The advertising industry has failed to make a compelling economic or societal argument for user-level targeting, argues WARC’s Alex Brownsell.
During the making of the WARC Guide to the Future of Identity, Google announced it was delaying the deprecation of third-party cookies on its Chrome browser until 2023. It was striking how many people emailed in the subsequent days asking whether we would be postponing (or even cancelling) the publication of the report.
Such is the nakedly short-termist reality of digital media. Many brands, agencies and media owners around the world will be tempted to file away those documents titled ‘Post-cookie Contingency Plans’ for 12 or 18 months, until such a time that the situation once again becomes urgent.
As we set out in this WARC Guide, any such delay would be the wrong course of action.
The nature of ad targeting
The (slow) demise of third-party cookies, Apple’s App Tracking Transparency (ATT) policy, and a sprawling patchwork of global data privacy regulation are combining to undermine the very foundations of digital advertising. And at the heart of this is a debate about the very nature of targeting and personalisation on the web.
There are estimated to be over 100 advertising ID solutions on the market, the majority of which aim to identify individual users and share insights into their online behaviour. Most work by encouraging a user to provide a piece of personally identifiable information (PII), such as an email address, by which they can be tracked across participating publishers and platforms.
So far, so compliant. However, concerns have been raised about the viability of such ID schemes, and whether they can attract enough sign-ups to be worthwhile to advertisers – and with good reason. After all, what is the motivation for consumers to share personal data with unfamiliar ad tech companies, when they can (in most instances) access that same content for free?
Time to pivot from user-level targeting
The fact of the matter is that, thus far, the marketing industry has failed to make a compelling economic and societal case for individual-level targeting.
Do consumers prefer relevancy? Of course, but there are plenty of ways to reach users with relevant communications without identifying specifically who they are. Publishers like the FT know enough about their registered users to help brands to reach appropriate audiences. Contextual targeting has come a long way since the days of basic interest-matching (e.g. fashion ads against fashion content).
What’s more, evidence shows that less user-level data does not necessarily mean less effective. An IRI study found that reducing the availability of Apple device ID data did not lead to a fall in product sales. Similarly, early trials of Google’s Federated Learning of Cohorts (FLoCs), which groups users at a browser-level based on traits and behaviours, showed “at least” 95% of the conversions per dollar spent when compared to cookie-based campaigns.
The time has come for marketers to reframe personalisation for a privacy-centric era.
While Google’s FLoC proposals are by no means perfect, Jerry Dischler, VP/GM of the company’s ads business, was right when he said that attempts to directly replace third-party cookies with lookalike technologies will not meet consumers’ rising privacy expectations – and nor will they stand up to rapidly evolving regulatory restrictions.
As Robin Berjon, VP Data Governance at The New York Times, argues in this excellent piece, this very notion of a singular identity is flawed. “I act as a different person with different interests whether I am at work, attending a philosophy of science conference, or haunting my local dive bar,” he writes. Consumer behaviour may shift as they move between different areas of the web.
The case for individual-level targeting is crumbling. People do not want to be followed by that apocryphal pair of shoes across the internet; nor do they wish to be constantly reminded of an idle moment of browsing. What’s more, businesses can survive (and thrive) without it.
A first-party data mindset
The one great exception, of course, is the ability of brands to personalise through first-party data.
As WARC Guide contributors from Artefact and OMD explain, marketers can gain huge competitive advantage from getting to know their customers better, and tailoring communications and content accordingly.
Adopting a ‘first-party data’ mindset means reviewing all customer touchpoints for data collection potential. As demonstrated by Heineken USA, even brands without the permission to sell directly to consumers can exploit owned media and events to gain audience intelligence. Loyalty programmes can be reframed to reward consumers on the basis of engagement, rather than simply encouraging one-off transactions.
Of course, all such first-party data collection must be compliant with local regulation. Brands should interrogate existing data supplies to ensure the information was provided actively, rather than passively. Recency is vital: out-of-date data can lead to irrelevant messaging. Marketers should make it as easy as possible for users to add and retract data permission through preference centres.
Even better than basic PII is the kind of rich, in-depth information that consumers are increasingly willing to share with brands in exchange for a tangible benefit. Dubbed ‘zero-party data’, this can include anything from how the individual wants the brand to recognise them through to explicit purchase intentions.
Lacoste Japan, for instance, created an interactive experience to poll consumers on their fashion preferences, and was able to tailor its marketing accordingly. This type of proactively-shared intelligence may quickly become the gold standard of identity data.
Consider the options
It’s undeniably a confusing situation for marketers.
The WARC Guide to the Future of Identity explains how advertising identity is changing, outlines the main options available to brands, shares guidance on first-party data collection and management, and offers advice on how to handle challenges yet to come.
The Guide features 15 articles by experts from around the world, plus Q&A videos by Ranga Somanathan, co-founder of RSquared Global Ventures, and Jen Gulling, VP, Enterprise Growth Leader, at Merkle.
It’s an ever-changing landscape, and one we’re intent on keeping on top of with further analysis and best practice assistance at WARC. Stay tuned.