Why a cookie-less future will set advertising free

James Bayes
By James Bayes | 2 August 2023
James Bayes.

James Bayes, VP ANZ, The Trade Desk

Back in the early 1800s, the world saw one of its biggest innovations of its time — the horse-drawn cart. For around a hundred years, people relied on horse-drawn carts to get them around.

But in the early 1900s, things began to change. The automobile was invented. There was nothing inherently wrong with the horse-drawn cart; but cars could do the same job but much more effectively and efficiently. Cars gave people more freedom and access to services they could not previously reach.

In 2023, we’re going through a similar situation in digital advertising. But instead of horse-drawn carts and automobiles, it’s about cookies and the next generation of identity.

The landscape we’ve been living in

Cookies have become synonymous with the internet that we know today. But they were never meant for advertisers. They were just the least-worst solution available to advertisers looking to deliver personalised campaigns back in the day when digital advertising happened mainly on websites.

Today, the digital landscape has expanded to include advertising channels outside of a web browser like music streaming, commerce platforms, BVOD and apps. So it’s clear that cookies are no longer fit for purpose, regardless of whether Google kills them or not.

How the industry is changing right now

The good news is that, while Google has spent the past five years discussing the death of cookies with little to no tangible output, the rest of the industry has seized the opportunity to develop new, modern and better approaches to identity that work across different advertising channels.

And it all starts with the idea of ‘logging in.’

Consumers are getting used to logging in to their favourite services. Almost all apps, news sites, music streaming services and video streaming services these days require everybody to log in. And even those services that don’t force people to log in encourage people to do so because of the personalised content they’ll receive.

This trend will only accelerate as publishers and advertisers reimagine the role of identity in a post-cookie, omnichannel context and realise the full potential of building authenticated audiences.

Advertising at a crossroads

‘Logging in’ is the premise on which new ‘alternative’ (or ‘alt’) identity frameworks like Unified ID 2.0, ID5 and LiveRamp’s Authenticated Traffic Solution have been created.

With alternative IDs, advertisers can meet their need to measure and manage campaigns across all channels — even those that never used cookies in the first place. Advertisers can see, for example, if a certain audience group has seen a particular ad on a streaming platform, and then manage the frequency of that ad for the viewer across all channels. Advertisers have no interest in bombarding users with the same ad over and over. They know it’s not good for their brand. But until now, they haven’t had great tools for managing that.

The benefits also extend to consumers. They log in with their email, which the alt ID solution then hashes and encrypts, so no personally identifiable information is ever available to advertisers. On top of that, consumers can manage their data-sharing preferences (or opt out completely) from a single place for all services they use on the open internet — rather than manage settings for each individual site.

These benefits are important because brands can then deliver personalised ads in a privacy-conscious manner. For example, with Unified ID 2.0, brands can use their first-party data to conduct ‘lookalike modelling’ to target additional potential customers who share some of the same characteristics of those loyal customers across the open internet. And brands can now do so without compromising the consumer trust they have spent years, or sometimes decades building.

The future of the internet requires a new approach to advertising

These innovations come as marketers become increasingly concerned about the limitations of walled gardens. The big tech platforms are building their walls higher, limiting transparency and competition and trying to take the high ground on privacy while trading on consumer data within their own walls. At the same time, data suggests that the open internet may be a much more effective environment to reach audiences, with Australian consumers spending three quarters of their online time there.

Cookies clearly no longer do the job that marketers require of them. So, whether Google kills them off or not, the advertising industry is naturally going to move away from them. Because once you’ve tried driving a car, you realise how antiquated and limiting using a horse-driven cart really is.

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