By Mark McEachran, VP Platform Product Management
The year was 1994. Lou Montuli, a Netscape engineer, had just invented the cookie. Did he want to build the foundation of a digital advertising industry that revolved around audience tracking and targeting? no He just wanted a shopping cart that worked properly in the early days of the web.
Montuli’s innovation allows publishers to set data inside a browser and retrieve it when the browser requests resources from the domain used to set the data. Their purpose was to keep a browser logged in to a service like a shopping cart, bank, DMV; Something that would otherwise have to repeatedly ask for credentials or pass credentials from page to page. Before cookies, keeping you logged in was a cinch.
By 1998, enough people were using the Internet that marketers and emerging ad technology companies began to pay attention to how cookies could be used to build audiences. It was a simple pixel, placed on a web page, that allowed the image host to retrieve and set cookies, then infer the user’s interests based on the pages they visited. With enough pixels on enough pages, a company can effectively track a user across the Internet.
This is the beginning of behavior that will eventually turn web users and regulators against cookies, but they also allow for highly effective, essential and harmless elements of online advertising, in particular, frequency capping and attribution. Marketers begin to enjoy the benefits of reduced waste from overserving an ad to a single user, gain the ability to optimize campaigns based on performance, and show return on their investment.
Ad tech Jio has hopped the fence and hit back at Apple
2008 is the next stop on our history tour, when the first iPhone with GPS hit the market While Apple customers were excited to find their nearest coffee shop, publishers saw an opportunity to improve their struggling mobile ad revenue. In the early days of the mobile web, the user experience dropped as soon as you started dropping ads on a page, but with location targeting, publishers could run fewer but more targeted — and therefore profitable — ads.
Using a device’s geographic coordinates has opened up a whole new targeting paradigm: geofencing. Clever campaigns can target you with ads based on your precise location. Burger King advertisers can geofence all McDonald’s locations and serve competing ads, luring users to the fast-food monarchy.
By 2011, mobile app capabilities were introduced in OpenRTB, the communication protocol that enables real-time bidding. Suddenly, device IDs from everyone’s phones flowed freely through Bidstream along with their GPS coordinates.
Then Apple started looking into the data leak. A team led by Erik Neuenschwander developed Identifiers for Advertisers (IDFA) which allows the user to effectively reset the virtual device ID. It seemed like the lightest possible touch on a platform for growing privacy concerns, but it was in the form of a more aggressive move from the company.
As Google followed suit with its Android platform, these identifiers received a new moniker, Mobile Advertising Identifiers (MAIDs). This was the first indication that the pendulum swing had reached its amplitude. As a bonus, addressing consumer privacy concerns has brought back favorable market sentiment from platform users.
Backswing momentum started with the IDFA, but that was quickly followed in 2012 with new restrictions on cookies, again, outside the camp, Apple. While the official time of death for third-party cookies has yet to be announced, Safari’s restrictions foreshadow its fatal trajectory.
At first, the market reaction was muted. Safari wasn’t a big part of the media mix for most of the campaign because it was isolated from the Mac computer and new smartphone channels. Almost the entire ecosystem continued to spend where the light was good, Chrome, and ignored the growing footprint of Apple’s privacy-friendly browser.
EU secrecy has swung the pendulum into a wrecking ball
It wasn’t until the European Union dropped its GDPR anvil on ad tech’s head that privacy became serious business. Almost as soon as the regulation became law in 2018, companies that relied heavily on prospective data exited the market. Others stayed there and suffered financial losses and were sued by a bunch of big and small players.
But with GDPR comes a terrible user experience. Publishers who wanted to leverage ads for revenue all had to implement annoying user notifications about… well, using ads for revenue. The user must accept the terms, or not. Even if they didn’t, the publisher still had to serve the same content to their more valuable users; Who can potentially provide advertising revenue.
The pendulum, as it is active, swings on both sides. Even when privacy wins, users can still suffer.
Apple, not content with just lame ads in its browser, introduced Intelligent Tracking Prevention in 2017, a collection of features under an initiative to protect user privacy and sell more phones by positioning itself as a privacy champion — a position Google will struggle to compete with. Because of the centrality of its advertising division.
ITP also has tracker limitations on the web and in Apple’s mobile app ecosystem. The latest additions to the program offer greater restrictions on throw-away email addresses, proxied web requests, and cookies.
At this point, some in the industry see Apple as ad-hostile, while others look forward to a broader push into ad monetization by the phone maker as the company slowly evolves into a media company. Walling their garden will pay dividends in the same way it did for Facebook, though thanks to their reputation for carefully cultivated privacy, they can avoid much of the social media network’s pitfalls.
Finally, we have Chrome cookies, the last piece of Montuli’s online shopping cart enabler. A technology based on an idea that dates back nearly three decades may fall into its most widespread use case in 2024. Many don’t think they will. I think they will.
This has left Team Chrome between a rock and a hard place, working on a privacy sandbox that’s supposed to strengthen ad tech while protecting user privacy. In the process, however, some of their solutions have integrated ad technology directly into Chrome itself, raising new privacy concerns.
For example, FLEDGE requires that the browser itself receives and stores a retargeting ad, then waits to serve it to the user when a partner publisher is available. Now, instead of ad tech tracking users from afar, it can track them up close. Will it survive the next swing of the privacy pendulum?
How to Prepare to Reach the Peak of the Privacy Pendulum
As the pendulum swings, we must take a balanced approach in the near term: continue to leverage cookies and identity when available; Use audience and attribution in traditional ways; They still work on existing technologies and vendors’ markets. But, also, look to the future.
That future is privacy-practicing user engagement. This means both marketers and publishers need to establish first-party relationships with their customers. Only a subset would want to get closer, but that’s good enough. Small, high-quality samples—the seed audience—that feed machine learning (ML).
Incentives can and should be used to bring more of these model citizens into the future of marketing These users fill out surveys, provide attribution signals, and voluntarily allow themselves to be seeded. We need these people, so we should make sure we take care of them with loyalty programs, exclusive discounts, members-only areas, and anything else that provides a value exchange for their cooperation.
Take comfort in the fact that even though we can no longer track everyone, we can and will still have these subsets to pin down our ML models. From there we reach our audience expansion toolbox. Look for terms like prospecting, cohort marketing, panel-based attribution and look-alike — or lookalike-audience — in your partnership.
These technologies will become the new pillars of online advertising. All of this will be opt-in and privacy compliant through ML, filling in the gaps left by the end of the cookie. The privacy pendulum will continue to swing — just look at the ongoing TCF conflict in the EU — but the history of online advertising shows that technology can adapt either way.
