Last Updated on March 14, 2022 by James Ewen
It seems that you can’t go anywhere in the world of online advertising at the moment without the conversation moving onto the role of advertising cookies, and what the future holds.
With the implementation of GDPR last year, the California Consumer Privacy Act coming into play in 2020, the cookie has come under increasing pressure.
Combine this with Apple’s Intelligent Tracking Prevention and the whispers that Google is also looking to block third-party cookies, and you can understand why everyone in the space is a little worried about what the future holds for the cookie.
We’re going to look at this future, how the cookie works, and how marketers and advertisers can adjust for any upcoming changes in how the advertising industry uses web cookies.
What are advertising cookies? How do cookies work for advertising?
First of all, what role do cookies play in the world of advertising?
Well, cookies are small code snippets that store information related to how the user behaves on the web. This cookie is stored on the user’s web browser and can be used accessed to store and change data related to the user.
Cookies can store a wide range of information, such as the pages you have visited and for how long.
We can divide these further types:
First-party cookies are created by the publisher or website owner when a visitor is on their site. Cookies enable website visitor tracking which helps a business understand which user is returning and ensure that the page content is right for that user. Often, this is something like language or another element that helps with the user experience.
These cookies also include analytics, such as Google Analytics, which used cookies to measure how users use the site.
Third-party cookies are used in the digital advertising ecosystem for retargeting and for behavioral-based targeting. Adding these types of cookies to pages allows advertisers to understand how users behave across the web. Using these, they can build a profile that can be selected to target with ads that are more personalized to each user.
What are cookies used for?
Advertising cookies can be used for analytics and for managing the user experience. But we are interested in the role that they have in the advertising ecosystem.
Here cookies are used mainly to retarget users based on which site and which pages they have visited. What started as a simple way to deliver products to users who had already seen them has now developed into sophisticated methods to target users that have previously visited a specific page or product.
The other side of the advertising cookie is to build audiences based on profiles. As a user visits a site, this information is used to build a profile for that user. This profile contains information such as age, gender, and interests. These profiles allow marketers to build and create new audiences that are relevant for their product or proposition.
The most significant change to the advertising industry in the last few years has been the drive for transparency and user privacy.
Privacy regulators have introduced legislation that limits how advertising cookies can be used to collect user data. These have created a massive issue for the advertising ecosystem, which relies heavily on third-party cookies to build profiles and target audiences based on behavior.
This is because programmatic advertising relies on these third-party cookies as the basis for user-level targeting and attribution. Without this process, marketers can’t target users with more personalized ads and understand when these ads lead to conversions.
As well as this, the people who bring the internet to users have also started to take a tough stance on the issue. At the time of writing, Apple has already announced an anti-tracking update to its native browsers, which blocks the use of third-party cookies. Firefox has implemented a similar policy, and there are reports that Google, who’s browser user base makes up over 60% of web usage, is looking at a similar process.
Another implication for advertisers is that the world has become more mobile-first since the invention of the web cookie. Users are using apps and mobile solutions much more instead of sitting behind a computer.
With all this, it makes a little more sense that advertisers are worried about how these changes will impact their business. But it’s not all doom and gloom – we have some examples of how advertisers can still deliver personalized ads and retargeting campaigns that work.
Focus on people and context
Instead of looking at the type of consumer and using this to build audiences, advertisers can focus on context.
Rather than focus on the user, placing greater emphasis on where the user is can be an effective way to target audiences. For example, using keywords to gauge purchase intent. Or using a user’s real-world location or environmental factors to understand factors beyond the user that make them ideal for targeted advertising.
Focus on first-party data and reliable first-party providers
First-party data will become an even more valuable currency for targeting users. Solutions that can combine first-party insights and compliance with privacy regulations will be invaluable for advertisers.
These datasets can help to target consumers reliably and with consent from the end-user. For example, anonymized first-party mobile location can be used to retarget users that have visited a physical store.
Wait for a persistent identifier
A persistent identifier is a solution that is commonly suggested as the ecosystem moves away from the cookie. Using this form of identifier, that sits with the consumer and requires explicit compliance with privacy regulations could be a solution.
The problem here is getting this to exist in one form, that’s standardized and that everyone can agree upon. Some areas of the advertising supply chain have introduced this already – but these don’t follow the same standards, making it difficult for advertisers.
Look at other channels
Advertisers will begin to look at channels that don’t require third-party advertising cookies. These will include traditional channels such as email, TV, and app-based ads.
These systems allow advertisers to use a persistent identifier for personalized advertising and marketing.
Marketers and advertisers will need to think about how they can focus on people based personalization in a world where the advertising cookie no longer exists. First-party data or reliable first-party data providers will become a vital source of behavioral data. Using alternative behavioral information, such as location, is a great way to deliver retargeting and personalization at scale.
Mobile ad IDs are currently universal and tracking identity across the moble infrastructure is much simple than the web. The role of advertising cookies is changing and quickly. People-based advertising and first-party data could well be the solution that the industry is looking for.
James is the head of marketing at Tamoco