When Cookies Go Stale: What the Future of Digital Advertising Looks Like
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While few would claim to know exactly what the future holds, many pundits do agree that cookies likely have a diminished role in digital advertising’s future. MaxPoint’s Casey Priore addresses the concerns of today’s conventional wisdom and offers insight into approaches that don’t rely on the crumbling cookie. Join Casey as he analyzes the issues in the current state of digital, offers some fresh alternatives and shows several success stories from brands and retailers that have found a better path.
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When Cookies Go Stale: What the Future of Digital Advertising Looks Like
- 1. When Cookies Go Stale: What the Future of Digital Advertising Looks Like October 16, 2014 Casey Priore | Director of Sales | MaxPoint
- 3. Actually, cookies are like disco.
- 4. What’s your business goal?
- 5. ADVERTISE TO NEW POTENTIAL CUSTOMERS Cookies only reach a small portion of consumers.
- 6. LOCATE THE RIGHT CONSUMERS Cookies can’t provide a complete picture of a consumer.
- 7. BALANCE CONSUMER TOUCHPOINTS Cookies are great for retargeting—but can cause ad fatigue.
- 8. REACH CONSUMERS ACROSS CHANNELS Cookies have limited uses on mobile.
- 9. MEASURE YOUR RESULTS Cookies can’t be used for measuring mobile.
- 10. So where do we go from here?
- 12. Enhance national advertising using neighborhood precision.
- 13. Hyperlocal Advantages Advertise to new potential customers. Locate the right consumers. Balance consumer touchpoints. Reach consumers across channels. Measure your results.
- 14. The Most Complete Solution EFFICIENCY—Reaching the right audience across the nation. CONTINUOUS LEARNING—Building and optimizing technology based on every campaign we run. HYPERLOCAL PRECISION—Adapting marketing at the neighborhood level.
- 15. BOOST IN-STORE PRODUCT SALES Goal: Drive sales of grilling products in stores Strategy: Use hyperlocal targeting to reach the right consumers in the right places at the right time Results: 3x increased engagement rate
- 16. DISCOVER NEW PROFITABLE AUDIENCES Goal: Generate orders for online clothing store Strategy: Combine hyperlocal digital advertising with real-time data Results: 32:1 ROI
- 17. Advice for the Future Leverage multiple data sources. Focus on goals, not just technology. Use cookies strategically, not foundationally.
- 18. Questions?
Editor's Notes
- Are Cookies Dead? I’d like to start off with a question—”Are Cookies Dead?” Cookies used to be foundational to the digital advertising industry. But these days, you can’t read the advertising press for more than a few minutes without someone declaring the death of the technology. These doomsday predictions claim that if you’re running your campaigns on cookies, your advertising campaigns will wither due to your use of a dead (or dying) technology. But is this the best way to think about cookies?
- Actually, I think of cookies more like Disco. There’s an old saying that, “Disco Will Never Die.” In the 1970s, people wore polyester suits, danced at disco clubs, and listened to the Bee Gees and Gloria Gaynor. It looked like an unstoppable trend that would live forever. And truth be told, it never completely died. Disco clubs still exist, draw an audience, and most importantly, help people have a fun time. But disco simply isn’t as popular as it was during the Saturday Night Fever days. The same is true of cookies. In 2002, they were the engine that drove web advertising. But today, they’ve lost their spot in center stage. The question is, “Why?”
- What’s Your Business Goal? At the end of the day, you advertise to solve a business problem or reach an objective. When you work with a digital provider and launch an advertising campaign, you often have a goal you want to achieve. Whether it’s reaching a larger audience and winning new customers, cementing loyalty among existing customers, or spending an ad client’s budget more efficiently, you have something in mind. Sometimes cookies help, but more often than not, they limit you. Let me give you a few examples.
