Chris Hogg
Chris Hogg 9 November 2021

The Game isn’t Over for Targeted Advertising, but Playing Strategies Must Change

Since Google announced the retirement of third-party cookies, the hunt has been on for a new, permanent, and privacy-safe replacement. But while the digital advertising industry has seen many solutions emerge — including several identity-centric initiatives and interest-based audience segments — it’s also encountered ongoing confusion and indecision.

With less than two years until cookies are phased out might indicate there is now much less urgency to find a different path. The new timeline, however, shows progress is still moving apace; with discussion around the contentious federated learning of cohorts (FLoC) due to end in the second half of 2023.

FLoC testing is now set to begin in Q1 2022. Moreover, fresh complexities continue to crop up, such as Apple’s privacy updates.

The need remains for a change of strategy focused on multiple alternative options and that includes exploring and iterating on predictive and authenticated IDs and contextual targeting. For example, does a London marathon runner halt their practice because it was delayed due to Covid-19? They use the time to train harder, get fitter and strive for a better time.

Optimising Reach Through Probability

One of the main benefits of predictive or probabilistic identity is scale. Solutions assign IDs to groups of signals that can run across environments and devices, working from a basis of public data such as browser user agents and IP addresses.

This means they have the capacity to help drive engagement and frequency capping for large audiences of potential customers, as well as complementing deterministic IDs. Privacy is also protected by minimal data use: because user phone numbers, home and email addresses aren’t required, personal data is safe from hacks on encrypted IDs.

But reliance on IP addresses does come with some key considerations. At a web-wide level, using this data makes consent vital, as outlined in the Transparency and Consent Framework. There are also further issues for specific operating systems. Apple has unveiled plans to start redirecting traffic through separate servers to obscure user IP addresses from third-party trackers.

The roll out of its Private Relay feature is therefore likely to create challenges for marketers to track users’ web browsing activities. However, as the IAB Tech Lab estimates, the scale of Private Relay may be low as it only applies to Safari users and requires users to enable it.

Leveraging Authenticated Accuracy

Revolving around the user data value exchange, deterministic identity offers maximum precision (so long as the user doesn’t give you a fake email address!). Approaches are powered by the information users agree to share, including log-in details such as email addresses, in return for greater value from publishers, brands and apps.

While the biggest advantage deterministic IDs present is reliable authentication, which fuels accurate ad targeting, measurement, and optimisation, they also bring the opportunity to build deeper relationships via direct interaction.

The practical application picture, however, is mixed. Although 64% of consumers are ready to open up data for bespoke experiences, only two in ten feel confident brands will manage it securely. Uncertainty on the consumer side is raising concerns among marketers about limits to data access; with 44% unsure whether first-party data will be enough to fill the gap left by cookies.

As reach remains a crucial advertising priority, strengthening audience bonds and diversifying strategies will be essential; particularly as Apple introduces other privacy changes such as Hide My Mail, a feature that will allow users to create unique random addresses.

A Tailored Content-Based Fit

Inherently privacy-friendly, contextual targeting is gaining attention as a simple and logical alternative. By tailoring ads to match content, solutions don’t depend on cookies or personal data but they do require consent to track someone’s interests and behaviors.

Scope to provide streamlined user experiences while maintaining the ability to support tailored ads has also made contextual targeting especially popular for publishers: to the point where 68% believe it will replace audience targeting.

Complications mostly lie on both the buy and sell side. Focusing solely on content will reduce media range to only certain web pages obviously linked with specific brands.

Marketers may find they need to blend contextual data from multiple pages so ads can be seamlessly targeted in line with the content users consume – even for a single session, this classes as tracking and makes consent necessary.

Added to the scale and measurement difficulties posed by taking all identifiers out of the equation, it’s easy to see why only 35% of marketers share current publisher optimism.

Flying with Google’s FLoC

FloC aims to broaden targeting horizons without losing ad resonance, or the need for cookies and IDs. Part of Google’s Privacy Sandbox efforts, the idea focuses on enabling interest-based targeting by using algorithms to build groups or cohorts of users who share certain tastes.

Keeping browser history private and placing individuals in vast segments of similar users will ensure they stay anonymous but still reachable.

Topping the list of challenges, however, is the possibility marketing and publishing success could become even more closely tied to walled garden technology. This issue hasn’t gone unnoticed, forming part of the UK Competition and Markets Authority (CMA) investigation.

There are also questions about the level of control FLoC could give Google over how content is classified, alongside the potential for privacy risk if interest data is combined with other information to allow identification.

It has become evident to the industry that FLoC’s technology is still surrounded by uncertainty and is not market-ready, hence the decision to delay cookie removal which is likely in order to advance a solution that asserts Google’s market dominance without the need for outside partners.

Confusion may still be reigning following the delay on cookie deprecation, but it would be naive to pause on future-proofing digital advertising. Marketers must adjust their mode of play to consider the pros and cons for every available option, not just waiting for one magic bullet.

It’s highly probable they’ll find the best way forward is embracing a blend of privacy-compliant and interoperable identity solutions that will work for the cookie-less open web and they must be testing these now.

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