Alternatives To Cookies: How Contextual Targeting Amplifies Ad Spend



David Simutis
Alternatives To Cookies: How Contextual Targeting Amplifies Ad Spend

Cookies have long defined online marketing. But soon, certain types of cookies will be phased out of the digital advertising industry all together. Here’s why and how to evaluate some alternatives to third-party cookies in your marketing strategies.


Why Are Cookies Going Away?

Cookies first hit the internet in 1994, when Lou Montulli, a Netscape employee, determined that websites needed a way to collect information about their visitors. By understanding more about their users, these sites could target relevant ads and content to them and, therefore, generate revenue.  

Two types of cookies then evolved. The first, aptly named first-party cookies, are set by the website server itself. Third-party cookies (or 3rd-party cookies), on the other hand, are set by third-party servers owned by adtech vendors or by code on the publisher's website. 

To be clear, not all cookies are going away. First-party cookies will still play a huge role in the digital advertising ecosystem because they are based on first-party data consented by the customer and governed by the brand. It’s third-party cookies—which are based on third-party data of often unknown source and accuracy—-that are going away, and it’s because consumers want them to.

Third-party cookies are the technology responsible for the proverbial pair of shoes you already bought following you around the internet. Over time, consumers got sick of being tracked across websites in this way.

User privacy concerns led to major laws coming into effect, such as the General Data Protection Regulation (GDPR), which requires user consent to track website visitors with cookies, and then soon after, the California Consumer Privacy Act (CCPA), under which consumers can demand to see all the user data a company has saved on them, as well as a list of any third parties with whom that data has been shared.

More recently, the U.S. has begun considering the American Data Privacy and Protection Act, a national data security and digital privacy framework that would create new rules and regulations for any business that collects consumer data.

Then, in early 2020, Google first announced its plans to retire third-party cookies from its Chrome browser. Through its Privacy Sandbox, Google is working hard to prevent covert tracking techniques like fingerprinting and network-level tracking as replacements for third-party cookies. There are also API groups focused on curbing individual-based targeting methods, such as reducing the ability to use IP address to build a user profile.

Google’s move was preceded by Firefox also blocking third-party cookies by default and followed by Safari’s 3rd-party cookie blocking, resulting in roughly 40% of US internet traffic now coming from users who already block these cookies on their web browsers. Apple then followed with major privacy updates to its iOS 15 that allow users to opt out of all app tracking. 

While all of these privacy changes taken in aggregate are good for consumers, they’ve left the digital marketing space in quite a dilemma when it comes to targeting and attribution. It’s difficult to wean off an advertising approach that was used for years, and that was believed to deliver adequate enough results. But therein lies the rub: Third-party cookies, in actuality, are quite ineffective. 

When third-party cookies first hit the digital advertising scene, no one could predict we’d have all the devices we do today, or that a single person would own several smartphones, tablets and computers. Third-party cookies were never intended to track user’s devices or all of the apps they store. This means that third-party cookies could never truly give an advertiser a full view of the customer journey, which often results in wasted spend. And for the consumer, this means the user experience while using much of the internet is sub-par due to irrelevant, annoying ad targeting. 


What are the Alternatives to Cookies? 

Third-party cookies going away doesn’t signal the end of all audience targeting. There are several other ways to get a better understanding of Internet users to serve more relevant ads and content to them. A few third-party cookie alternatives include: 

  • Contextual data: Contextual data is perspective about a user. It pulls from and connects multiple data sets, such as demographic information, preferred communication method (email address or phone number), and last item purchased, from across multiple touchpoints, such as websites, email, and social media. Contextual data differs from third-party data because it’s more about the content a user has most recently consumed, not past behavior. 
  • Page signals: Page signals include both on and off. On-page signals include keywords, titles and subheadings, meta descriptions, and image optimization. Off-page signals include backlinks and domain authority, or how your site compares to other competitive sites. Algorithms tap into multiple page signals to see if a piece of content matches what a user is searching for.
  • Device type: Simply put, device data allows you to target ads to people based on their device, whether it’s a computer, smartphone, tablet, or TV.
  • Email: Email customer data can tell you a ton about your audience, especially if you segment your database. This intel includes demographics, which content users are most often clicking on, and motivating factors such as offers, surveys, and quizzes—all information that adds more detail to your customer profiles.


What is Contextual Targeting?

Contextual targeting uses algorithms to target ad placements based on keywords, website content, and other data mentioned above. This cookieless targeting approach leverages recency over past shopping behavior, showing ads based on content consumed when a user visits a website to better pinpoint buyer intent and design more personalized user experiences. Contextual targeting and advertising ultimately helps advertisers serve more relevant ads based on website content. Contextual targeting also carries the benefit of helping to create more personalized advertising without the need for constant user consent to use personal data.

These advantages might be why global contextual advertising spending was estimated at 178.3 billion U.S. dollars and is projected to more than double by 2027.


What’s Different About A Contextual Data Marketplace?

What if you struggle to tap into enough contextual data to execute contextual advertising well? Or, what if you want more unique data sets to better engage with your customers and prospects? 

This is where contextual data marketplaces come in. As it sounds, a contextual data marketplace curates innovative, pre-bid, cookie-free contextual data based on content such as web pages, apps, and even physical location. The thinking goes, the wider variety of contextual data sets at an advertiser’s disposal, the better the insights they’ll have for targeting at scale. Advertisers can then create tailored combinations of categories and individual categories specific to their strategy

Some of the data in a contextual data marketplace might include: 

  • Emotional context, in which the emotional intent of an ad is matched to placements where audiences are most receptive to that emotion
  • Real-time conditions, in which you can leverage real-time environmental factors and dynamic weather conditions
  • Propensity to purchase, geography/ZIP, in which category purchase affinity is matched to geographical location 
  • Demographic, in which demographic data is matched to geographical location 
  • Disinformation avoidance, in which top disinformation sites are avoided 


How to Adapt to a Cookieless World

Third-party cookies are disappearing at some point. And ID providers have capitalized on this by promoting various identity solutions aimed at continuing to utilize user identity for targeting on some level. Thankfully, there are a number of viable emerging and established replacement solutions available to evaluate. Here are some of the best alternatives:

  • Using first-party data, such as hashing opted-in emails into encrypted, unique codes and using those for off-platform targeting
  • Universal IDs, such as the Trade Desk's Unified ID, an open source framework built from hashed and encrypted email addresses—in another words, a permanent user ID or identifier, for use in targeting across websites, platforms, and channels
  • Google Chrome Topics API, which has replaced the federated learning of cohorts (FLoC) proposal in Google’s Privacy Sandbox, looks at what content a user has consumed for three weeks and then generates five “Topics” for each week, one on which will be sent in response to an ad request
  • Contextual advertising, which lets brands serve ads based on the content of a web site, not on customer data, using machine learning to predict the right pages to target at the right time

Peer39 has you covered for the cookieless future. Our contextual advertising solutions give advertisers a vast pre-bid contextual category library for delivering relevant ads in brand-safe and suitable environments. This includes creating custom categories for tailored advertising, planning and targeting contextual connected TV, and mobile.

Interested in learning more? Get in touch to learn how we can help you future-proof your advertising for the cookieless future with contextual advertising.

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