With new regulations such as CCPA and GDPR and the demise of third-party cookies, the digital identity of a consumer is being challenged. There are growing challenges around digital marketing tactics centered on audience profiling, targeting, and user attribution.
The new variations of targeting offered by the industry are either replacements of cookie identifiers or solutions based on first-party data, such as contextual targeting. These new pathways are likely to change the way brands interact with consumers through ads and also reshape overall customer experiences.
Let’s review these ad tech milestones, what ramifications they bring, and how the ad behaviour might change if the market turns towards contextual targeting.
What are third-party cookies?
Basically, third-party cookies are small individual files that are attached to your browser and follow you around the web. For example, as a user looks for certain treadmill models, their browser will be marked with a cookie. Ads for these particular items will start popping up on other websites, sometimes in an invasive way.
First-party cookies are read and written on the same domain; they are used to create a better user experience by remembering login information, abandoned items in the basket, visited pages, etc. On the other hand, third-party cookies are the same files but accessed from other domains.
In the above-mentioned situation when a user is retargeted by treadmill ads, a cookie is written on the advertiser’s website but accessed on other sites during ad serving, usually, by SSP scripts embedded in the publisher website. Many analytics systems also use third-party cookies for user attribution when measuring website performance.
For nearly a decade until now, with third-party cookies as identifiers, audiences could have been profiled and sold to advertisers through programmatic DSPs and trading desks. Apparently, this use also raised privacy concerns around cookie technology as advertising specialists could track user activity from domain to domain.
The future of addressability online
For a few years now, users have become more aware of their privacy on the internet and are getting more involved in the process of handling their personal data. Therefore, users and industry authorities that act on their behalf insisted on more accountability from websites and ad tech platforms. The ultimate objective here is to keep those agents away from profiling users based on their past browsing behaviours.
Responding to this demand, governments in Europe, USA, and other jurisdictions are enforcing more stringent requirements for collecting and processing user data. GDPR and CCPA are only the first steps towards user protection on the Internet. These measures decreed that cookies were personal data and put restrictions on the use of third-party cookies.
Pushed by regulators as well as public requests, big tech companies put restrictions on digital identifiers and device IDs. Third-party cookies are already gone in Safari and Firefox, while Google announced their demise in Chrome by 2023. Apple also restricted the use of IDFA on iOS devices.
Also, browsers are restricting other browser signals such as fingerprinting, which can be used for probabilistic user identification. This type of identification uses multiple data points such as IP, browser fonts, language, etc. to assume a visitor is the same person who performed certain actions before. So far, in the nearest future, there will remain no real way to identify users on the web without their explicit permission.
Why we should feel optimistic about it
Even given all the above, there remain several possible ways to bypass these challenges, from the industry perspective:
- First-party identity plans
- Cross-industry identity plans
- Contextual targeting
When looking for use cases of first-party identity plans, consider large publishing groups like News Corp, The Washington Post, the Guardian, Insider Inc., and TI Media.
These publishers tag their readers with unique identifiers, track user reading behaviour, and store this information anonymously in the centralised customer data platforms. Advertisers can then target the right audience based on the gathered insights around readers’ habits and preferences.
Cross-industry identity plans are another alternative to third-party cookies. In this case, publishers and platforms create standards to solve user identity challenges and combine their first-party data so that advertisers can transact on one shared ID across their inventories. While this option is viable even for smaller publishers, its long-term application is limited by regulatory data collection rules.
By building new industry-wide identity solutions, market players can fall into making the same mistake as with the third-party cookies; failing to remain on the side of consumers. To abide by privacy laws and user expectations, websites and apps will need to implement a unified consent framework with more explicit opt-in for users. Still, there is a risk that most users will choose to disallow their tracking.
The primary reason behind the demise of third-party cookies is growing concern from consumers on how and why they are targeted on the web. By shifting back to first-party data and contextual targeting, advertisers give users more choice and transparency.
From the consumer perspective, contextual ads are a preferable way of ad targeting. A few recent IAS studies confirm that 81% of UK users prefer ads that match the surrounding content of the page.
Better regulation and privacy protection will build trust and enable a better advertising experience. For example, by knowing that it’s not targeted at their individual identity and that rather the advertising message is contextual, users are more likely to share it on social media.
Contextual targeting as a solution
Intuitively, the environment where ads are seen has a strong effect on how they are perceived. This assumption is confirmed by numerous recent studies. A survey conducted by Pinterest confirmed that 6 in 10 US adults are more likely to remember and click on the ads seen next to positive, inspiring content, while the negative context drains advertisers’ KPIs.
