But there came a shift in digital marketing when browsers started introducing more user-oriented privacy settings. Third-party cookies became the villain of the story and digital advertising started developing in a completely different direction. 

In 2022, we are facing a cookieless future of advertising. Here is what digital marketers can expect from 2022 and the following years.

The death of device ID

Device ID has been the backbone of digital advertising for years. After all, the majority of the population uses mobile devices, and most hold onto them at all times. There was never a better way to gather information about a person’s habits, likes, and dislikes. 

In 2016, Forbes reported that people didn’t mind exchanging privacy for rewards. Sharing some of our data with a company in exchange for discounts and reward points seemed like a good idea at the time. 

In 2022, that’s no longer the case. Consumers want a say in how their personal data is used and additional rewards are rarely considered a fair trade-off. In the past, advertisers relied heavily on device identifiers to track browsing habits, purchases, and downloads. But that will have to change after the results of Apple’s decision to offer users a choice. From iOS 14.5 up users have to opt-in (rather than opt-out) to be tracked by every single app they have installed on their devices. As it turns out, the monthly opt-in rate has not exceeded 25%.

Since then, there’s been a shift in advertiser spending towards Android devices. Losing granular data has pushed many marketers to look for other options. However, as stated in one of Google’s policy updates, from April 2022, regarding all Android phones, tablets, and Android TV:

“[…] when a user opts out of interest-based advertising or ads personalization, the advertising identifier will not be available. You will receive a string of zeros in place of the identifier.”

Consequently, device ID might not be the most reliable identifier going forward.

The renaissance of contextual targeting

Behavioral data is steadily becoming harder to obtain. Because of growing restrictions and expanding privacy control for users, the data supply chain is breaking down. So how can advertisers make sure that ads are reaching the desired audience?

There are multiple strategies for navigating the cookieless, privacy-oriented industry. But one of them has a clear advantage in terms of durability. That’s contextual targeting. 

According to Statista, 68% of marketers in the United States are familiar with contextual advertising. This is, perhaps, the most native form of advertising, which focuses on matching ads with the theme of what’s currently at hand, rather than browsing history and habits. A recent study also suggests that contextually matched ads are easier to remember and are viewed as an integral part of the reading experience.

“Endemically matched ads, or those that align with and match the surrounding content based on vertical (e.g. auto ad near auto content), drove a 23% lift in activation within the part of the brain responsible for memory of practical details, which includes key messages, calls to action, and branding elements.“

What’s more, while browsing history can be wrong (as is in the case of shared devices or ads for a product appearing long after the product has been purchased), placing ads in the relevant context ensures that the reader is looking at an ad of something they’re actively learning about.

While relying on data, and especially third-party cookie data, used to be considered the most efficient method of targeting, it’s always been unclear whether it pays off. In 2019, WSJ reported that “publishers only get about 4% more revenue for an ad impression that has a cookie enabled than for one that doesn’t.” 

The price they’re willing to pay, however, is disproportionate. 

User experience comes first

Cookies are going away because consumers were fed up with them. Digital advertising went to great lengths to serve as well-targeted ads as possible. Many users began to feel watched and even listened to. 

So how can the advertising market change to accommodate the needs of the consumers?

Apart from the above-mentioned solution – contextual advertising, there are further steps that need to be taken to ensure a good consumer experience. People hate to be interrupted. They find it uncomfortable to be followed, and they prefer shopping in apps to websites. 

According to a study conducted in 2020, 43% of respondents are not comfortable with sharing information to receive more relevant ads and 35% would like to dictate data collection preferences. 

It has been found that consumers use emotions rather than information in evaluating a brand. It is likeability that drives purchase decisions, not legitimacy, information, and claimed superiority of the product. Hence, the future of advertising will focus on creativity and unobtrusiveness. Autoplaying video ads and audio ads on music streaming services are considered to be annoying by over 50% of respondents. These are not the recommended strategy for 2022.

Advertising and seamless experience can go hand in hand. For example, choosing in-app mobile advertising and direct partnerships should provide a better result than interstitial advertising. What’s more, in-game advertising is yet another option to display ads in a non-disruptive way, possibly in a contextually relevant environment. On the other hand, research and case studies were the most trusted forms of advertising.

Brand safety as an indispensable part of digital advertising

Brand safety is an existing issue that gets increasing attention due to arising social conflicts and issues. In 2017, there was a series of incidents where ads were displayed next to offensive content on the YouTube platform. It resulted in many advertisers moving their campaigns to other advertising platforms. 

As a part of a smooth user experience, displaying adverts in an environment that creates negative associations is something every advertiser is actively trying to avoid. And while most advertising platforms are doing their best to adhere to brand safety standards, the advertising dollars of big brands will flow towards the most brand-safe options. And so should yours. 

Keeping online ads in a safe and suitable space can be achieved in a variety of ways. 

• Whitelisting and blacklisting keywords in contextual advertising allows brands to narrow down the context in which the ads appear. Companies can not only block keywords with intrinsically negative connotations, but also those that don’t match the theme of the brand. 
• Private deals and buying directly from a publisher is a strategy that allows for complete control over the ad space and its context. In that case, the quality of the ad space depends on the publisher. As long as there is a proper context moderation system in place, direct access to the publisher’s inventory can provide the most value.
• Brand-safe ad formats are, of course, the ideal solution. Intent-based advertising is about displaying ads in circumstances where customers are actively searching for a product. Ad formats like Search Autocomplete or Tiles offered by NewProgrammatic meet the highest standards of brand safety by taking consumers straight from the search bar to the brand’s website. Cutting out the middle step of displaying an ad in context. 

The future of advertising lies in brand-safe environments. Read the article on the importance of brand safety to learn about how brand-safe ad formats can improve your business.

The future of digital ads lies in user willingness to opt-in

Sooner or later, third-party cookies are going away. Giving a chance to opt-out of being tracked proved just how much the world doesn’t appreciate the notorious tracking practices. However, there is a large part of users who are willing to share their data for an enhanced experience.

There is no place for third-party data in the future of advertising. The Internet has made it clear – tracking cookies and rampant data sharing is not something that enhances the browsing experience. First-party data, on the other hand, gives advertisers the ability to target users who want a more personalized experience.

After all, sharing one’s habits and transactions in exchange for being the first to know about promotional campaigns and trends seems like a fair deal to 44% of users according to one study. 

Unfortunately, the definition of acceptable personalization varies from one consumer to another. Delivering messages with the right content at the right time can, however, be facilitated through the use of first-party data which is more likely to be shared by the consumer. 

“74% of consumers are willing to share preferences, interests, and demographic information directly with brands if that would improve their online shopping experience.”

Video advertising as the key to reaching younger audiences

The younger generation is driving up the statistics for video ads. According to Forbes, there is a clear societal shift where teenagers and young adults are moving away from social media platforms like Facebook and Twitter (which are now filled with political content) and towards visual-based platforms like Snapchat, Instagram, YouTube, or TikTok. 

Advertisers who intend to engage the younger generation of consumers, need to remember that the requirements for grabbing user attention will be completely different. For once, video content and human creativity are what gets the attention. 

