By Mike Addonizio, Director, Platform Solutions at Digilant
The digital advertising industry loves cookies – the dominant data currency of today. Much of programmatic media buying technology and the way we deliver billions of digital ads, depends on this magical string of characters that helps identify consumers online. But what exactly is a cookie and how is it used to target ads? It’s not as straightforward as you’d think and the answer should help you understand why the ad industry will eventually replace the cookie and move to “People-based Advertising.”
What Is A Cookie?
In the advertising industry, many would say that a cookie is a digital identifier for a consumer that an advertiser can target. While this is true, it can be misleading. A cookie is an identifier for a browser on a device. Each device has multiple browsers and each consumer has multiple devices. So, while a cookie is an identifier for a consumer, it is one of many cookies that represent each consumer. When advertisers target a cookie, they target one browser, on one device, for one consumer.
How Many Cookies Does A Consumer Have?
It varies by country, but the global average is approaching four devices per consumer (source). Therefore, at a minimum, the average person has at least four cookies. However, each device can have multiple browsers, and therefore multiple cookies. Even your iPhone, which has a default browser (Safari) that
most of us use, contains multiple browsers. For example, when you open a website in your Facebook app or Reddit app, that behavior is likely attributed to a different cookie than the default browser on your phone.
Today, cookies are increasingly short-lived. When someone clears their cookies, they are essentially changing their digital advertising identifier for that browser and all previously collected behavior is lost. When someone uses private browsing (like “Incognito” mode on Chrome), they create a new cookie each time they reopen the browser.
So if a programmatic advertiser wants to target a specific cookie, it’s possible that they will never see that cookie again because the consumer has cleared their cookies.
How Is A Cookie Used To Target Ads?
In the early days of digital advertising, it was quickly recognized that profiles could be built around cookies by tracking what users do across multiple websites. For example, if you browse between a travel blog, TripAdvisor, and Expedia, it can be inferred that you are in market for a vacation. In order to monetize their audiences, websites started sharing data with third-party resellers, like BlueKai. These resellers wrapped that behavior up into segments, and sold bundles of similar cookies to multiple advertisers.
It has been quite successful to date, but with the explosion of devices, the surge of ad blockers, and learned habit of “clearing cookies,” the age of cookies for digital marketers is coming to an end.
The Future: People-based Advertising
The goal of digital advertising has always been about using consumer behavior to communicate the right message to the right person at the right time. The more data an advertiser has about users, the more this goal can be realized.
It should be obvious by now that in today’s world a cookie represents a small portion of consumer behavior. In the days when most consumers had one desktop device and no ad blockers, a cookie represented the lion’s share of that person’s online behavior. However, we have hit a tipping point in the advertising industry where the value of a cookie is diminishing.
In order to replicate the success of the past, behavior across browsers and devices must somehow be tied back to the consumer. This is referred to by some as “People-based” advertising – where targeting occurs at the level of the consumer, not their cookies.
In order for People-based advertising to work, a shift from cookies to an identifier needs to happen. Many have looked at an email address as the alternative option. If an email address is tied to cookies, it is possible to tie behavior across multiple devices and browsers back to an individual. Furthermore, an email address translates to other channels – such as social, search, and email (of course!).
However, the reality is that many consumers have multiple email addresses – a personal email, a work email, and an email used for junk mail – and email addresses don’t last forever. While email is a great first start, it won’t create the defragmented consumer profile required for optimal ad targeting.
Could A Mobile Phone Number Enable People-based Advertising?
Most consumers have one mobile phone number. Since mobile providers allow for a phone number to be transferred from one provider to another, consumers don’t often change their number. The mobile number is a non-fleeting, unique identifier that represents a consumer. If all digital behavior could be tied to a mobile phone number, advertisers would have a full profile of their consumers.
It’s no surprise that ecosystems, like Facebook and Google, are requiring a mobile phone number to verify a consumer’s identity. If you want to sign up for an account, you need to provide your phone number. As this practice becomes commonplace for smaller apps, publishers, and websites, mobile phone number could become the identifier of the future.
For programmatic advertising, a consumer’s unique ten-digit identifier could one day act as a replacement of the cookie – assuming this happens in a privacy compliant way. It would span ecosystems, devices, browsers and help advertisers achieve their goal of delivering the right message to the right person at the right time.