Neuroscience also confirms that contextually relevant ads inspire greater purchase intent. In the study, conducted in partnership with the neuroanalytics firm SPARK Neuro, it was found that contextual ads generate 43% more neural engagement and 2.2X more memorable than contextually irrelevant ads.
So far, context can be a suitable replacement for cookie-based targeting and help advertisers reach expected clicks and conversions. However, it also shifts the focus towards building suitable and contextually relevant messages for consumers. Don’t think about context just as a tool to make targeting decisions; this solution can also make advertising tactics smarter.
Contextual customer journeys
By definition, a customer journey consists of the prospect’s touchpoints with the brand on their way to becoming a customer. It comprises four key stages: Awareness, Consideration, Purchase, and Loyalty. At each stage, brands need to engage with customers in a meaningful and personalised way.
Numerous studies confirm that irrelevant, intrusive ads disengage consumers. With contextual targeting, advertisers can get much closer to the exact moments of user purchase intentions instead of focusing on their browser history. Instead of following users around the Internet and bombarding them with products they have seen in the past, marketers will focus on the right environments that get users to see and interact with ads for the first time.
However, how can context shape and strengthen the journey experience? Well, treadmill ads that follow you rely on the assumption that you still need this product and often use the same photos as on the website to help spark a memory. If the brand wants to sell things consumers want in this particular moment when they get this idea for the first time, their ads should become more creative and shareable.
Cookie-based advertising commoditises placements and audiences, whereas relying on the context, advertisers should be able to align brand messages with the content visitors are actively consuming. For consumers, that means more diversity in ads they see, better experiences, and new strategic approaches as marketers become more focused on driving higher engagement rather than collecting audience data.
With the context, not only the first touchpoints on the customer journey can be better, but also future interactions as well. For awareness and consideration stages, advertisers can specifically target web pages more relevant to the decision process. That means that the ads are placed next to the content produced for those actively looking for a solution or more familiar with the subject matter, e.g. articles about treadmill workouts.
The power of contextual AI
Today, contextual technology has come quite far in allowing ad tech platforms and brands to find and transact on the best interaction points at scale. Machine Learning and Natural Language Processing solutions analyse the context of individual pages while applying an extensively detailed categorisation. To meet the growing advertisers’ demand and solve the cookieless targeting problem, large ad tech vendors have already launched their first takes on contextual targeting.
The early adopters are GumGum, Oracle Advertising, MGID, Verizon Media, and other big companies. Necessity is the mother of innovation, therefore the ultimate goal of these new up-and-coming solutions is to enable advertisers to reach their marketing objectives and targets without cookies.
To build a suitable replacement for third-party cookies, Contextual AI should make the targeting precise and efficient by relating contexts to behaviours. This problem can be solved by assessing web content based on many different aspects and dealing with the degree of relevance.
For example, if you promote expensive jewelry, you can target pages that talk only about jewelry accessories, but this will limit your scale. The recent developments in contextual intelligence will allow you to target relevant content categories, such as fashion, travel, etc., and adjust bids taking into account the actual performance of web pages during the campaign.
Contextual AI is 100% transparent and privacy-friendly because the targeting decisions are made based on what’s on the page for any user. The recent solutions launched by big players distinguish meaningful content assets of the web page and evaluate them based on IAB Content Taxonomy 2.2 or another categorisation in use. The advertising engines can make targeting decisions instantly after assessing content based on keywords, tone of voice, or negative or positive sentiment.
As contextual AI can look at not only context but also sentiment, it can help advertisers retain full control over ad placements. This way, consumers will receive advertising messages in 100% brand-safe environments.
Flexibility of some advanced contextual solutions also allows training the classification to the advertiser’s specific needs. Thus, marketers will become more aware of the user touchpoints and capable of using the available first-party data to customise user interactions with ads.
So far, with contextual AI, advertisers have the necessary optimisation capabilities to reach the set KPIs, manage brand suitability of advertising placements, and orchestrate the customer journeys. Adopting this approach, messages can be put in front of readers when they are ready to interact with the advertising content. The last consideration is particularly important for B2B ads and some consumer products. For example, B2B targeting is far more effective while users are consuming business content at work. The users will be more likely to turn on ad blindness and ignore the same ads if they see them when searching for vacation tours.
Privacy regulations and big tech companies making changes to their browsers have paved the way for transparency and privacy in the digital ecosystem. There is a real shift towards first-party data, and mainly contextual data, which can be used to target prospects at the right time along their customer journey and even effectively orchestrate their experiences.
Knowing where customers are in their journeys and what content they are consuming can help brands finetune their initial messages and adjust the further series of interactions. This new contextual approach will allow advertisers to ensure 100% brand safety and move away from commoditised audience trading and start testing new creative approaches.
Originally published Aug 11, 2021, updated Jan 16, 2023