The future of programmatic advertising in a cookieless world is one of the hottest topics for brands and marketers right now. And even though there are some disgruntled voices claiming the programmatic horizon is looking rather grim without the third-party cookies support, the majority sees it as a new chapter. A new chapter to a privacy-focused and brand-safe form of online advertising that helps bring brands and consumers together.
The digital marketing landscape has indeed changed a lot in the last decades, and online advertising is now facing a new era. So, what is the future of programmatic advertising going to be like in this new, cookieless world? Let’s find out.
The state of digital advertising in 2021 is looking good
The coronavirus pandemic hasn’t been easy for anyone and 2020 was indeed a challenging moment for the digital advertising industry, too. Still, despite the pandemic and major changes happening to third-party data tracking (that have really put a strain on the ad-tech world for a moment) programmatic came out of the turmoil in a pretty good and unshaken state — while also showing significant growth.
According to Statista, the global ad spend for programmatic advertising in 2020 reached an estimated 129 billion dollars, and is now predicted to exceed 150 billion dollars in 2021. As reported, such growth can be attributed to the rapidly increasing use of software and algorithms that help streamline and automate the ad buying and serving process, thanks to which programmatic has become “one of the most indispensable digital marketing tools worldwide”.
Also, according to IAB Europe and Attitudes to Programmatic Advertising Report 2020, we’re currently experiencing significant investment growth as programmatic budgets continue to increase. The percentage of advertisers who invest more than 41% of their display ads using programmatic solutions increased to 70% in 2020, from 55% recorded in 2019.
The remaining months of 2021 will probably build even more anticipation for the great third-party cookies phase-out from Chrome, but this should only be seen as means to forming new strategies and adapting to new opportunities brought by the privacy-oriented trends that will continue throughout 2022.
Overall, with new programmatic solutions emerging on the market every year, as well as brands and marketers increasingly recognizing the potential that lies with data-driven yet brand-safe solutions, the future is looking more than promising for the programmatic industry.
Speaking of the long-planned depreciation of third-party data tracking by all major browsers on the market, one thing is clear. The end of third-party cookies does not mean the end of user-targeted advertising.
What it means is that brands and marketers now find themselves in need of user-oriented solutions that can still deliver desired results, but at the same time meet newly introduced privacy regulations.
Companies like Apple, Google, and Facebook have naturally followed suit and thus responded with their own ways of enabling advertisers user-oriented ad targeting that doesn’t rely on third-party cookies. Because some of the proposed solutions haven’t been fully released to the ad-tech world just yet, as tech giants are constantly working on improving their post-cookies targeting systems, it’s hard to say which option is ultimately the best.
Still, the good news for advertisers who have heavily relied on third-party data tracking in the past, and would like to continue targeting users in a similar yet privacy-compliant way, is that there will be ways to secure that kind of supply. And from many possible options, Google’s Privacy Sandbox seems to be at the forefront of a cookieless targeting race.
Google Privacy Sandbox
The Privacy Sandbox initiative was announced in August 2019 and was first meant to be introduced in 2021. Due to a bigger scope of work needed for the project to fulfill its purpose, earlier this year Google has announced that they’ll be pushing the release date a year later — that is until 2023.
But why the delay and what actually is Google’s solution to third-party cookies depreciation?
The Privacy Sandbox by Google is a series of smaller projects and initiatives aiming to enable broad user targeting without third-party cookies or cross-site data targeting that could violate user privacy. What’s important is that the ideas come from other stakeholders in the ecosystem (the W3C group), not just the Chrome team alone. There are over 30 proposals that cover different scenarios, and Google developers are working on the key initiatives to deliver both user-friendly and advertiser-satisfactory solutions.
The two core elements include:
- Replacement solutions for cross-site tracking that don’t rely on third-party cookies.
- Removing third-party cookies from Chrome completely once new solutions are implemented.
FLoC (Federated Learning of Cohorts)
One of Google’s Privacy Sandbox initiatives is FLoC, a system of Federated Learning of Cohorst, aiming at creating a privacy-first mechanism for advertisers to target users based on collecting information regarding their interests rather than cross-browser data tracking.
The way FLoC is supposed to enable Chrome and other browsers in the ecosystem to do that without third-party cookie tracking is the following.
