UPDATED 10:00 EDT / AUGUST 24 2021

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Here are 5 insights you might have missed from ‘The Cookie Conundrum’ event

The reliance on third-party cookies to track user behavior for advertising is going away based on plans outlined by Google LLC, provider of the dominant Chrome browser with 69% of the market. What will this mean for the advertising industry and consumers?

This was a focus of “The Cookie Conundrum: A Recipe for Success,” a recent broadcast by theCUBE, SiliconANGLE Media’s livestreaming studio, in partnership with Quantcast Inc. A number of the industry leaders spoke about the changing landscape of advertising on the open internet, and here are five additional insights gleaned from the discussion. (* Disclosure below.)

1. Third-party cookies will be replaced by contextual targeting.

Industry observers, including a number of those interviewed by theCUBE, saw use of third-party web browser cookies to track user behavior as headed for inevitable extinction. These small pieces of code, stored when a user opened an ad-enabled web page, have provided advertisers with data for decades. But web browsers were already blocking or deleting cookies at a 64% rate based on one study, rising as high as 75% on mobile devices.

It appears likely that digital advertisers will now turn toward contextual targeting. Through advances in the use of AI and machine learning, including natural language processing, a wealth of data can now be fed into an ad optimization engine for suitability, relevance and context.

The rise of contextual targeting goes beyond indiscriminately dropping cookies into a user’s browsing activity. Contextual platforms can analyze text, videos and imagery and match targeted pages in real time to meet advertiser requirements.

This means that a supplier of American cheese will no longer be pitched on generic “food and drink” sites frequented by vegans or fine dining aficionados. That business could target sites with online videos tied to more suitable and specific keywords, such as “grilled cheese,” with a potentially more satisfactory result.

“Contextual has always been important,” said Konrad Feldman, founder and chief executive officer of Quantcast, in an interview with theCUBE. “It will become more important, and it will be combined with natural language processing with machine learning models to really understand the detailed context of different pages across the internet.”

2. The third-party cookie may disappear, but the crawler lives on.

Lost in the current hue and cry around the disappearance of the third-party browser cookie is another piece of technology that has been equally as significant – the web crawler.

A crawler, also known as a spider, is a search engine bot that indexes content from across the internet. It is what drives search queries and provides users with immediately relevant content as soon as the appropriate keywords are entered.

In addition to making it easier for users to find desired results from the vast ocean of online information, crawlers also serve a helpful purpose in search engine optimization, or SEO. Crawlers can identify broken links and duplicate content to improve website structure and rankings.

“Crawlers scan the entire internet at this point, extract the content of the pages, make sense of it and organize it,” said Peter Day, chief technology officer of Quantcast, during a conversation with theCUBE. “They organize it for publishers so they can understand how their audiences overlap with potential competitors or collaborators. More importantly, they organize it for marketers so they can understand what kind of high-impact opportunities are there for them.”

However, the use of automated crawlers has become problematic in the cybersecurity community as malicious actors have begun using the technology to search for websites with unpatched applications. It should also be noted that the elimination of the third-party cookie will not curtail the practice of data scraping, where various online organizations employ crawlers to mine public records or social media information.

3. The advertising industry could ultimately embrace an open-source solution.

One of the solutions that has emerged as a replacement for the third-party browser cookie is Unified ID 2.0, or UID2, an open-source framework developed by The Trade Desk.

The UID2 solution is based on the creation of an encrypted identifier when a consumer logs onto a website using an email address. Consumers can set preferences on how collected data is shared, and this information is then passed into the advertising online engine or bidstream accordingly. Interoperability agreements signed by The Trade Desk will remove the need for users to sign into UID2 multiple times.

UID2 has been gathering steam since January when The Trade Desk submitted code for review by the Partnership for Responsible Addressable Media and signed up a significant list of ad industry partners. However, the UID2 movement was thrown into some chaos in March when Google, which is developing its own replacement solution, came out in opposition to the use of email-based identifiers.

“Unified ID 2.0 is the one that’s probably gotten the most adoption in the space,” said Shiv Gupta, founder of U of Digital, in an interview with theCUBE. “UID2 is user level. It’s basically taking data that’s authenticated from users across websites that are logging in and creating a kind of identity map.”

4. Geo-targeting of consumers offers an alternative for advertisers.

Advertisers looking for a way to reach consumers at the right time and place in the absence of third-party cookies will likely turn more strongly toward geo-targeting as an effective solution.

Geo-targeting leverages a Wi-Fi connection, GPS signal, cell triangulation, or a mobile user’s IP address to serve an ad to a specific location. Smartphone makers, such as Apple Inc., now give users a choice to opt-out of location-based ads, but studies show that spending on location-based advertising in the U.S. is on the rise.

There is also evidence that geo-targeting campaigns are getting results. Hyundai built a marketing program to target cell users who walked into a competing car dealership in Australia and saw a 50% better click through than the average for the industry. Whole Foods Market pursued a similar campaign with ads offering steeper discounts than nearby competitors and saw a 4.69% click through rate versus a national average of only 1.43%.

“The geo-targeting strategy has been underrated because the granularity and deep learning data could go down all the way to the local level, even beyond zip code,” said Xiao Lin, managing director of solutions at Xaxis LLC, in a discussion with theCUBE. “Census block data is especially important for consumer packaged goods brands. So, we’re working closely with the client teams to understand not only the online data, but the offline data and how we can utilize that in the future.”

5. The cookie conundrum is generating a new wave of innovation in first-party data.

The demise of the third-party cookie will mean that first-party data, information gathered from direct interaction with customers, will become crucially important. There is enough evidence to show this is what customers prefer because it can generate highly personalized communication and digital technology enables it.

In late July, Comscore Inc., a dominant local TV measurement company with 75 million screens in the U.S., announced that it would partner with Experian, InfoSum and LiveRamp to bring first-party data into its “cookie-free” audience-targeting capabilities.

The need for tools to effectively leverage first-party data is also driving the rise of custom algorithms for digital ad targeting. The head of verified tech at Publicis Media has reported that the firm fielded three times as many discussions this year alone on custom algorithms from advertisers.

Quantcast introduced its Permisio portal in November to provide consumers and publishers with more control over first-party datasets. Quantcast Measure also deploys first-party cookies to provide real-time insight about specific audience behavior.

“We have first-party tags across over a hundred million plus web and mobile destinations,” said Shruti Koparkar, head of product marketing at Quantcast, in an interview with theCUBE. “That first-party footprint is going to come in really handy in a world without third-party cookies. We are encouraging all of our customers, publishers and marketers to grow their first-party data.”

(* Disclosure: TheCUBE is a paid media partner for The Cookie Conundrum: A Recipe for Success event. Neither Quantcast Corp., the sponsor for theCUBE’s event coverage, nor other sponsors have editorial control over content on theCUBE or SiliconANGLE.)

Image: Rutmer Visser

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