With Apple’s App Tracking Transparency framework making it more difficult to track engagement, video advertising can give brands newfound leverage. Cisco estimates that video will account for 82% of internet traffic globally by 2022. Expert predictions also see the rise in popularity of user-generated content and AR and VR content. 

The next decade is bound to see many technological advancements and a lot of them will be tied to video. Multiple platforms with social aspects invest in more video making and sharing options for the community and the advertising industry is following right behind. 

Companies who want to appeal to younger users should adjust their creative messaging to make it suitable for social media. Studies have found that ads on TikTok are more memorable than those found on other platforms. The future of advertising depends largely on the younger audience and so far it seems that video ads are in high demand. 

Mobile takes over the advertising industry

While spending on desktop advertising is facing a slight decline, mobile advertising keeps growing. And while this is not news to anyone from the technology industry, the continuous growth of mobile advertising means that in 2022 more brands will shift their budgets. 

Adoption of mobile devices has always been high for younger demographic groups, however, there has been a rapid growth in the percentage of older adults who now own a smartphone. 

As of 2021, 96% of those aged 18 to 29 and 61% of adults over 65 own a smartphone. What’s more, while it’s still the smallest number out of all the age groups, the percentage of older users who use social media has grown four times in the past decade.

In 2022, social media apps are most frequently used on mobile devices and customers prefer shopping via apps over the browser version of the shop website. They’re also 200% more likely to engage with the brand through mobile devices. 

What’s important to remember is that mobile advertising only works if it’s done well. Companies that run promotions and create engagement strategies for mobile devices need to remember one thing – optimization is key. Slow loading time, issues with image display, or bad user experience are likely to deter users from seeking that brand’s services again.

Conclusions

The future of advertising lies in inobtrusive technology that follows the latest privacy directives and provides a high-quality user experience. The choice of sharing data belongs to every consumer. The value provided by companies will determine how much of that data will be shared. And if you don’t have the means to shape the brand’s relationship with consumers, you need to switch to privacy-oriented contextual advertising. 

NewProgrammatic provides ad formats that can shape the future of digital advertising. 

Book a demo and learn more.

The post The Future of Advertising – The biggest changes coming to online marketing in 2022<span class="badge-status" style="background:#00e5d1">NEW</span>  appeared first on NewProgrammatic Blog.

However, targeted ads are not hard to notice. And when the consumers realized they were being followed by ads, they demanded to have their privacy back. So, digital advertising in that form could no longer exist. 

Let’s take a look at the most recent changes in user privacy regulations and their impact on the ad tech industry. 

Recent developments in GDPR and anti-cookie policies

In 2011, The Wall Street Journal published an article on the loss of online privacy. They asked experts from various areas related to privacy, Internet research, and journalism to share their opinions on how much people should care about privacy. The answers were not uniform.

While privacy is something not to be taken lightly, the loss of privacy is an integral part of joining a social network. As the services gaining in popularity in the 2010s, such as Google+, Twitter, or Facebook, were focused on connecting people, and thus, allowing them to publicize personal information, the loss of privacy was imminent and often willingly given. 

The experts noted that, unfortunately, the cost of free content is consumer data. Sharing personal data on Facebook is not wrong or irresponsible in itself. It’s the way such companies use it. And quite often, it’s not about what users share in their messages and posts, it’s what they click on, what sites they visit simultaneously, and what their geolocation is. This is the data that digital advertising companies collect and use to serve ads.

This is also the real danger of online spaces. The data that’s collected without people’s explicit consent.

At that time, the experts decided that unintended consequences of introducing stricter online privacy acts (such as more paywalls, less free content, and devaluation of online media) outweigh the benefits. Nonetheless, the public disagreed, expressing the need for more privacy and less targeted advertising.

How is personal data handled by the most popular browsers?

Fast forward ten years into the future and most popular Internet browsers have made a stand against tracking. There were many regulations and events that led to browsers limiting ad targeting and giving users more control over their data. Apple was the first company to enable ad blocking, thus limiting the outreach of advertisers relying on Safari revenue. 

This is how browsers currently handle user data, third-party cookies, and tracking cookies.

Apple’s Safari is blocking all third-party cookies by default. In short, no advertisers can follow Safari users around gathering data on their browsing habits. Additionally, users can disallow first-party cookies from being shared across sites, and login IDs can’t be used by ad trackers for digital fingerprinting. Apple continues to be a pioneer of data privacy standards.

Mozilla follows closely behind. In Mozilla Firefox 89, both the regular and private browsing modes have something called Total Cookie Protection. This technology not only covers well-known trackers but just about anything designed to follow users across the web. The only exception is allowing cookies that enable cross-site login or similar functionality. Overall, Mozilla keeps a high standard of consumer privacy. 

Advertising is responsible for over 80% of Google’s revenue. This is also why Google Chrome is not blocking third-party cookies by default. Google’s Privacy Sandbox, announced in 2019, was the first step towards prioritizing user privacy. However, Google isn’t so keen on limiting tracking. The company only plans to phase out third-party cookies by 2023. The lengthy (in comparison to other browsers) time window for the procedure allows Google to come up with alternative methods of targeted marketing and data collection, however, the Privacy Sandbox timeline keeps facing delays.

While Google, being the market leader in online advertising for over a decade, remains adamant about keeping cookies alive, other browsers have already entered a new privacy-focused era. Digital advertising is not going away, nonetheless, it’s no longer that easy to serve well-targeted ads.  

What are the effects of the third-party cookie phaseouts?

Cookies have been the backbone of digital advertising for the past 25 years. And although the collective decision to phase out cookies was not a surprise, it did cause a stir in the market. The consequences ranged from loss of revenue for the big players in the industry to inconsequential panic among affiliate marketers practicing media buying at small to medium ad networks.

Overall, agencies, brands, and media buyers had to battle some of the following:

• Third-party cookie-based ad trackers could no longer work (as third-party cookies were blocked by default).
• Google Analytics has lost accuracy (due to shortened life of a first-party cookie). 
• It became more difficult to serve relevant ads and personalized content (because of more types of cookies being blocked by default). 
• Conversion attribution became a challenge (as cookies could no longer freely follow users around the web).

Who was actually affected by the move towards consumer privacy?

According to an article by Digiday, real-time bidding platforms, as well as cookie-reliant advertising methods, were the ones facing the biggest consequences. Real-time bidding, due to its nature, is not GDPR compliant. Hence, those looking for a brand-safe way of advertising would opt for a different method. 

Cookie-based targeting, on the other hand, has been progressively restricted by browsers and platforms alike. With Apple leading the way, third-party cookies have been eliminated from iOS devices and other browsers following in Apple’s footsteps. Companies that relied on targeting and tracking their sales via third parties have experienced significant losses.

Google has published a report on the effect of disabling third-party cookies on publisher revenue. According to the experiment and the subsequent analysis:

While a handful of publishers have a small revenue loss (<10%), the majority of publishers have losses of 50% or more, with some losing over 75% of their revenue.

How much do consumers really care about privacy?