- Advertise to New Potential Customers If you want to reach a lot of new customers, you’ll have to go beyond cookies. A cookie-reliant approach’s biggest flaw comes from its inability to reach new customers and put them into the sales funnel. This happens because, in order to reach a customer online: They need to have been cookied. And they must have stored their cookies. This presents some problems. Privacy-minded users often block cookies by default. At best, these users clear cookies frequently, often making it impossible to reach new consumers based on their browsing history. At worst, they’re simply off the cookie-advertising grid altogether. And many consumers might not even know that their browser comes out of the box with third-party cookies disabled, as is the case with Apple’s Safari. And, on top of that, you often reach duplicated audiences, rather than new, fresh consumers. The fact of the matter is that you just can’t reach all of your target audience if you’re only using cookies. Solution: If you want to put new customers in the funnel, you’ll have to make sure cookies aren’t your only method of reaching them.
- Locate the Right Consumers Of course, you also want to put the right consumers into the sales funnel. This means you have to target based on several criteria. Cookies are one-dimensional—they show you online behavior only. But customers are multi-dimensional. They contain hidden depths and they’re much more than just the sites they visit. Cookies explain only online behavior—they don’t reference offline data points. They might be able to tell you that these consumers have visited a specific site—but they can’t tell you that they’re only a few miles away from a superstore. If you want to spend your budget efficiently, you have to understand the complete consumer and target accordingly. You need to know: Their demographics What they buy Where they’re from Where they buy What they’re interested in (and spend their time thinking about) Without all of this information, you could be reaching the wrong customers. Auto Example For example, let’s say you’re out to sell cars. And you buy third-party cookies to reach consumers who’ve browsed auto sites in the past few months. These consumers are likely to buy a car soon, correct? Well, not exactly. Many visitors to auto sites are kids who love cars, and who are simply playing around with the online interactive tools. But they don’t have the ability to buy—or drive—a car. Each time you advertise to this audience, you waste a small part of your budget (which can absolutely add up). Solution: Instead, make sure to have the complete picture in mind before you advertise. Use all of the data available to you to understand and find the right customers. This includes: Demographic data Consumer interests Offline purchase data Distance from local stores Car ownership data Real-time behavioral data By having all of these tools at your disposal, you spend your budget more efficiently, reaching only the best matches for your products or services.
- Balance Consumer Touchpoints Cookies can be an effective way of retargeting your audience. It often takes multiple touches before a sale, and cookie retargeting is one effective way to do it. And, in fact, I’ll talk later about how we’ve achieved great success using cookies in conjunction with other tactics. However, it’s important to make sure you don’t over do it. Retargeting can quickly go from persuasive to annoying, causing ad exhaustion among potential consumers. And, over-targeting wastes some of your budget on customers that buying point. Note to Casey: This is the perfect spot for your engagement stone story, if you’d like to mention it. So, it’s important that you find the right balance point for your campaigns. Solution: Optimize your campaign in real-time. Using the right data, you’ll be able to strike the right balance to truly drive sales, while avoiding ad fatigue.
- Reach Consumers Across Channels The mobile experience has become essential to American life. With smartphone device usage time up by 48% in 2013 from the previous year, the trend is that mobile usage will only continue to grow (with mobile devices continuing to expand their roles in the consumer shopping and buying experience). However, third-party cookies are disabled by default on many mobile devices (particularly the Apple suite of products). This is a serious problem—your audience is going mobile, and your cookie campaign simply won’t translate onto these devices. That means a lot of missed opportunities. Solution: Base your digital campaigns on technology that’s device-agnostic. With the right technology in place, you can reach consumers across desktop, laptops, smartphones, and tablets.
