Cookieless advertising is threatening the reach of digital advertising – how can the ad tech industry respond?
Digital advertising has seen stratospheric growth in the approximately 26 years of its existence. In the past three years alone, for example, total global digital ad spend has increased nearly 54%, from $283.35 billion in 2018 to a projected $435.83 in 2021.
Much of the success of digital adverting industry comes from its reach: thanks to third party tracking cookies and Mobile Device IDs (MAIDs) like Apple’s ID for Advertisers (IDFA), brands can find their perfect audiences wherever they are on the internet and programmatically serve highly tailored messages at just the right time. Now, however, we are entering a new age of cookieless advertising, and that’s a real threat to the growth of the digital advertising industry.
How is cookieless advertising impacting the ad tech industry?
Without the full availability of data from cookies and Apple’s IDFA, digital advertising loses its reach. It’s like flicking a switch and turning the lights off on the internet. There will still be occasional bright spots, where walled gardens like Facebook, Amazon and Google use their own first party data to identify audiences, but the vast majority of the anonymous web will remain in the dark; unknown users surfing from site to site who may or may not be relevant to a brand’s marketing efforts
The loss of cookies and IDFAs is well publicised and understandable. The idea of tracking users on the web now seems outrageous, and even if it weren’t for privacy regulations like the General Data Protection Regulation, the California Consumer Privacy Act and other emerging privacy regulations around the world public sentiment would have nudged browser companies and OS operators to act.
That action is decisive: already most browser companies restrict third-party cookies and the one that matters most – Google, which accounts for around 65% of internet searches through its Chrome browser – is looking to ban third party cookies across its browsers and advertising stack by 2023. In the world of mobile, Apple recently changed its IDFA model from opt-out to opt-in, decimating uptake in the process. Alternatives to cookies, such as device fingerprinting, are also falling out of favour due to similar concerns over privacy.
How can you adapt to cookieless advertising to stop a decline?
The concern for the adtech industry and publishers that sell digital advertising inventory is that cookieless advertising will diminish what made digital advertising special: audience reach. Without reach to known audiences, the internet becomes no better than broadcast or print advertising where “pay and spray” approaches favour brands with the biggest budgets and those willing to take a hit on their Return On Ad Spend.
It goes without saying, however, that the adtech ecosystem isn’t going to take all this lying down. While third party cookies were instrumental in the growth of the digital advertising industry, cookies themselves would not have arisen without another important tool: innovation. Already, the industry is experimenting with new solutions to find a way to increase reach in a cookieless world. One of the most promising is telco-verified IDs.
These identifiers are so exciting because they are capable of once again “lighting up” the entire web for advertisers, but in a way that fully respects the privacy of netizens. Take Novatiq’s own Zenith ID and Hyper ID as a case in point.
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Zenith ID verifies a publisher’s or brand’s first party cookie against telco network intelligence without the use of Personally Identifiable Information. Only the pseudonymised ID is transacted, and the verification happens in the telco-network, which is a highly secure environment. Using this approach, publishers and brands can verify users across devices and create unified profiles, regardless of whether the user is authenticated or not, effectively unlocking ID verification for the anonymous web. This video explains more how the Zenith ID works.
Meanwhile the Hyper ID is used to reach verified audiences in real-time. The Hyper ID is generated in the publisher ad request and verified by the telco. From there, Novatiq’s platform links the requested audience segments to the ID – filtered to send specific responses to each buy-side platform. As a user level ID for audience delivery, Hyper ID is only valid for a single transaction. Once it has fulfilled its purpose, the ID disappears leaving absolutely no traces behind.
Reaching audiences at scale in a cookieless world
Far from sounding the death knell of audience reach online, cookieless advertising merely represents a move from problematic, surveillance-centric approaches to advertising, to a better model where the right ads can be served to the right audiences at scale in a privacy-first manner. In any fast-growing industry change is inevitable as new facts come to life, perceptions change and regulators catch up. This is the process that digital advertising is currently going through. It will emerge stronger as a result.