Let’s not forget that the potential losses depend entirely on how much consumers really care about their privacy. While third-party cookies are blocked by default there is always the possibility to enable them. Similarly, there are consent popups on most websites that offer users the possibility to choose what cookies they want to accept. 

In April 2021, Apple made yet another move to protect its customers. New pop-ups started to appear on Apple devices asking users if they consent to be tracked. Every business (app) that wanted to gather data for the purpose of advertising had to now seek explicit permission. 

According to Reuters, some mobile advertising analysts believed that fewer than one in three users are likely to grant permission. Similarly, Facebook analysts assessed that the platform faces up to a 7% decline in second-quarter revenue if 80% of its users block the company from tracking them on iPhones.

The reality was bleaker than expected. As it turns out consumers do care about their privacy on the web and 96% of US users opted out of app tracking in the iOS 14.5 update, as reported by Flurry Analytics. As for Facebook, the consequences differed across the types of advertisers. E-commerce stores (using Shopify) were amongst the most severely affected. The shops lost their ability to retarget ads and track sales. While the average decrease in tracking accuracy amounted to 50%, in some cases it reached a loss of a staggering 90% of captured sales. 

What can brands do to mitigate the consequences of stricter privacy policies?

While the new privacy regulations have a significant impact on data privacy, they also force companies to look beyond the old methods of targeting. Personalizing ads based on the collected data needs to be replaced by other methods to stay fully compliant with the most recent regulations. 

The General Data Protection Regulation, for example, has made a small but significant change in how the consent was obtained. Before GDPR, businesses could assume they had user consent unless the user opted out. After the introduction of GDPR, it was no longer allowed to assume anything. The user had to clearly and willingly agree to be considered as ‘opted in’. 

The fines for non-compliance were as high as 20 million dollars (or up to 4% of their total global turnover of the next fiscal year, whichever is higher). Hence, targeted advertising had to be replaced by contextual advertising. As Digiday points out, there’s been an increase in the amount of contextual targeting even among companies who chose to still do personalized advertising.  

Use contextual targeting

Contextual targeting is similar to keyword targeting with some additional parameters. This method is not about gathering data, however, it still belongs to the category of personalized advertising. Rather than following consumers around the web, contextual advertising networks (Google Ads, Terminus, The Trade Desk, Oracle’s Grapeshot, NewProgrammatic) display the digital ads among relevant content and in a relevant location. 

While contextual advertising comes in many forms, or ad formats to be precise, in each case it is based on keywords. Each site is described by keywords and thus it’s categorized as containing a certain kind of content. Context-based ad formats require manual input from the publishers – the ad needs to be described and categorized (by keywords and negative keywords) in such a way as to ensure as exact placement pairing as possible.

In the case of NewProgrammatic, ads would be displayed based on what the user is searching for. Upon entering a keyword in the search bar, an ad for a brand with relevant content or a shop that has the particular product would be displayed.

So, as opposed to cookie targeting, the user would not be followed and the ad would not be based on their previous action but on something that’s relevant to them at the moment. If they’re browsing reviews of Nike running shoes, they will be presented with an ad for a shop with Nike running shoes. No data on that user will be gained, saved, or stored anywhere.

Focus on first-party data

Although personalization of digital advertising has been based mainly on third-party data, first-party data provides an equal, if not better, data infrastructure. What’s most important is that first-party cookies are always consented to. Websites don’t save login data or preferences unless a user specifically asks them to. 

Hence, many companies are seeing first-party relationships as instrumental in navigating the new era of privacy. For example, in Germany, 20 companies created a unified consumer login product where consumers would be able to decide exactly what data and with whom they’re willing to share. Platforms that gather data through surveys, saving preferences, or coupon incentives are still able to personalize content and ads while staying in the clear. 

Base targeting on user choice and consent 

To expand on the previous section, the future of advertising lies in context and consent. Third-party tracking had to go because it was a shady practice that became abused for the purpose of online marketing. While making data collection transparent was a good first step, it didn’t eliminate the illegal practices or workarounds (e.g. burying the ‘Decline All’ button two layers deep into a cookie consent pop-up). 

To comply with the privacy laws and keep transparency trends, companies should establish a healthy line of communication. In fact, 71% of people prefer to share their data instead of paying a monetary fee when given an informed choice and a clear explanation. This user-oriented digital marketing approach is the only way to continue interest-based advertising while being fully compliant with GDPR and internet privacy directives.

Here are some options of permission-based data collection strategies:

• Rewarding users with virtual coins or points for agreeing to share data;
• Creating feedback communities for those who want to share data and help improve the experience;
• Asking for permission before sending promotional emails;
• Assigning tokens that don’t identify the browser or the user;
• Providing exclusive for customers who opt-in to share data.

Conclusions

Data-driven advertising methods used a surveillance system (known as third-party cookie tracking) to gather data on the consumers with a complete disregard for user privacy. Data protection policies enforced consent pop-ups which were frequently put to wrong use (and rendered ineffective). It was Apple’s Safari, followed by other browsers that changed the entire industry. 

Third-party web cookies along with other questionable data collection practices are on their last legs. Advertisers and publishers alike will have to apply different strategies to please customers without losing their ad revenue. Luckily, there are alternative, privacy-compliant methods that deliver ads based on context rather than data. 

NewProgrammatic uses the search intent to lead customers to where they need to be without relying on any data.

Are you looking for a context-driven advertising method?
Book a NewProgrammatic demo 

The post How to advertise in the user privacy era? appeared first on NewProgrammatic Blog.

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. 

The end of third-party cookies doesn’t mean the end of ad targeting

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. 

Thus far, the key initiatives were FLoC (later on replaced by Topics API) and FLEDGE (TURTLEDOVE). 

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. 

FLEDGE (TURTLEDOVE)

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. 

Topics API

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 trends for a cookieless future 

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.

New solutions for cookieless advertising 

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.

How can marketers prepare for a cookieless future?

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.

Book a demo & see how NewProgrammatic can help your brand grow in a cookie-less world.

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After a few years of an ongoing debate as to what should be done about third-party data tracking, one of the big players in the ad-tech world decided to give its users a choice. Apple’s decision to allow third-party ad blockers on Safari in 2015 triggered a whole new approach towards handling consumer data in the advertising world. 

Fast-forward to 2021, the global discussion whether to keep or cease third-party data usage is slowly coming to an end. No one needs nor wants 3rd party cookies to be associated with their brand when data privacy and web safety are at the forefront of consumer-oriented businesses.

Apple, Mozilla, Google, and many others have either completely blocked 3rd party cookies already, or are in the process of doing so. This leaves marketers and brands in need of new programmatic solutions that don’t rely on third-party cookies as well as comply with brand safety and user privacy regulations. And we’re here to tell you more about it.

Why brands and marketers don’t need third-party cookies.

There are many reasons why brands and marketers don’t need third-party cookie tracking to succeed with programmatic ad targeting or media buying. One of them is that relying on third-party data has never been a perfect solution for the ad-tech world.

