What will a cookieless ad tech future look like?

If GDPR is a new term to you, you must have been living under a rock the pas

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If GDPR is a new term to you, you must have been living under a rock the past two years or so. Jokes aside, here’s a recap. GDPR is a European data protection legislation, forcing companies to be more transparent about the use of personal data. Cookie consent is also one of the things that fall under the giant GDPR umbrella. It’s not only the EU that is keen on this privacy trend. California has jumped along with its California Consumer Privacy Act in order to ensure its resident’s privacy rights.

It’s not just governments that are regulating for more consumer privacy. Browsers like Safari and Firefox are also making surfing the web more private. Apple launched its Safari ITP already in 2017, with the aim of preventing companies to track website visits. Apple launched a new version of the ITP, the 2.3 this fall, that eliminates all kinds of tracking on Safari, not only data relying on cookies. We suspect that this is probably just the beginning.

In order to understand what we talk about here, you need to know the difference between 1st, 2nd, and 3rd party data.

First-party data is the most qualitative and valuable data and is usually gathered from website visits and CRM systems and is more or less always gathered through cookies.

Second-Party data is, in theory, the same data as first-party data, but someone else has gathered it. Through for example partnerships, you could access someone’s second-party data.

Third-party data is more accessible data you in most cases can buy. Third-party data is not specific and in many cases irrelevant to you, but when in need of quantity before quality, third-party data is useful. Cookies are what make the browsing experience personal and thanks to these you are being shown relevant (or at least an attempt to relevant) ads on new sites you visit and websites you have entered before remember you and can provide you the information you previously have submitted.

What’s the problem here?

In ad tech, targeted ads perform in general a (hell) lot better than non-targeted ads, see our post here about how to do targeted ads yet staying compliant. Although there have been lots of speculations about a cookie-free future the past year, most online advertising companies still rely on cookie-based targeting for personally targeted ads. So why not just continue as it is? Well, because in every story there always has to be the bad guy. In this case, the bad guy(s) would be GDPR, CCPA, and Apple with their ITP. However, these are not the only ones to blame here. Cookies have in fact never been an “ideal” solution to targeting, but it has been convenient and has become a very integrated habit in many companies, a habit which is difficult and expensive to break out from.

Consumers have become more and more aware and careful about their personal data in the past few years, which has lead to the point we are today, companies need consent to collect cookie data.

The good news is that regulation typically drives innovation. Companies in the online advertising industry need to come up with new ways to target their ads and reach their desired audiences without using their personal data. It could be that what marketers today call “target audience” will mean something different in the future.

So what will the future look like?

It looks like cookies will die soon – but so will fingerprinting (a more technical way of identifying a specific user). We’ve succeeded to advertise without personal targeting before but where will we see a renaissance; creative design, storytelling or something else?

There are many opportunities to succeed without having to use any personal data but yet providing a personalized browsing experience. Machine learning and AI open up doors to countless of ways to walk around cookie targeting by taking advantage of loopholes in regulation. Targeting ads based on sites visited in the past is becoming a bit outdated as a tracking measure anyways. Instead of relying only on historical data, based on past browsing habits, you could rely on live data, being served at the same time as the ad is being served. There’s a huge amount of unused, non-personal data available that’s driving our purchase decisions and this creates a billion-dollar opportunity for startups to figure out the new secret sauce.

It’s clear that 2020 is the time to get innovative. The industry needs a way to provide personal and relevant ads, without the cost of sacrificing consumer’s privacy. Will we come up with something? Guaranteed.