- From the advertiser’s perspective: advertisers should add the FLoC algorithm code to their websites, which will allow browsers to collect the cohort data that can be then shared with various ad-tech platforms. If such a platform learns that a specific website provides a specific segment of cohorts that record shared interests, adequate ads will be served to that cohort.
- From a user perspective: when a user enters various websites with the FLoC code added, their browser collects information about user interests. The FLoC algorithm then streamlines the interest data collected from various websites and browsers, and assigns interest cohorts to that user, without sharing other user or browsing data.
To better understand the differences between the FLEDGE and FLoC proposal, there’s yet another term that needs discussing — it’s TURTLEDOVE.
- TURTLEDOVE stands for Two Uncorrelated Requests, Then Locally-Executed Decision on Victory and is more of a conceptual proposal rather than a technical solution.
- FLEDGE on the other hand is the subsequent technical experiment based on the concept of TURTLEDOVE. Similar to FLoC, it also has to do with collecting interest cohort information from browsers using the FLEDGE API.
- FLoC vs. FLEDGE — for the first solution it’s the internet browsers that assigns the cohort to a user. While the second one gives such possibility to publishers and ad-tech platforms, also allowing them to define the events that make a user belong to a specific cohort. So, the two options are similar in terms of creating audience segments and cohort-targeting but differ on the cohort-determination level.
After introducing the FLoC initiative in 2021, Google faced considerable criticism. The privacy-centric approach to tracking was found to have substantial shortcomings, potentially exposing Chrome users to discriminatory targeting practices.
After pushing the project’s launch date to 2022 and then 2023, the FLoC idea has recently been killed and replaced with Topics API.
- In Topics API, each website that chooses to participate would be manually mapped to a topic (based only on domains, not subpages).
- Users would be assigned topics from a limited pool of options (provided by both IAB’s Content Taxonomy and Google’s own review) based on their browsing habits from the previous three weeks.
- Topics associated with a particular user would be shared with each website that user visits to help advertisers show more relevant ads without revealing the browsing history of a user.
Why first-party data are the future of programmatic advertising
As Google pushes the Privacy Sandbox release date forward, brands and marketers are not eager to just sit and wait. Many stakeholders don’t want to be associated with third-party data tracking already, others don’t want to invest in solutions that can soon become deprecated, while others are simply hesitant towards soon-to-be targeting mechanisms that are still quite vague and not fully implemented. So, what’s left?
The answer is first-party data, a brand-safe and privacy-friendly solution coming directly from users who voluntarily agree to share their data. And given third-party data seems so out-of-fashion in 2021, a new approach towards first-party data advertising has been adopted.
Possible solutions for brands to deliver ads without the use of third-party data tracking are:
- Waiting until Google’s Privacy Sandbox solution is released to the public.
- Creating their own first-party data collection base.
- Partnering with ad-tech companies offering to enable the creation of such a client base.
- Relying on contextual advertising solutions working on first-party data only.
- Partnering with ad-tech companies enabling both creations of first-party data client base and contextual advertising solutions for brand-safe and cookie-free advertising strategy.
Digital marketing is facing the dawn of a cookieless era. This means that brands and marketers need to focus on both — securing a steady streamline of first-party data or another reasonable solution to track users on a broad scale, as well as tapping into the cookieless advertising trends quickly emerging on the market.
Since no marketer wants to miss that train, here are our top 5 choices for digital marketing trends in a new, cookie-free world.
Programmatic advertising reigns supreme
As already reported, the prognoses are looking more than good for the programmatic industry in the upcoming year. With the global ad spend estimated to surpass 150 billion dollars in 2021, a 20% rise in marketers who claim to treat programmatic as one of their major advertising strategies, global efforts to establish new ways for advertisers to target their programmatic ads on a large scale without the use of third-party or cross-site data tracking, and even showing significant growth during and post-pandemic, there’s no doubt that programmatic ad serving will reign supreme in 2021 and upcoming years.
Programmatic brought in-house
Due to advertising budget cuts caused by the coronavirus pandemic threat, as well as the growing accessibility of programmatic solutions for both ad-tech savvy companies and brands that only recently became interested in automated ad buying, programmatic is now being brought in-house.
It does not mean that each brand is now focused on building their own programmatic platforms — it costs time, energy, talent, and money. But with new programmatic solutions available on the market, it’s much easier to manage the process in-house while partnering up with platforms that have the technology and experience in helping brands make the most of their solutions.