To better understand the difference between first-party and third-party data tracking without getting into technicalities, it’s enough to think of playing Chinese whispers. The more people pass on the message, the less precise and more faulty it becomes. 

Programmatic ad serving is all about showing the right ad, to the right user, at the right place, and at the right time. That’s why there is no room for mistargeting, which has been one of the main issues with third-party cookie tracking right from the start, even before the consumer privacy and data safety issue has been raised. 

After almost two decades on the market, this method of targeting users has become obsolete and doesn’t meet current trends, nor demand. And given the recent shift in attitudes towards data safety for all Internet users, brands simply cannot afford to rely on outdated solutions. 

The second reason why brands and marketers don’t need 3rd party cookies is that 1st party cookies aren’t going anywhere. This data allows brands to improve user experience, deliver customized content and collect user information needed to nurture its clients down the sales funnel. Yes, 1st party data does come at a much smaller scale but at the same time, it allows for more direct and precise targeting while also ensuring that users receive content they agreed on. 

The third reason why brands and marketers don’t need third-party cookies to succeed in the ad-tech world is that there are various solutions available on the market already, and new ones are being developed as we speak. 

Third-party cookie tracking has never been the only way to reach wider audiences, nor the perfect one. Given the rapid evolution of the programmatic advertising industry, and how dynamically the online media landscape has changed in recent years, alternative solutions for online ad targeting have been already developed, even if not yet globally adopted. 

How to target your ads in a new, cookieless world.

As mentioned, there are ways for brands to target users on a large scale that don’t involve 3rd party data sharing. In that case, why has the news on phasing out third-party cookies by all major browsers wreaked such havoc within the digital marketing community? 

Cookieless identifiers 

Although cookieless ad tracking methods have been indeed available, external cookie sharing became a default go-to method because of its scale and global adoption in the ad-tech business. Due to the recent shift in data collection trends, now seems like an excellent time for brands and marketers to learn more about other options that help identify users and serve them ads that resonate.

Another thing to be remembered is that marketers shouldn’t rely on one method of user targeting only. Using just one channel of communication with potential audiences can never provide all the necessary information, nor answer all of the brand’s needs. The key to a healthy system and a holistic view of one’s audience is relying not on a single but combined methodology. 

Brands and marketers who want to nurture a more holistic view of their customer base need to team up with all the players in the programmatic advertising ecosystem. That also includes partnering up with businesses that have both the technology and experience in delivering desired results.

Cookieless advertising strategies.

Total deprecation of 3rd party cookies will surely affect the whole of the digital industry, yet consequences can be leveraged with several cookieless advertising strategies. Some of the tried and tested solutions include the enhanced use of 1st party data, other forms of cookieless targeting, or going back to long-neglected contextual advertising. 

1st party data tracking

First-party cookies or first-party data has always been the safest and most stable way for brands and marketers to reach their customers. Now more than ever the industry needs to embrace the importance of the direct relationship with consumers and accept what information people actually do want to share and what data they’d rather keep private.

Although this may seem like a limited solution, again, the industry has been evolving as so has the first-party data tracking. Even a simple piece of data like an email address can go a long way in the programmatic landscape, without any mistrust and murky data sharing. 

For that reason, to further enhance the process of 1st party cookie tracking, brands and publishers globally are now working to maximize data collection and improve consumer privacy and data safety in advertising technology (Google Chrome’s Topic API, Facebook Walled Gardens, Apple’s IDFA, LiveRamp).

Cookieless targeting

Given the rising concerns on consumer privacy in the digital age, ad-tech giants rolled out their own cookieless targeting solutions for brands and advertisers that will still allow for reaching large segments of users. Of course, the biggest hopes were put with Google’s FLoC proposal.

The FLoC (Federated Learning of Cohorts) system has been designed specifically to answer data protection concerns and address the user safety demand. 

But how was Google’s FLoC supposed to save the day in the new, cookieless era?

Google’s initial solution aimed to enable ads to be targeted to users based on their web browsing history alone. This would mean a cease to tracking specific actions like user clicks and purchases, which lately has been seen as tactics that breach the level of privacy users should hold while engaging online. Collecting the web-browsing data on a large scale could then allow FLoC to group users into targetable segments, rather than tracking individual users.

This solution, however, was almost immediately rejected by all major browsers. What’s more, the Electronic Frontier Foundation was able to point out a defect in which fingerprinting techniques could be used to distinguish users from the cohort and establish unique identifiers.

Eventually, the short-lived project has been scrapped and replaced with Topics API

What’s the advantage of Topics API over Google’s FLoC?

In Topics API websites are labeled with topics taken from an established pool of IAB & Google-approved topics. The browsers that choose to adopt Topics API will collect information on visitors by saving a short list of Topics attached to the visited sites. The set of topics would then be shared with advertisers to facilitate ad targeting. 

While losing on the accuracy, the Topics API solution is said to be an improvement over FLoC when it comes to user privacy. However, there is a lot of skepticism around Topics API. As reported by The Drum:

 “For some of the large brand advertisers who want to reach broad audiences, this is something, but for the majority, this has no value whatsoever as the category is too broad for their targeting criteria or campaign budgets.”

It is yet to be decided whether Google’s answer to the privacy-first world of advertising in the new, cookieless era will be sufficient. There are a lot of questions still to be asked and answered, and so far the total 3rd party cookies phase-out in Chrome has been postponed until the end of 2023. 

Contextual advertising

Another way of targeting broad audiences without 3rd party data or any specific information on user activity is contextual advertising.  It’s worth remembering that before 3rd party cookie tracking took its momentum, most of the ads served online were context-based. This proves that although data sharing is a vital element of the online advertising ecosystem, it’s not essential. 

Contextual targeting doesn’t need nor involve any specific information on a single user. The three elements for this method to work are:

• page context — allows for understanding the language, whole sentences, as well as word segments. This leads to creating vertical and niche segmentation, which can be used for both targeting or blocking for brand safety reasons.
• user context — this allows to better understand user behavior on a given page, tied mostly to distinguishing between high or low user engagements and CTR rates. 
• request context — allows for understanding more technical aspects of user targeting such as time and geo-location that can be then combined with real-time advertising.

That way contextual advertising allows for broad, non-intrusive ad serving that can also be narrowed down to more specific segments or niches. As with everything in the ad-tech world, context-based targeting has also come a long way since the first banner ads were placed online. But as with every method, there are some pros and cons to it.

The end of third-party cookie tracking is near, and the programmatic advertising industry must prepare for it. This might mean that contextual advertising will once again become a primary choice for many brands and marketers out there, especially those searching for broader reach and large scale for their programmatic advertising strategies.

New programmatic solutions for brands and marketers.

Today’s landscape of programmatic advertising provides brands with a whole array of modern solutions. The challenge that such brands seem to be facing at the moment is making the right choices to meet their advertising goals. But one remains the same, and it’s reaching your customers before the competitors do. 

That’s why delivering brand-safe and user-friendly ads to customers before they even complete their search might be the key to advertising your brand. NewProgrammatic lets you acquire customers through capitalizing on their intent either via Search Tiles or Instant Search Ads that users can engage with right at the start of their customer journey. 

