While many brands believe third-party cookies are critical for ad revenue, there’s an increasing concern over consumer privacy that are making marketers question cookies. In fact, the regulations surrounding consumer data collection are getting stricter each year as GDPR, CCPA, and other legislation goes into effect.
Moreover, there’s a growing body of evidence that suggests targeted ads may not be all they’re cracked up to be. According to data from Brave, a privacy-centric web browser, when NPO removed third-party tracking, the company’s revenue increased by 62% in the first month alone.
So are companies ditching cookies? We’ve asked marketing leaders what contextual marketing is, if it’s set to replace third-party cookies and whether brands should get started.
What Is Contextual Marketing?
“Contextual targeting in its simplest terms means matching ads with content,” stated Sarah Cascone, Director of Marketing at New York, N.Y.-based Bluecore. That means contextual ads leverage webpage data such as keywords, topic, metadata, and other signals from the content to serve more relevant ads to visitors. While the contextual approach allows companies to limit data collection, it’s challenging to offer the level of personalization that today’s consumers expect.
“With contextual marketing, we are aiming to understand the significance of key terms and phrases on pages in any given language,” explained Mikael Holcombe-Scali, Senior Business Development Manager at Hamburg, Germany-based Semasio. Then marketers determine how these terms and phrases are related to each other and can be leveraged to drive positive results.
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Contextual Ads vs. Cookies
While third-party cookies enable brands to tailor ads to specific audiences, contextual ads are tailored to the content itself. “It’s the difference between advertising based on who the person is versus where they are,” explained Heidi Bullock, CMO at San Diego, C.A.-based Tealium. But it’s important to note that third-party cookies aren’t the only audience-based approach. In fact, Bullock believes “contextual and first-party data can work together to deliver the privacy and personalization consumers are looking for.”
First-party cookies are created and stored by the website or domain the visitor is currently on, rather than a previously visited site or another third-party service. “Marketers who use GDPR/CCPA-compliant technology with a foundation in living first-party data (meaning it is constantly refreshed),” Cascone explained, ”have the ability to surface highly relevant content and products to customers.” This makes first-party cookies a potential way to safely leverage behavioral data.
“With third-party cookies disappearing,” Bullock added, “contextual marketing is seen as an alternative to understanding consumer intent without the privacy baggage of third-party cookies.” But she doesn’t believe contextual ads will directly replace cookies because it’s much harder to measure results when brands move away from an audience-based approach. A better alternative may be a combination of first-party cookies and contextual marketing to strike the right balance between privacy and personalization.
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Should Brands Start Using Contextual Ads?
“Contextual marketing has been around for a long time and brands are probably doing it to some extent,” Bullock said, “like with keyword-targeted ads.” But she also warns that moving away from third-party cookies doesn’t mean brands should rely solely on contextual advertising. “Rather, it’s time to uplevel contextual marketing to modern standards,” Bullock explained, “by using it as part of a broader first-party data strategy.”
“First-party targeting will replace cookies,” Cascone argued, “not contextual marketing.” While contextual marketing is less intrusive for consumers, it’s hard to measure results accurately and usually doesn’t generate the same revenue as cookies. “Most consumers welcome the use of their data,” continued Cascone, “as long as in return, they receive products and messages that interest them.” Many brands, therefore, can increase the lifetime value of their customers while remaining within the guardrails of consumer privacy regulations.
Bullock believes brands should use first-party data throughout the customer journey, but leverage contextual marketing at the top-of-the-funnel. “That way, your advertising efforts aren’t taking place in a silo,” she explained, “disconnected from the rest of the customer experience.” Combining this contextual and behavioral data can generate valuable insights that wouldn’t be possible separately. “By bringing contextual marketing in as part of a first-party data strategy,” Bullock said, “that’s how you help fix some of the problems associated with [contextual ads] like poor attribution modeling and the inability to suppress audiences.”
Finally, Holcombe-Scali concluded, “The need for an ID-based solution is obvious, therefore contextual marketing will continue to supplement whichever user-based ID solutions arise victorious from the ‘Cookiepocalypse.’” Third-party cookies may be fading away, but first-party cookies or another behavioral-based alternative will be here to stay.