OPINION: Programmatic advertising – what will happen when the cookies crumble?

By Jessica Jacobs, Global Director of Partnerships & Growth, Incubeta

With the potential to automate dynamically placed targeted campaigns, and generate a market worth of $418 billion in 2021 alone, programmatic advertising is a clear focus-point for marketing growth.. But as the marketing industry enters a state of flux, with increased privacy regulations and the loss of third-party cookie data, programmatic advertising will undoubtedly change in the years to come.

As new technologies are developed, what benefit will those changes bring to the industry? And how will it impact less data-driven formats, such as out of home (OOH) advertising – which has long struggled to track, scale up or pause campaigns based on results?

What is happening to programmatic advertising?

The way that marketers gather data to build programmatic campaigns is undergoing massive change – set to shape the future of the entire marketing industry.

Historically, marketers have relied heavily on third-party data to shape the bidding process, with cookies as the driving factor behind purchasing ad-space. With privacy regulations increasing across the world and Google ending third-party cookies by 2023, advertisers will need to find a new way to define their campaigns and reach the right consumers.

However, while the removal of third-party data is shaking up marketing as we know it, this isn’t necessarily a bad thing.

Although it may sound terrifying for marketers who have built careers and company growth around third-party data, the change offers huge potential to rethink what success actually looks like in data-driven advertising. To engage audiences and reach them with targeted products they absolutely do want.

Without third-party cookies, companies will need to work harder to build up first-party data reserves and use these to fuel their programmatic campaigns. This will require a higher level of investment upfront. But it offers big benefits in the long run, for the future of the industry. It will provide brands with more refined data that will lead to better ad targeting and a stronger infrastructure overall.

How much the demise of cookies will affect your brand will of course vary between companies and their current reliance on third-party cookies, but one thing is for certain, marketers need to make harnessing the power of first-party data a priority in this new, cookieless world.

The power of first-party data

To manage that transition away from third-party data, brands must start building a database of first-party audiences today. Brands and agencies must evaluate their first-party data strategies, the types of data they are receiving and where it is coming from to create a consolidated database for programmatic campaigns.

That means changing the way businesses target an audience. If you haven’t been collecting first-party data so far, now is the time to do so. And if you have, you need to dive deeper into the data that’s been collected from other sources and bring it into your strategies and programmatic campaigns. It’s no longer good enough to develop services in silos, with features considered for CX, or engagement alone. Those services must be integrated with the data programmes to power the future of your programmatic ad targeting.

For example, if a brand has a virtual try-on tool on their website – using augmented reality to let the consumer experience a variety of clothing, makeup or different hair colors, that data can drive many journeys and customer understanding.

While this may seem like a simple addition, it allows brands to collect detailed data on how their customers use and value their products. Combining all that data in the backend can then build customer journeys and lifetime value propensity models. For example, is mascara a gateway product for a shopping spree, are people who ‘try on’ T-shirts more likely to convert to other products? These services not only delight customers, but help marketers see how audiences engage with products differently, and what does that tell you about your customers?

While data restructuring beyond third-party cookies may pose an immediate challenge to businesses, it will lead to more relevant and personalized experiences reaching the right users with the right advertising, at the right times.

Programmatic can enhance the future of OOH

It’s not just about data. Programmatic is also shaping the ad content we see in the future.

One such change will be a resurgence of contextual advertising, matching the advert with content on a webpage. As cookies are removed, it will be harder for marketers to present an advert based on the previous pages they’ve visited, which will lead to an increase in contextual adverts. This will also lead to brands creating more engaging adverts, as they will be targeting a wider audience, and can no longer rely on the hyper-targeted advertising granted to them by tracking cookies.

There will also be changes in the channels targeted by programmatic campaigns. While mobile still continues to be a focus point, accounting for nearly 75% of all internet traffic, other channels are on the rise. Streaming and over-the-top (OTT) services have become the predominant way of consuming content, along with audio streaming services for music, meaning investment in OTT and digital audio advertising will continue to rise.

As a growing number of static billboards are turned into digital displays, we will also see more investment in digital out of home (DOOH), and the programmatic data used to shape these adverts. There is also potential for DOOH to turn into one of the most visually beautiful advertising formats that we’ll have. The ever-evolving technology landscape will allow for bigger and more beautiful adverts to be created, that wow and engage customers.

Pairing that with locational and demographic data means DOOH will become much more immersive, and targeted, replacing the nostalgic value of TV advertising and increasing in size and beauty.

The future of marketing is undeniably bright

While changes to the marketing landscape may present an initial challenge to brands and businesses, the future of programmatic will see more immersive, responsive and successful campaigns. The focus now should be on converting current data into first-party audiences, which will then form the basis for a more cohesive programmatic strategy once third-party cookies have been removed.

The changes to privacy regulations will put the consumer in the driving seat, meaning they will only be exposed to the content they want to be exposed to, but this also means that less money will be wasted on irrelevant advertising – allowing brands to invest more budget on engaging content, shown at the right points along the consumer journey.