And what’s especially important given recent developments in the ad-tech space, NewProgrammatic solutions don’t rely on cookies or any other third-party tags and trackers. Working with top publisher partners (browsers, search engines, mobile apps, and more) NewProgrammatic ads ensure both scalable performance and protection of consumer privacy, which makes it a brand-safe and future-proof choice for a new cookieless world. 

Conclusions

Digital advertising is facing a cookieless future where privacy laws need to be respected by everyone joining the table — publishers, advertisers, brands, and marketers of all kinds. 

Even when third-party cookies become a thing of the past, precise ad targeting will still be possible, just like data collected from first party cookies will still allow for creating audience segments to better understand consumer behavior and deliver ads that convert. Whether brands decide to engage in transparent advertising that gives consumers the freedom to decide what content they want to receive and what happens with their data is the brand’s call. And for those willing to take up the challenge of the new cookieless era, new programmatic solutions are awaiting. 

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The post Cookieless advertising for a cookieless world — new programmatic solutions. appeared first on NewProgrammatic Blog.

Cookies are a part of a large browser tracking scheme that allows advertisers to do their jobs effectively. While some internet users appreciate the well-targeted ads, many raise their concerns about a possible threat they pose to online privacy. 

Over the years, opinions on browser cookies have changed but the mistrust remained the same. The NewProgrammatic blog brings you the complete history of cookies, the changing of attitudes, and their effects on digital advertising. 

The early history of cookies

Before 1995 it was not possible to know whether someone browsing the Internet has seen the same site twice. All kinds of transactions had to be completed in one go or started over again on the next visit. While the first online banner ad appeared in 1994, it was placed on one site only and had no other targeting than the visitors of said website. 

Browsing the web was largely anonymous until 1995 when the first cookie was created. Lou Montulii, a programmer working for Netscape Communications, came up with the idea to track users by placing a cookie on their computer. The purpose of that new technology was to make browsing sites easier. The products stayed in the shopping cart for the user’s next visit and websites became ‘aware’ of who visits them, what action that user takes, and how often they come back.

Cookies were almost immediately adopted by Internet Explorer. Despite both the Microsoft browser and the Netscape browser keeping cookies under the table, those privy to the inner workings of the web had already become concerned about what cookies could be used for.

Cookies enter the world of online advertising

While cookies were designed to be working within the same site (and related sites), there was a simple loophole. Companies could easily agree to share these cookies with third parties. Actually, companies anonymously aggregating user information could easily do so for the purpose of advertising. It didn’t take long for the large Internet advertising companies to get a hold of that.

DoubleClick and Engage were the first companies to try it. They used a common cookie across the web to keep track of what the user was doing. By that point, banner ads were already scattered around the web. It was already possible to identify a potentially suitable audience. But it was only when cookies came about that tracking the performance of ads became feasible. 

As reported by The Wall Street Journal, by 2010 some sites were using over 100 tracking cookies at a time. Among the surveyed sites “some two-thirds of the tracking tools installed—2,224—came from 131 companies that, for the most part, are in the business of following Internet users to create rich databases of consumer profiles that can be sold.”

Third-party cookies became a very popular media topic at the time. Tracking users and consumer privacy was a controversial issue. Nonetheless, despite multiple attempts to stop advertising companies from gathering user data for the purpose of targeting ads, all the directives and laws were either ignored or bypassed. 

The phasing out of the third party cookies

Since 2011, the ad tech industry has grown to insane proportions. Despite Google Ads and Facebook dominating the advertising industry, there were many smaller and bigger ad networks created. DoubleClick (later bought by Google), Yahoo!, Baidu, Criteo, and others were all working alongside social media platforms in filling the web with advertisements. 

In fact, the online advertising market grew by 93% between 2011 and 2016 as reported by European Audiovisual Observatory. Additionally, in 2016, online advertising surpassed TV advertising in revenue. And thus the data collected about individuals browsing the web became worth its weight in gold.

However, to meet the rising consumer expectations and concerns, cross-site tracking had to be limited. This time… effectively.

The main reason for changes was that cookie consent notices established in 2009 were found to be largely ineffective. According to academic research on GDPR consent notices, most pop-ups didn’t fulfill their purpose. They failed to be informative, they offered pre-selected switches in favor of ad tracking, or they offered a single confirmation button with no visible option to decline third-party data.

Apple takes the stand against ad tracking

Apple was the company that took the first step towards limiting ad tracking and protecting the user identity on the worldwide web. In 2015, the release of iOS 9 brought many improvements along with one special functionality – to block ads in Safari. It then became possible to create all kinds of ad content blocking extensions for iOS devices. 

The decision has not been met with enthusiasm from Google and the whole $70 billion mobile marketing business. Publications like the WSJ’s Apple’s Ad Blockers Rile Publishers, or Tech Times’ Ad-Blocking Feature In iOS 9 May Cripple Mobile Advertising Industry, and Techwalls’ Apple’s Anti-ads iOS 9 will Worry the Media Industry expressed the attitudes clearly. 

Apple was doing the right thing. However, it was not the right thing for the advertising industry. Limiting the availability of ad spots could raise the prices for iOS publishers and make it generally more difficult to advertise on iOS devices. And while Google has already been in trouble once for circumventing the privacy measures in Safari, it was once again sharing tips on how to get around the new Apple security rules. 

That was the first blow to mobile advertising. According to Statista, Apple has sold over 230 million devices all over the world, just in the year 2015. By giving that many users control over whether they want to see ads or not, Apple has caused anxiety to many web publishers relying on mobile audiences. 

In 2017, Apple decided to go one step further by introducing Intelligent Tracking Prevention 2.0 (ITP 2.0). While this update made Safari one of the best web browsers when it comes to user’s privacy, it severely complicated the lives of performance marketers. Third-party cookies were no longer allowed unless extra steps were taken. The workarounds, however, often made it more difficult to accurately track data. 

Apple’s decision to kill third-party cookies had, once again, a negative impact on companies like Google, Facebook, and Amazon. Ads could still be shared, however, since personal data and preferences were no longer recorded, the ads could not be properly managed. 

The introduction of ITP 2.1 and 2.2 deepened the problem. As of May 2019, first-party cookies were filtered by functionality, and the analytical ones were deleted after 24 hours. And what does that mean for advertising? The workarounds no longer worked. Ad tech giants could no longer track user activity outside a 24-hour window in the Safari browser.

E-commerce advertisers who used the first-party cookie to save data about website visitors could no longer use that. It used to be possible to score a conversion after sending reminders to users who have abandoned their shopping carts or didn’t make a purchase after browsing the site. After Apple’s ITP (2.1, 2.2, and then 2.3) a user had to make a purchase within the same session. Otherwise, the funnel (displaying an ad – sending an email reminder – receiving a conversion) would be broken. An advertiser would still receive a conversion but without accurate data on where it actually came from (email campaigns vs. the original ad).   