Growing investment in brand-safe solutions
As a result of the shift in bringing the online advertising strategy in-house rather than relying on agencies only, as well as new opportunities emerging on the market, more brands are eager to invest in their own programmatic solutions. Also, brands are eager to invest more thanks to budget savings generated thanks to cutting out the middleman. Another explanation is that due to the pandemic, programmatic turned out to be one of the most direct ways for brands to reach their customers. Hence, increased investments into what seemed an only viable option, and has since proven effective — even in the post-pandemic time.
First party-data over third-party targeting
Naturally, those in the programmatic industry who want to stay on top of their game have to undergo a major transformation, too. That’s because programmatic advertising in a new cookieless era cannot afford to rely on outdated targeting methods or ad formats that don’t guarantee brand satisfaction. If brands are now looking for new programmatic solutions to meet their customer demand, ad-tech platforms need to do the same.
With a proven track record of successful programmatic campaigns through most difficult times, more brands using programmatic in-house, growing investments, and user-oriented changes made globally, the emergence of new programmatic solutions (especially at a dawn of a new cookieless era in advertising) is a natural consequence. Ad-tech platforms are now in for a treat to tap into a whole new demand market, and brands can’t wait for what the tech platforms have in store.
Contextual advertising is back even though it has never left
Contextual advertising can be described as one of the oldest forms of advertising in general — whether it’s print or digital. And even though it has significantly evolved and transformed into a fully automated process of online media buying and selling, contextual advertising is now back to save the cookie-less world.
In the past years, cross-site tracking and third-party cookie targeting became extremely popular methods of identifying specific users online. Because of that, contextual advertising was moved to the sidelines. But with the recent call for increased user privacy and better transparency in data-sharing practices, major browsers needed to take actions to limit the use of third-party-data tracking. The shift in user privacy has now given way to the advent of contextual targeting — in a new, updated form.
Contextual advertising can be now seen as a user-friendly and brand-safe way to connect with users based on their choice — instead of breaching user privacy and trust — becoming one of the easiest and most easily accessible alternatives to online advertising in a post-cookie world as reported by Forbes.
It doesn’t involve third-party cookies and is based solely on users’ choice to engage with a specific type of content. The evolved technology helps streamline the most adequate ad matching as well as allows for effective and efficient content categorization. But most importantly, it offers a continued and undisturbed supply of revenue for both advertisers and publishers, as well as a brand-safe and privacy-oriented form of advertising for brands and marketers.
Brands that use programmatic solutions to up their game
With all the available answers to the problem we’re yet about to face — as third-party data tracking is still possible today, but soon won’t be — brands and marketers are now testing what strategy works best for their needs. And by brands, we mean a variety of products from cosmetics to gin brands.
According to the Wall Street Journal, Google’s plans to restrict third-party data targeting prompted big brands to revamp their data strategies. This time the brand in question was Bacardi, testing their programmatic alternatives for Bombay Sapphire — one of the most popular gins on the market. After conducting test campaigns focused on targeting anonymized users, the WSJ reported that the brand saw an increase in CTR and cost efficiency while refraining from third-party data usage:
Bacardi says those and other encouraging signs give it confidence in its ability to build its brand and sell products even once it no longer has access to individual ad tracking and targeting technology that Google plans to move against next year.
But not all brands are happy to follow the suit — some try yet alternative methods for user targeting and try to outsmart tech-giants in their customer data collection practices as reported by the Wall Street Journal in their article on sidestepping Apple’s privacy rules.
Yet for brands in need of cookieless solutions that don’t cause turmoil, we recommend following NewProgrammatic case studies that prove programmatic advertising can be both effective and brand-safe.
The rapid evolution of data processing and proliferation of automated ad serving allowed for programmatic to shift its position from means only accessible to those with a strong technical background to a real game-changer available not only for media-buying agencies and advertisers, but also brands who now bring programmatic in-house.
The digital landscape is constantly changing and tech platforms are now making everything they can to answer the demand for brand-safe and cookieless advertising that will appeal to both users and marketers.
That’s why the best piece of advice anyone in the programmatic industry can get right now is to look for multiple privacy-oriented solutions to then diversify their digital strategy using both tried and tested, as well as newly emerged strategies to serve relevant ads that users want to receive.