Privacy-first addressability: a crucial challenge for advertisers and publishers

The challenge for advertisers: first-party data and cookieless alternatives

The decline of third-party cookies is forcing advertisers to get creative with their targeting strategies. First-party data is becoming the go-to option for marketers; it provides a wealth of information directly from users and allows them to match audiences across ad platforms, reducing reliance on third-party ID solutions. Salesforce reported in 2022 that 78% of marketers now consider first-party data their most valuable asset for ad targeting.

First-party data can be collected through various channels: website interactions, email marketing, and customer relationship management systems. This data allows advertisers to create more personalized and relevant experiences for audiences, leading to better conversion rates and stronger advertising performance. However, relying solely on first-party data has its limitations; it fundamentally restricts brands’ ability to reach new audiences.

To fill this gap, advertisers are turning to alternative methods of ad targeting that don't rely on cookies. One is contextual targeting, which focuses on the context of a webpage to serve relevant ads, rather than tracking individual user behavior. By examining factors such as keywords, page content and website categories, advertisers can serve ads that are more likely to resonate with their audiences. Google has been testing its Privacy Sandbox initiative since 2021, which explores various alternatives to cookies, including the use of machine learning for contextual ad targeting.

Another is topic-based targeting. Google’s ‘Topics’ proposal has replaced their controversial FLoC (Federated Learning of Cohorts) cohort-based targeting solution announced back in 2021. To figure out your interests, Google categorizes the sites you visit based on one of 300 topics – arguably allowing a more personalized approach than FLoC.

As advertisers navigate the next few months, we must test and optimize strategies targeting browsers that already have limited or no support for third-party cookies, such as Safari and Firefox. By doing so, you can get a head start on refining privacy-first targeting methods and adapt to a cookieless future.

Publishers: delivering value in a privacy-first world

As privacy concerns continue to grow and first-party data becomes a precious resource, more publishers are ‘walling off’ content and encouraging users to subscribe in order to access exclusive material.

This helps publishers generate revenue (by providing advertisers with ‘addressable’ users) and allows them to collect valuable first-party data to improve their content. The key to this is a solid value exchange between publishers and audiences, building trust, loyalty and subscribers.

To achieve this, publishers need to focus on five things.

1. Transparency

Publishers must be transparent with their audience about how their data is being collected, used, and protected. Clear privacy policies and user-friendly consent management tools are essential in building trust with users.

2. High-quality content

The key to driving subscriptions is offering high-quality, engaging content that provides genuine value to the audience. By creating content that meets their readers’ needs and expectations, publishers can encourage subscriptions and foster long-term relationships with audiences. Sports publication The Athletic has done a fantastic job of this in recent years.

3. Personalization

With access to first-party data, publishers have an opportunity to deliver personalized experiences for their subscribers. By tailoring content and recommendations based on user preferences, publishers can enhance the overall user experience and increase engagement and data they collect to power advertising.

4. Ad relevance

As publishers shift to privacy-first ad targeting, it’s essential to ensure that ads on their platforms are relevant and non-intrusive. By working closely with advertisers to implement cookieless ad targeting alternatives like contextual and cohort-based targeting, publishers can maintain ad revenue while respecting user privacy.

5. Collaboration with advertisers

Establishing a strong partnership with advertisers is crucial for success in a privacy-first world. Publishers can work with advertisers to develop tailored campaigns that leverage first-party data, creating a win-win situation where advertisers reach their target audience, and publishers maintain user trust.

Privacy-first ad targeting solutions for publishers include data management platforms like Permutive, which uses edge computing to process data on the user’s device, rather than relying on third-party cookies. By doing so, Permutive enables publishers to deliver personalized ads without compromising user privacy.

Another example is the industry-wide initiative led by The Trade Desk, Unified ID 2.0, which aims to create a more effective and privacy-compliant alternative to third-party cookies. The solution uses hashed email addresses to create unique identifiers, allowing publishers and advertisers to collaborate on targeted advertising while protecting user privacy.

Privacy-first addressability is an essential challenge for both advertisers and publishers. As we move toward a cookieless future, advertisers must embrace first-party data and explore innovative ad targeting alternatives. Meanwhile, publishers must focus on delivering value to audiences through transparency, quality content, personalization, and improved advertising options for both users and brands.

To read more from The Drum’s latest Deep Dive, where we’ll be demystifying data & privacy for marketers in 2023, head over to our dedicated hub.