Firefox takes steps to improve user privacy

Starting in 2018, Firefox began to gradually improve its privacy policies. At first, third-party cookie blocking and tracker blocking became possible. In January 2019, Firefox 65 introduced options for handling third-party cookies. 

In an opinion piece by What’s New in Publishing, the new options have been called a mere bump in the road. The author claims the Firefox update is most likely to affect only smaller and less trusted publishers. Additionally, Firefox’s insignificant global share of the market (under 5%) means not many businesses will be affected. 

Although Mozilla’s actions were nowhere near as severe as Apple’s, they allowed users to decide how much they’re willing to share. The three options – standard, strict, and custom gave users options to refuse cookies from all unvisited websites, all third-party cookies, or all cookies (including first-party cookies). The strictest options came with a warning about causing some websites to break or malfunction.

In further updates, third-party cookie blocking became a default (not only for the private mode as was the case before). By January 2020, Firefox added default blocking of crypto miners, device fingerprinting, social tracking protection, and a Facebook Container. That last feature made it very difficult for Facebook to collect data about what the logged-in users are doing on other websites.

As reported by Wired, Mozilla has acknowledged that there will be a negative impact on publishers, however, it’s only a matter of time before new technologies will replace third-party cookies. Finding alternative privacy-oriented solutions is a sustainable long-term investment, so rather than worrying about the revenue, publishers will find better ways to target ads.

The beginning of Google’s Privacy Sandbox

Finally, Google was forced to take initiative. In August 2019, Google announced the Privacy Sandbox. While acknowledging the issue of the invasiveness of the omnipresent third-party cookies, Google noticed that the attempt to replace them gave rise to another tracking technology, namely, fingerprinting. As a consequence, Google’s proposal was to create new web standards that would protect users’ privacy while retaining some form of individual user tracking and ad targeting.  

In January 2020, Google announced plans to gradually phase out third-party cookies in Chrome. Their two-year plan included limiting cross-site tracking and giving users more control over third-party cookies. The announcement posted on the Chromium blog also criticized the actions of other browsers saying that blocking third-party cookies, […] has unintended consequences that can negatively impact both users and the web ecosystem. 

Although third-party cookie data will no longer be used to track users, HubSpot reminds all those concerned about the integrity of the ad tech supply chain that this is not the end of online advertising. Google – the search giant – has stated in their blog post they will work with advertisers to ensure that targeting ads will be possible without infringing on user privacy.

Additionally, first-party cookies are still vital. They would remain an integral part of every user’s browser to ensure a smooth experience within the same site. Google’s Privacy Sandbox is also meant to include a replacement for third-party cookies in Chrome. 

What’s the current state of Internet cookies?

When in 2019 Europe’s high court ruled that pre-checked consent boxes for tracking were illegal, a large part of the advertising industry noted significant reporting losses. Tracking without explicit user consent was outlawed permanently. At that point, it was known that changes were coming. 

As of March 2020, third-party cookies are automatically blocked in Safari. Apple was once again the first company to make another big move towards protecting the privacy of its users. Additionally, Apple also blocked fingerprinting, thus making it virtually impossible to track the same user across different sites in the Safari browser.

However, the popular misconception that Google Analytics will no longer work in Safari is not true. Yes, third-party trackers known to collect information about individual users will be blocked. However, as Google Analytics is not one of those trackers, it will continue to work as before. 

One year later, in February 2021, Mozilla introduced total cookie protection in Firefox 86. In simple terms, Firefox will now not only block cookies left by popular tracking companies, but it will also keep all cookies separate. Meaning, no cookies can be used to track you from site to site as you browse the web.  

At last, Google’s original plan to replace third-party cookies by 2022 had to be postponed to late 2023. The reasoning behind this decision was to give more time to advertisers and publishers to familiarize themselves with new ad technologies. The new cookie-replacing solutions are supposed to be integrated into the Chrome Browser before late 2022. This would give the digital advertising industry a long period to move and adapt before the final cut-off in late 2023.

Still, the ad tech industry is skeptical about some of the new third-party cookie alternatives. Federated Learning of Cohorts (FLoC) was Google’s first web tracking alternative that was meant to be developed as a part of Google’s Privacy sandbox. Instead of sharing user data with third-party companies, it would store the data inside the browser. It would also group people into ‘cohorts’ based on the demographic, their habits, and interests.  

Soon after the announcement, The Wall Street Journal and many others have reported that both Mozilla and a lesser-known browser – Brave, are not planning to participate in using the system. The main argument against FLoC is that it harms user privacy in a different way than cookies did, possibly more severely. DigiDay points out that this particular method of targeting could enable discriminatory targeting or data use.

Furthermore, Financial Times said the delay along with the introduction of FLoC seems to be designed to benefit Google. They’re not only responsible for the design of cohorts but also for the effectiveness of the new system. The new developments have even sparked an antitrust investigation into Google’s practices. 

By October 2021, FLoC had been rejected by all major browsers, pushing back the end of the testing phase from the end of Q2 to the end of Q3 2022. In January 2022, the FLoC project has been scrapped and replaced with Topics API.

Topics API assigns each website a topic and then collects information on user browsing habits based on said topics. The main difference between FLoC and Topics API is that users are not grouped in cohorts, thus preventing unique user identification. While Topics API seems to be an improvement over FLoC when it comes to privacy, Search Engine Land claims it’s unlikely that Firefox, Safari, Edge or other browsers will adopt Google’s proposal […].

As reported by The Drum, there’s already been some harsh criticism from advertisers. The solution is said to provide some value to large advertisers but none to smaller businesses with lesser budgets. Targeting based on a limited number of Topics is simply not accurate enough to yield satisfactory results.

While Google works to replace third-party cookies, advertisers can discover the blooming market of alternative advertising solutions and cookieless ad formats.

Conclusion 

Although the invention of cookies has brought a lot of improvements to the way the web works, it’s also brought a lot of concerns in terms of Internet browsers handling personal data. The growth of the digital advertising industry fueled by a breakneck gathering of behavioral data has caused third-party cookies to be one of the most talked-about subjects of the previous decade. 

Nonetheless, the rapidly evolving regulatory restrictions slowly brought back privacy for the web community but as a consequence weakened the ad tech industry. 

As of now, Apple’s Safari and Mozilla’s Firefox are both blocking third-party cookies by default. They both have additional options to block first-party data from being shared across sites.

Opera and Edge don’t block third-party cookies by default, however, they both have certain options to increase privacy. 

Google Chrome does not block third-party cookies by default although it does provide extensive options for managing privacy settings. As the most popular browser, it relies most heavily on the ad tech ecosystem. That’s also why instead of making drastic changes, Google announced they will be slowly phasing out third-party cookies in Chrome in the next two years. 

As existing technologies are departing from their reliance on third-party data, digital marketers will have to adjust. The ad tech giants can rely on first-party data but brands and agencies will have other options to turn to.  

You don’t have to feel powerless against the constantly changing cookie regulations. If you’re looking for an innovative cookieless way to advertise your brand, NewProgrammatic can help you achieve consistent results.

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The post What’s happening with browser cookies? Advertising industry in the face of third-party cookie phase-outs. appeared first on NewProgrammatic Blog.

