The cookies are crumbling

Matt Gibney at adCAPTCHA explains how businesses can keep marketing precise without invading privacy

 

The drive for more personalised experiences for users in digital has been an obsession for marketers and brands for over a decade now. Digital advertisers have seen various legal and technology challenges, such as ad blockers, diminishing the effectiveness of these channels.

 

Google’s $5 billion privacy lawsuit over the use of incognito mode data collection has forced them to settle and set a new direction in a ‘post cookie world’. Their Topics API system aims to present advertisers with a user’s area of interest without exposing a user’s browsing data. Equally, Apple’s Intelligent Tracking Prevention (ITP) has limited the ability to track cross sites therefore limiting retargeting of users through advertising. 

 

Google is clearly attempting to find new ways to maintain or increase their advertising revenue without falling foul of legal challenges. One of these is the changes in its manifest V3 which led to many ad blockers no longer being functional as extensions. Many of these have redeveloped although have more limited capabilities but it’s clear that Google would like to get rid of ad blockers.

 

The question is though, was personalised digital advertising actually ever effective or something users would feel comfortable with? 

 

At its core, users do not want to engage with or be shown adverts. The first display adverts had click through rates (CTR) of around 44%; today it sits around 3% with some of this potentially bot traffic. This led to the model shifting to cost per mille (CPM) where you are charged for every 1000 views of an ad. This in of itself is under threat with bots making up a third of global web traffic.

 

Even if you use data about the user to improve the relevancy of these ads it’s never been that effective. Without wider knowledge of a user’s browsing activity across the internet, the attempt to understand their needs and therefore provide relevant ads is limited. Users also can feel that the more personalised it gets, the more intrusive the interaction, especially as most of the data is collected without their knowledge.

 

Bots also play a significant role in the quality of personalised advertising. Many methods to be more relevant rely not only on an individual’s activity, but creating cohorts from large data sets which match that behaviour.

 

However, with a large amount of web traffic now bots, this data is then being skewed and provides inconsistent results. With bot detection and security tools lagging behind in human verification this is a growing issue.

 

The traditional ad tech technologies have struggled to deal with the shifts as well. By focusing on this kind of marketing and building their tech in line with personalisation they are unable to adapt.

 

An example of this is Oracle’s advertising business being shut down in September 2024 after spending billions on acquisition and tech investment. In 2022 revenues were at $2 billion, only two years later this plummeted to $300 million. Faced with GDPR concerns, privacy legislation and legal challenges they were forced to drop the entire ad division.

 

Amazon in contrast has taken a different approach, albeit whether this will face any kind of legal challenge is unknown. They have steered away from the traditional ad network model and focused on the utilisation of their own retail platform’s ad space to allow advertisers to target users based on buying habits. This is across display and product pages as well as their streaming services. After putting ads into Prime Video’s base subscription they saw no churn on paid users and as of December 2024 are looking to extend the amount of ads users will see.

 

Most other streaming services are reintroducing advertising to prop up the subscription model in light of this move and also creating a new channel for advertisers.

 

In the post-cookie world, the move to focus advertising on specific platforms is growing. Platforms like Topsort aim to focus on large retailers selling their ad space to approved advertisers. This leverages their user base but doesn’t use cookies. It utilises the stage at the product journey to inject ads rather than basing on their data. This avoids any data collection across platforms and legal challenges therein.

 

Creating precise advertising without cookies requires a realignment around targeting users where they are in the journey and not on them themselves. Even with this approach, the lack of human verification and gamification will never resolve the problem of actually gaining engagement from users. 

 

A complete rethink of the types of ads, how they merge into the user experience and their relevance, is the only true way to regain value in this space. 

 

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Matt Gibney is CTO of adCAPTCHA 

 

Main image courtesy of iStockPhoto.com and Chainarong Prasertthai