- Measure Your Results Finally, at the end of every campaign, you want to take stock of where you stand. You want to see how your ad campaign contributed to the bottom line. Cookies were once key to digital advertising measurement. By dropping cookies on machines, advertisers could track a number of attributes based on a Web user’s behavior—including whether they purchased something online, whether or not they were served an advertisement, or which pages on a site they visited. But you run into a problem when it comes to mobile measurement. In fact, it’s this reliance upon cookies for tracking that makes mobile measurement such a thorny issue. The top minds in the advertising world are working on developing cross-device measurement capabilities, but these efforts are still in their infancy. If you want to track your mobile results, you’ll have to pick a different method. Solution: Use other data—including offline sales and location data—to get a better picture of your campaigns. This could mean the difference between understanding your advertising efforts, and leaving a large hole in your reporting on the mobile end.
- So, this prompts the question: where will digital advertising go in the future? The answer lies in the data.
- In 2002, you would only be able to use cookie data. But today, there’s so much more intelligence available. You have the opportunity for the first time ever to truly understand all of the nuances and depths of your audience. We’re in a golden age of digital advertising where we can understand demographics, social media information, content consumption and interests, online purchases, offline purchases, and much more. This means smarter advertising, better targeting, and more effective digital campaigns. But you have to go beyond cookies to look at other data sources like: Offline purchase data—Such as credit card and point-of-sale data. Online interest data—Insight into what these shoppers spend their time reading about and watching. Rich location data—Intelligence about where these consumers live, where they shop, and where they spend their money. And, you need to be able to reach consumers consistently across channels—including on smartphones and tablets.
- Hyperlocal Digital Advertising One way to solve these problems is through hyperlocal digital advertising. I know I’m a little biased, but I’ve seen it work time and time again, solving many of the problems inherent in traditional cookie-based campaigns. Let me tell you what our solution is all about. MaxPoint’s unique digital advertising solution combines the best of both offline and online data sources to enhance national-scale advertising campaigns with hyperlocal precision. Precision down to a neighborhood level. Our team of analysts and engineers remapped the United States into 34,000 unique Digital Zips (or neighborhoods). We have identified commonalities—such as income, age, purchase behavior, and interests—at the household level in order to target only the neighborhoods that make sense for your advertising objectives. Our solution not only reaches the right consumers where they live—but we’ve also built the technology from the ground up without ever having to rely on cookies. We can work alongside trading desks and other cookie-based solutions, but we’re never reliant. We decided from the beginning that we would take a different approach to targeting than many digital providers were taking at the time. We read the tea leaves early, and saw that cookies were going to decline in prominence—so we built our solutions without using cookies as a crutch. And it paid off.
- Hyperlocal Advantages How does hyperlocal advertising answer the challenges left by cookies? How do we solve for each of these concerns? I’ll take them one-by-one. Advertise to new potential customers—MaxPoint built its advertising solution without depending on cookies. As a result, instead of reaching only those consumers who’ve been cookied, we can reach 100% of consumers online without sacrificing precision. Locate the right consumers—We advertise to neighborhoods based on a combination of offline and online data. By analyzing billions of data points, rather than relying on a one-dimensional source like cookies, MaxPoint bases its advertising decisions on a thorough and complete picture of consumers. Balance consumer touchpoints—MaxPoint optimizes in real-time, allowing advertisers to discover the right number of impressions per user. Retargeting is important in any campaign—and MaxPoint’s technology finds the balance point between too many impressions and too few. Reach consumers across channels—MaxPoint has run campaigns that are desktop-only, mobile-only, and everywhere in between. And because our systems never relied on cookies, we’re uniquely positioned to deal with the increasing centrality of the mobile experience. Mobile’s important to everything, and since we’re not cookie-reliant we can do this. Measure your results—MaxPoint routinely works with brands, retailers, and agencies to measure both online and offline advertising results. While we can use cookies to measure, we’re equipped to handle even the most robust measurement requests, including sales lift studies.