Before the Internet evolved to its present form it was a lot less practical. Each visit was a separate, completely anonymous event. But that didn’t work so well for many sites, especially e-commerce ones. As necessity is the mother of inventions, it was necessary to give the web a memory. 

And thus cookies were created. They allowed websites to keep track of who visits them and what they’re looking at. It wasn’t long before the advertising industry saw the immense potential of using cookies to personalize ads. 

If you’re curious about the peculiarities of cookies and how they transformed the advertising industry, read on and learn how a small text file can cause so much controversy.

What are cookies?

Cookies, often referred to as HTML cookies, HTTP cookies, Internet cookies, or browser cookies, are small text files used to identify individual users browsing the web. They are indigenous to the visited websites and are stored on the user’s computer via web browsers. Essentially, cookies allow each site to recognize a user as the same person that has visited the site before.

In practice, when you visit a website it drops a cookie on your computer. That cookie keeps you logged in and keeps track of your activities (such as setting filters while browsing a store or storing items in your cart). When you visit next time, the site knows it’s the same person again.

Cookies can have different purposes as well. While we’ll discuss the types of cookies in the next section, they all serve one of the following two purposes:

• Managing a single browsing session – these are the cookies briefly described above. They keep track of browsing activities within the same session, thus ensuring a smooth user experience and streamlined e-commerce transactions. 
• Managing multiple separate sessions – these are the cookies that are able to identify an individual user over multiple separate sessions. They’re used in cases such as keeping users logged in or saving browsing preferences and history. 

What are different the types of cookies?

Apart from the most popular distinction into third-party and first-party cookies (to be discussed below), HTTP cookies can be divided by the period of activity.

Session cookies – also called transient cookies or temporary cookies, last only one same site session. A session cookie is not stored on the hard drive and is deleted as soon as the user is done browsing the site. This is the cookie that has a unique session identifier that allows it to recognize a single user as they move through the site.

Persistent cookies – also referred to as permanent cookies, last over multiple sessions. Among the most popular ones are tracking cookies and authentication cookies, however, their range of functionality also includes remembering any changes made to a website including language, theme, favorites, preferred shipping addresses, payment methods, etc.

Flash cookies – are no longer in use, however, they were not a type of HTTP cookie. They weren’t stored in the browser but in the Adobe Flash browser application. Because of that, they had to be managed (cleared) separately. 

Before the end of Adobe Flash Player in late 2020, flash cookies were the most popular type of zombie cookies. Zombie cookies take the form of a small bit of code (rather than a text file) which is capable of recreating removed HTTP cookies. Flash cookies were also extremely difficult (or impossible) to delete which, in 2010, has brought on a lawsuit on companies who used them. 

Third-party vs. First-party cookies

The biggest distinction in browser cookies is based on who the cookie belongs to. There are no other technical differences, meaning, both cookies are the same in characteristics but different in origin and usage. 

A first-party cookie belongs to the owner of the website. It’s created by the host domain and its main purpose is to manage the single browsing session. It remembers what users are doing, what parts of the website they’re visiting, and the changes they make to the site (e.g. adding items to the shopping cart). Apart from ensuring a good web browsing experience, first-party cookies collect analytical information that can only be accessed by the owner of the website. 

A third-party cookie belongs to someone other than the website owner, e.g. an ad tech platform. The main purpose of a third-party cookie is to track user activity across the web. Sometimes, these cookies are used to provide third-party services (such as a live chat), however, most of the time, they’re used for online advertising activities.  

How are first-party cookies used in advertising?

First-party cookies are generally not used in advertising. They belong to the website owner and they can only be used by the said owner. There are, however, some exceptions. First-party data can be stored in data management systems. From there, it is possible to share it with third-party vendors. First-party data can also be shared as a form of partnership between websites.

How are third-party cookies used in advertising?

Third-party cookies are an integral part of the web pages that millions of users visit on a daily basis. The browser stores them on a user’s computer, essentially allowing the third parties to gather an extensive profile of each unique user on their web server. And if a certain ad company knows the location, reading habits, interests, and recent purchases of a single individual, they can target and retarget ads between various sites and companies to serve ads of products that individual is actually interested in. 

And how does a third-party cookie find its way into a website? It’s a simple process. A lot of websites make money by ‘renting’ space to advertisers. Hence, they simply allow others to place cookies in the form of an ad or an invisible pixel on their site. 

Also, web pages used to have no limits on storing cookies. Before regulations introduced by Apple, Mozilla, and finally Google, each user could have been tracked by multiple 3rd-party cookies at the same time. That way, a user’s browsing history, preferences, areas of interest over multiple visits, user’s shopping cart, and various other data was known to other websites and used for the purpose of ad targeting.

Are cookies good or bad?

The answer to this question is not straightforward. Cookies have a purpose – to remember what a user is doing and where just so they can facilitate a smooth web browsing experience. Thanks to cookies, we stay logged in, we have a list of favorites and we receive ads of products we looked at. Cookies can provide users with ads of products they wanted to buy anyway but with a special discount. They can be useful but at the cost of privacy. 

It will be clear from the following section why third-party cookies are slowly eliminated. However, before we judge cookies as either good or bad, it is important to learn what they’re capable of and where the privacy concerns are coming from.

The early history of cookies

To understand the current attitudes towards cookies we need to take a look at their history. Cookies were created in 1994 by Lou Montulli, a web browser programmer at Netscape Communications. The idea behind cookies was simple – they would allow people shopping at an e-commerce site to store their items in a virtual shopping cart. As reported by The New York Times, this was the first instance in the history of the Internet where a website’s data could be reliably stored on a user’s computer. 

In 1995, Montulli applied for the patent for the cookie technology, and just the same year it was implemented in version 2 of Internet Explorer. Although cookies have already become an integral part of the web experience, they were working entirely behind the scenes.

This is where the first concerns appeared as well. While the public enjoyed the comfort that came with individual tracking, the more tech-savvy user raised their concerns. That led to the publication by the Financial Times in February 1996. It wasn’t what the cookies were that alarmed people, it was what they might be used for. 

And thus the issue of consumer online privacy was born. Let’s remember that at that point in time, cookies were not used for advertising purposes. It didn’t mean, however, that their potential wasn’t noticed and considered in a much broader light that far exceeded their initial purpose.

The first directive to block third-party cookies

The realization that cookies could be shared with and exchanged between their origin websites and across a whole network of sites made cookies, and to be exact, third-party cookies a hot topic. Within a year, the existing advertising companies have already begun exploiting third-party cookies to track users and follow them around with ad campaigns. 

This is also the reason why the Internet Engineering Task Force’s recommendation (RFC 2109) to block third-party cookies was not followed. Both the then-popular Netscape Navigator browser and the newcomer Internet Explorer ignored the plea. The browsers were set to automatically accept third-party cookies and, at the time, there was no way of enforcing a different state of action.

