Tech News: Digital advertising and the cookie conundrum

By Louis Fourie  5h ago

JOHANNESBURG – Three weeks ago, I wrote about the media blues and the closing down of established print publications with a history of many decades. One of the contributing factors to the media blues is the dwindling print advertising income since advertising followed consumers to the world of digital media. 

The influence of digital media on consumer behaviour is well-known. One American survey indicated that 64 percent of people have been influenced to buy something after they watched a video online. 

The same survey disclosed that an amazing 52 percent of buying decisions can be traced to Facebook. 

Due to the popularity of social media and the amount of time that people spend online, it is understandable that advertising moved to digital media. The digital world is where the people are and to reach them businesses need to be there, create brand awareness, increase leads and make sales. 

The changing behaviour of consumers is why digital advertising became increasingly popular over the last number of years. 

Digital advertising

Digital advertising is the publishing of promotional content through various online and digital channels such as social media, mobile apps, search engines, websites, e-mail, games, affiliate programs and any other program that can be accessed digitally.

In fact, the first digital advertising in the form of banner ads appeared on HotWired.com, the original website of Wired Magazine on October,27, 1994. This was followed by Google AdWords in 2000, Google AdSense in 2003 and Facebook ads in 2007. From there the digital advertising industry developed by leaps and bounds. 

Traditional (non-digital) advertising mainly followed the so-called “spray and pray” approach. It reached the masses, but it was never possible to know if the correct target group was reached. Despite significant amounts of money spent on advertising, the return on investment (ROI) could not really be established. 

In the initial years of digital marketing, online ads were bought and sold very much in the same way as traditional press. 

Media agencies and advertising sales houses would typically determine the price of an online ad based on its positioning and duration. 

The ad banner was displayed on the website for all online users to see. Although it was a new medium, this method of advertising was still very much the “spray and pray” approach with little targeting of the audience. 

This approach was therefore rather ineffective, a waste of money and irrelevant in connecting advertisers with their targeted audiences across digital domains.

On July, 17, 1995 the first central ad server was introduced by FocaLink Media Services. This important development in digital advertising allowed sales houses to sell ads on multiple websites. 

Advertisers could hand pick which websites they wanted to display their ads on. Although some reporting on the ads was available, there was unfortunately still no guarantee that the banner reached the target audience. It merely displayed to every person that visited the website. 

It could very well be that products targeted to reach the adult market were seen by young people or children. This often resulted in a massive wastage of advertising money. Despite the new ability to advertise across websites the issue of specifically targeting certain audiences remained problematic.

But digital advertising kept on developing and Real Time Bidding (RTB) was introduced. 

Real Time Bidding is a server-to-server buying process that allowed the buying and selling of advertising spaces on websites on a per-impression basis through programmatic real time auctions, very similar to the financial markets. This ability to reach an audience across the web with your advertising and control it through an agile and responsive system formed the basis of programmatic advertising as we know it today.

Programmatic advertising has fully automated the buying and selling of digital advertising. It currently uses artificial intelligence (AI) and machine learning to buy ads without the intervention of any human person. This automation makes transactions fast, efficient and more effective, while streamlining the process and consolidating the digital advertising efforts in one technology platform.

Programmatic advertising has developed far beyond the sphere of online display advertising. Today, anything in a digital format can be bought programmatically, whether it is audio, television, Internet or outdoor advertising (also known as out-of-home advertising).

Digital advertising is heavily data-driven and can give advertisers minute details of their campaigns and results. It is the availability of rich user data that makes the sophisticated and specific targeting of audiences through algorithms and technology possible. It is exactly this massive data collection that is being shared between buyers and sellers that has led to serious concerns regarding the privacy of consumers. 

Digital distrust

Over the past few years the distrust of large data collectors, such as Google and Facebook, has been growing amongst the digital community. Although tracking allows advertisers to serve targeted audiences with more relevant content, people just do not like every move they make to be tracked and interpreted. Too many cases of exploitation have been exposed.

At the moment one of the popular ways to collect data is through the use of cookies. A cookie is a small piece of data sent from a website to the web browser that saves the user’s data on the computer and then sends it back with each request made to the web server when the user visits the website. Cookies are the backbone of programmatic advertising and the targeting of audiences. They are vital to all aspects of the digital advertising process, from the planning, segmentation, targeting, frequency capping and attribution of the advertisements to the metrics on their performance. Through third-party (or tracker) cookies, advertising companies and social networks can carry out behavioural targeting, ad tracking, and measurement for deep analytics. Tracker cookies make it possible for advertisements to follow users around the web. 

Third-party cookies allow vendors, with whom users have no relationship, to build considerable profiles on them based on their Internet activities. This is why cookies are increasingly being considered as a threat to user privacy. Over the past few years the overuse of cookies and tracking has come under scrutiny and technology has been developed to prohibit the download of cookies to a computer or other device, or remove them afterwards. 

Google announced in August 2019 that their Chrome browser will no longer support third party cookies beyond 2021. 

Apple Safari initiated Intelligent Tracking Prevention (ITP) in 2017 and Mozilla Firefox launched Enhanced Tracking Protection (ETP) to protect user privacy by restricting their data tracking across the web. It seems as if the end of the cookie-based ad ecosystem is close and with that the audience addressability of companies.

Google’s solution to replace third party cookies is an initiative called Privacy Sandbox aimed at strengthening users’ privacy while using their browser and simultaneously make users’ data more secure. 

Google is of the opinion that since users are demanding greater privacy, transparency, choice, and control over how their data is used, the web ecosystem will have to evolve to meet these increasing user demands. However, industry observers have correctly pointed out that it is not only about privacy of the users, but that Google is also protecting its own business as the world’s largest online advertising company (64.1 percent of the global browser market).

A serious concern regarding the loss of cookies is that unethical operators may resort to fingerprint tracking. 

Canvas fingerprinting is a method to receive browser data through the HTML5 canvas element of the website, originally used to generate the canvas pixel data of a website via the Application Programming Interface (API) method. The text encoded pixel data is a unique identifier for every user and allows invisible tracking without any possibility to control it. Google promised to prevent fingerprinting by limiting the number of API calls a website can make. 

Due to the absence of third-party cookies to target individual users, the alternative to programmatic advertising would be to undertake more contextual advertising campaigns. In this instance publishers focus more on the first-party data (login details, website configuration, items in the shopping cart) of a logged-in audience. In this case advertisements would have a much higher relevancy to users. 

The deterioration of third-party cookies can be an opportunity to drive innovation and ensure that audience targeting in future happens within a transparent framework that is well understood and acceptable to users, as well as respect their right to privacy.

Data remains essential to digital advertising. Within the changing environment of the increasing privacy needs of users and the subsequent phasing out of cookies, advertisers will have to focus on the generation of their own first-party user data to ensure the highest quality of user data. Despite the cookie conundrum, digital advertising remains an important tool for businesses to reach and engage with their audiences.

Professor Louis C H Fourie is a futurist and technology strategist Lfourie@gmail.com