Unrevealed Potential Of Contextual Advertising in the Post-Cookie Environment

We thought we’d be saying goodbye to third-party cookies in the digital advertising ecosystem this year, but Google has pushed that timeline to 2025. While users may need to wait a bit longer for that sigh of relief, advertisers and brands should take this extra time to roll up their sleeves and refine their strategies for reaching the right audiences.

Reasons to renounce third-party cookies

If 75% of marketers still rely heavily on third-party cookies, why phase them out? It’s all about the intent to build a safe web and minimize users’ concerns about possible private data violations.

For many years, cookies have helped website owners monitor users’ interactions with a site and their behavior on the internet. However, a major worry has been raised about the potential risks associated with third-party cookies.

Unlike first-party cookies, which collect information that users agree to provide during their visit to a certain webpage, third-party cookies gather data about the overall user activity on the web. This information may cover details about device IDs, credit card numbers, passwords, and other sensitive data, apart from the history of visited websites, viewed products, and engaged content.

Combined together, these factors bring the privacy issue to the forefront and cast doubt on the legitimacy of third-party cookies. That’s why we’re now observing the decline of the third-party cookie era and entering the brand new cookieless world. What consequences for advertisers will it bring?

Challenges for Advertisers

For decades, the efficiency of advertising campaigns has been inseparably connected with the insights collected about website visitors, enabling informed decision-making, precise targeting, and improved tracking of results. In 2021, half of US marketing decision-makers employed data retrieved from third-party cookies for advertising campaigns and marketing strategies.

While Safari users can already enjoy a cookieless environment, and Google users are on the way to joining them, the demise of third-party cookies isn’t a big tragedy for advertisers but rather a challenge to adapt and diversify data collection methods to stay ahead in the dynamic advertising space.

In this term, Insider Intelligence reveals insightful findings about alternative sources of critical consumer data. For example, customer purchase history emerges as the most highly regarded source of valuable data for 36% of respondents. Fewer participants address social media profiles when looking for user information or plan to place their trust in website registrations.

Contextual advertising, in this sense, is also gaining momentum. Worldwide spending for contextual advertising is projected to double in 2027 and reach $376.2 billion in 2027. This promising method holds numerous advantages for effective advertising in a world where third-party cookies are sinking into oblivion. Let’s explore what contextual programmatic advertising is and how it works.

The Role of Contextual Advertising in the Privacy-First Advertising Landscape

Contextual advertising links an advertiser’s content with the context of a publisher’s webpage. This approach's distinguishing feature is that it doesn’t rely on consumer data, eliminating data security concerns. Instead, advertisers utilize audience segmentation data provided by publishers to deliver relevant ads to consumers according to the displayed content and platform.

When aligning creatives with the context of a publisher’s site, advertisers can be sure that they are reaching the right audience without compromising brand safety since ads are displayed in a verified context. Additionally, they can reasonably allocate their ad budgets, bid on high-value impressions, drive click-through rates (CTR), and increase ROI without resorting to tracking users’ internet activities or transmitting personally identifiable information (PII).

Moreover, contextual programmatic advertising fosters an advanced data management strategy that is able to reshape the future of audience targeting with seller-defined audiences (SDAs). This feature empowers publishers to use first-party data with user consent, eliminating the involvement of third parties and the risk of data leakage. Unlike traditional contextual advertising, SDAs have the flexibility to offer precise audience segments based on purchase intent, interests, and demographics.

AI Revamps Contextual Advertising

Artificial Intelligence (AI) and machine learning (ML) bring revolutionary change to contextual advertising, taking targeting to the next level. Advanced AI solutions identify bits of content where the ads can be placed in real-time while users interact with related content, be it a video or text.

In other words, advertisers and brands can promote their products within a specific context. For instance, website visitors are shown beauty care or clothing ads while reading an article about fashion or beauty trends. The efficiency of contextual targeting increases as users interact directly with content corresponding to their inquiry. A specific problem piques their attention, so they are more likely to resonate with the relevant ads at the moment.

Besides, the key advantage of AI in contextual targeting lies in a comprehensive analysis of the entire web, not separate sites, across language, location, and other important criteria. So, targeting powered by machine learning models is 92% sharper than it was before. Despite all the possible biases existing around contextual advertising, this method of reaching out to the proper audience without third-party cookies is real and can be more efficient due to improved placement and audience targeting.

Placement

An ad served once a webpage or a video opens is not always a good idea, as it may cause different user reactions. AI finds the most suitable places for ad display: advertisers get informed solutions for the best ad spot according to previous performance and tons of other processed data. Thereby, AI allows for serving relevant ads to the right audience in the proper context.

Just imagine displaying the same ad to the same users first in the wrong context and then in the right one. How will it affect the brand if 52% of respondents dislike seeing products not related to them?

It will absolutely result in some reputational risks and even a drop in consumer trust since users are more likely to remember negative emotions provoked by the ad shown in the wrong context. Therefore, AI-driven contextual advertising has increased effectiveness as the algorithms can filter out threats to the brand’s perception and image.

Audience Targeting

Contextual targeting doesn’t require knowing the audience well to build a campaign by relying on their age, demographics, or other information. This data has no value. Keywords, phrases, or some natural language processing tricks matter more because they allow for targeting various groups of people only based on their interests.

With contextual ads, advertisers can display feature-rich product descriptions on different platforms, thus drawing the attention of people who resonate with this product. Boosted with AI capabilities, contextual targeting is more granular than behavioral targeting, which focuses on user actions like browsing or searching habits rather than preferences.

What Is the Cookieless Future Like?

Changes are hard to accept and implement, but the results will warrant the efforts. Advertisers are used to applying third-party cookies, thinking of them as the driving force of their advertising campaigns, and forgetting about the benefits of contextual advertising. Contextual ads powered by AI algorithms have the hidden potential to transform the industry without jeopardizing privacy and marketing metrics.