- The Most Complete Solution I’ve described how hyperlocal stacks up against cookies, but what else does this strategy have to offer? Efficiency—Hyperlocal is about reaching the right people across the nation efficiently. That means locating the neighborhoods across the United States best suited to meet your goals. Once the audience is modeled and found in those neighborhoods, the campaign is run nationally or scaled down to a regional or local level. Because neighborhood targeting is more granular than DMA targeting, you spend your budget more effectively. Hyperlocal is essentially a zero-waste approach. Continuous Learning—Hyperlocal isn’t new technology based on old methods and models. We build and optimize our technology based on all campaigns we run. This always-learning approach identifies and responds to shifting opportunities in real time. Everything learned from the campaigns we run for you and others like you is fed back into the system, generating smarter campaigns as each second passes. Hyperlocal Precision—Hyperlocal is adaptive marketing at its ultimate. You have the ability to run different messages to different neighborhoods based on shifting preferences, weather, content consumption, even allergen levels. So the question now becomes: what does hyperlocal advertising look like in the real world?
- Case Study Notes A grilling supplies company wanted to boost sales of its products ahead of grilling season. So, they turned to the neighborhood experts at MaxPoint for help. MaxPoint analyzed billions of offline and online data points to serve rich-media ads to: Males between the ages of 18 and 54; Who are interested in cooking and entertaining at home; And who had recently attended a barbecue. Each ad highlighted the local weather predictions to entice shoppers to stock up for the weekend. The brand tested two separate landing pages: Promotion coupon for grilling supplies Grilling website including several recipes Over the course of the campaign, MaxPoint optimized targeting in real-time—including smartly deploying ads based on local weather conditions. Finally, we measure results using a one-question brand lift survey asking consumers how likely they were to purchase the grilling product for the upcoming weekend. Results: Consumers who received MaxPoint’s digital ads were over three times more likely to report an intent to purchase the product.
- Case Study Notes An online clothing retailer wanted to generate orders for its garments. Specifically, they set out to generate orders from new customers—meaning they simply couldn’t rely on purchased cookies for their upfront targeting. Simply put—they wouldn’t have been able to reach as many users with cookies as they would with hyperlocal targeting. To help, MaxPoint used its Digital Zip technology as the foundation of an online advertising campaign. But we also incorporated real-time data using web traffic tracking and strategically dropped cookies for people who visited inner pages of the clothing website. This more strategic use of cookies allowed MaxPoint to develop complex audience models based on real-time feedback and clickstream data. We could track information down to the page-by-page level, and cross-reference it against our existing data to draw distinct conclusions. From there we found untapped audiences based on these complex audience models. Instead of using cookies upfront and reaching only duplicated audiences, we were able to analyze the data mid-campaign to discover new sources of buyers. For example, mid-campaign analysis found that, while the initial target was mothers, the brand saw higher-than-expected sales among singles. This opened a new, potentially lucrative market for the brand. The result of the campaign was an exceptionally high 32:1 ROI. The campaign also increased the number of offline catalog requests, demonstrating an important, long-term interest in the brand from new customers.
- Takeaways: Think Beyond the Cookie So where are we now? And what should you walk away with? Here’s some advice. Use multiple offline and online data sources—Cookies cannot be your only solution. You have to look at multiple points of data, and you need the ability to do that in near real time. Compare it with direct mail—a list broker who only looked at one dimension of a customer, such as what types of publications they read, would go out of business pretty quickly. But the problem is that this is what you’re doing when you rely completely on cookies. It’s a problem and one that you should correct. Align your digital advertising with your underlying business objectives—This goes well beyond the technology. Work with your partner to find the right solution for your campaign objective. Sometimes cookies can help, but more often than not they aren’t the best solution. Try cookies strategically, rather than making them central—Cookies will never completely die, because they still have some use. Five or ten years from now, people will still be talking about them, and the advertising press will still report on their impending demise. But many brands, retailers, and ad agencies will continue to use cookies to reach the roughly 25% of consumers who’re reachable via this technology. However, hyperlocal targeting can sit beside this approach, offering precision when companies target the 75% unreachable by cookies. The key is to use them strategically, rather than foundationally. Employ cookies when you need them, but don’t make them a cornerstone.