To curb the arising negativity and dispel any rumors, the Computer Incident Advisory Capability (CIAC) released a statement explaining exactly what cookies are and what they are not. Here is the beginning of the statement:

The popular rumors about web cookies describe them as programs that can scan your hard drive and gather information about you including: passwords, credit card numbers, and a list of the software on your computer. None of this is close to the truth. A cookie is a short piece of data, not code, which is sent from a web server to a web browser when that browser visits the server’s site. The cookie is stored on the user’s machine, but it is not an executable program and cannot do anything to your machine.

The start of a war on third-party cookies

Coming into the 21st century, the ad tech industry was becoming adept at utilizing third-party cookies. In 1999, DoubleClick (one of the biggest internet advertising companies, now part of Google) had planned to merge with a company specializing in collecting user’s personal data for the purpose of online advertising. The negative public reaction was so severe that the plan had to be abandoned.

In 2000, another RFC directive was released. This highly technical document specified how and when each kind of cookie is supposed to be used. This was supposed to cater to the needs of the browsers that didn’t comply with the RFC 2109 directive. Unfortunately, that didn’t happen. The new types of cookies were hardly ever used and quickly sunk into oblivion.

Rapid gathering of third-party data

In the meantime, the usage of cookies runs rampant. According to the investigation done by The Wall Street Journal in 2010, user data was being regularly exchanged for website access. The 50 sites checked by TWSJ have installed over 3,000 tracking files on the computer used in the study. 

As expected, it was the ad tech giants that were tracking users most scrupulously. The concept of user privacy was slowly disappearing. Some sites didn’t allow for blocking third-party cookies and although tracking was disclosed in the privacy policies, the extent of it was further than people could imagine. The 2002 ePrivacy directive, requiring websites to inform users about what data is being tracked and allowing them to opt-out was not entirely successful.

Third parties would not only gather data on users’ behavior, and location, but also on their age, gender, income, marital status, health concerns, purchases, and interests. Some would go as far as recording keystrokes thus completely violating consumer privacy in the race for most accurate data collection. 

The cookie law 

The unrestrained user tracking finally led to firm actions from the Federal Trade Commission and the European Union. In 2011, the Cookie Law came into play. Otherwise known as the Directive 2009/136/EC, it established that it’s illegal to place third-party cookies on a user’s device without their consent. Companies were no longer allowed to collect data without informing users and receiving their permissions.

Of course, the directive didn’t include first-party cookies or any other tracking technologies used to provide a smooth user experience. It was simply the breakthrough moment when all of the pop-ups started appearing asking users for permission to collect third-party data. An ad network could still target ads but only to those who explicitly consented.

Why are third-party browser cookies disappearing?

The web community has always been skeptical about web servers gathering information about user browsing habits. After all, cookies store not only information necessary for the functioning of websites, but also information about their interests and interactions. That might include sensitive data and personally identifiable information. 

Cookies created without user consent could follow individuals around the web. Despite GDPR laws and directives, consent pop-ups were still designed to trick users into accepting browser cookies. And while it was possible to delete cookies, some (like Zombie cookies) would stay on the visitor’s computer without their permission, thus propelling shady advertising practices. 

That prompted a new privacy-oriented trend. Started by Apple in 2015, browser cookies were given less and less power in favor of user control. Despite the ad tech industry’s reliance on permanent cookies, the biggest web browsers on the market started taking these security concerns seriously. After Apple has enabled ad blocking in Safari, other browsers followed with increasingly stricter cookie policies. 

A timeline of browser cookie phase-outs

2015 – Apple allows third-party ad blockers on Safari. Users who didn’t want to see any more ads could simply install an ad blocker from the app store. A browser cookie that would normally be ‘hidden’ in an ad, would no longer be able to land on the user’s computer.

2017 – Apple’s Intelligent Tracking Prevention 2.0 disables browser cookies coming from third parties. Users would still be shown ads, however, as Safari wouldn’t accept cookies from the publishers of the ad, the data stored in a cookie was no longer available. Hence – no accurate tracking and revenue attribution.

2019 – Mozilla introduces options for handling cookies and the option to disable cookies coming from third parties. This decision affected mainly smaller publishers but it paved the way for other browsers to further disable cookies used for tracking.

2019 – Apple’s Intelligent Tracking Prevention 2.2 limits the tracking functionality of first-party cookies. So first-party data became only accessible for 24 hours which didn’t restrict website functionality but made it difficult to analyze data coming from complicated funnels that used first-party cookies. 

2019 – Google announces the Privacy Sandbox. As the browser that relies most heavily on advertising revenue, Google Chrome was most reluctant to introduce any changes. That’s why the Privacy Sandbox project was meant to focus on finding alternatives to persistent cookies rather than removing them completely. 

2020 – Safari introduces automatic third-party cookie blocking.

2020/2021 – Google announces plans to gradually phase out third-party cookies by early 2023. Initially, the plan was to be realized by 2022, however, Google keeps postponing further steps due to the ongoing development of alternative tracking solutions and the rejection of FLoC by all major browsers. 

2021 – Mozilla introduces total cookie protection completely limiting tracking its users across multiple sites.

2022 – Google abandons FLoC in favor of a new, less controversial solution – Topics API.

By mid-2021 cookies have slowly become obsolete. While first-party cookies are here to stay, third-party data will no longer be gathered and shared between the ad tech giants and the rest of the advertising industry. If every time a user starts an app they are asked for permission to be tracked, they will only agree only 25% of the time, as shown by the most recent Apple update.  

These developments have brought cookies back to their primary form. They’re once again used to make the browsing experience easier and more convenient without infringing on user privacy. 

What’s the future of advertising?

There is no place for third-party cookies in the future of advertising. After third-party cookie-based ad formats peaked in the 2010s there’s been a growing tendency towards more privacy-oriented solutions. 

It was Apple that started the trend of giving consumers more control over being tracked around the web for the purpose of ad targeting. Consequently, the attitudes have changed and now all of the major browsers are either limiting or eliminating third-party tracking altogether. Thus, old targeting and retargeting methods are no longer working. There is, however, more space for alternative advertising solutions, be it first-party data, contextual targeting, or a yet-to-be-discovered technology.

Google, Facebook, and other tech giants who are most affected by the changes will continue to search for alternative methods of keeping their ad businesses alive. In the meantime, the last bits of third-party advertising is dying and brands are moving to cookieless ad formats.

If you’d like to learn more about the most recent changes, read about the state of the advertising industry in the face of third-party cookie phaseouts.

Conclusion

As for the ad tech industry, it is hard at work trying to replace browser cookies with other methods of effective advertising. For the past couple of years, it’s been clear that browser cookies coming from third parties (tracking cookies) are not welcome anymore.

Some of the largest companies in the world are now in the rush to future-proof their advertising. To answer the suddenly increasing demand, innovative and cookie-less ad formats are starting to emerge. These can not only bring customers to the desired website without cookies or any other third-party tags or trackers but also do it more effectively than traditional ad formats while maintaining brand safety and user privacy.

Would you like to learn more about future-proofing your advertising with cookie-less ad formats? Request an exploratory call with a NewProgrammatic expert, and let’s get the ball rolling!

 Ask us about effective cookie-less ad formats!

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