat the impending challenge is closed-loop measurement: the ability to use first-party data sources to connect marketing touchpoints to business results to enable robust and reliable measurement.

What Is Closed-Loop Measurement?

Closed-loop measurement is the method of linking marketing touchpoints to specific business results, such as a sale or revenue-generating activity. Though not a new method of measurement it is vastly improved in the modern era of marketing technology and automated data processing at scale.

Closed-loop measurement involves collecting first-party data from both online and offline to connect the dots of a customer's journey. Data sources include web analytics, customer relationship management systems (CRM), online sales data, and in-store sale (POS) data.

Here is an example of a simple journey as the customer interacts with a retail business and how the touchpoints can be measured to enable closed-loop attribution:

An email campaign to lapsed customers is sent to shoppers who haven't purchased for a month.
A customer receives the email and clicks through to the website.
The customer browses some product pages and adds a product to their basket.
The customer completes the purchase.

All those touchpoints can be measured with first-party data points from the email CRM tool, website analytics, and sales data... giving the business a robust dataset from which to measure the effectiveness of the email campaign.

Benefits of Closed-Loop Measurement

The benefits of closed-loop measurement extend beyond replacing third-party cookies.

Connecting the dots of a customer's journey among different touchpoints and channels enables a much more holistic view of the path taken than third-party reporting from individual walled garden technology. As a result, when using closed-loop measurement, marketers can make more informed decisions about marketing strategy and campaign optimizations.

Some other advantages:

Media and channel mix optimization. By measuring the touchpoints across marketing channels rather than channels individually, it is possible to identify the most effective channels in the system and optimize the channel and mix with greater robustness to maximize ROI.
Deeper customer insights. A holistic view of the full customer journey provided by closed loop measurement enables a more granular view of customer behaviors. Such insights inform a more personalized marketing strategy.
Cross-channel collaboration. Touchpoints across marketing are connected to business results, ensuring that channels are transparent with results and not siloed.

Another—less tangible, but long-term—advantage is that closed-loop measurement has a greater dependency on high-quality first-party data, ensuring that the business will benefit from improved datasets when building a system of robust data collection from first-party sources.

First-Party Data Is Critical to Implementing Closed-Loop Measurement

The requirement of first-party data for effective closed-loop measurement places a challenge on implementing a robust framework of data collection to ensure clean, reliable measurement.

The data may come from many, disparate sources, so multiple departments must come together to collaborate on integrating these sources: creating and passing common IDs where possible, resolving identities from multiple sources to a common ID, and keeping and processing metadata.

Implementing a closed-loop measurement system is an iterative process in an effort to keep up with a changing ecosystem both in the market and on the client side.

Tools and Technology Required

A combination of tools (many with three-letter acronyms) can help support the implementation of closed-loop measurement. These tools help marketers collect, clean, and analyze data to create actionable insights:

Website analytics tools. This is the most common tool companies use. However, with closed-loop measurement, it becomes more important to ensure that a customer's journey across the website is tracked accurately to provide a clean and well-labeled dataset.
Customer data platform (CDP). CDPs provide a unified view of the customer across all touchpoints, eliminating the need for businesses to stitch together data from disparate sources. A CDP can ensure that multiple channels along a customer journey can be brought together for the holistic view required to implement closed-loop measurement.
Marketing automation platforms (MAP). MAPs enable the automation of marketing processes, such as lapsed email campaigns or cart/basket reminders, and track the resulting touchpoints.
Customer relationship management (CRM) tool. CRMs enable a business to track their interactions with customers and keep a central record of customer information.

Those tools help to form that first-party view of a customer that is critical to the success of a closed-loop measurement system.

Mapping Out Guidelines for Success

The end of third-party cookies poses a substantial challenge for marketers and businesses alike, and examples are already apparent because changes to both Apple's Safari and Google's Chrome browsers are causing gaps in measurement and tracking from third-party tools.

Closed-looped measurement is not a new concept, but it has become more relevant than ever in the cookieless era. It will continue to evolve as technology improves, so starting with these guidelines will set marketers on a path for success: