By Regina Ye, CEO and Co-Founder of Topsort
In the shifting digital advertising landscape, the potential phase-out of third-party cookies has caused a great deal of concern for advertisers (with Google subsequently deciding to go in a different approach), yet the writing is on the wall: the future of advertising must prioritize consumer privacy.
According to research from Capterra, “86% of consumers feel forced into providing personal information online”. Even if the industry isn’t going to deprecate cookies as was previously envisioned, marketing teams are wising up and trying to get ahead of the curve, privacy-proofing to meet the desires of the consumer.
Brands and marketers are already adapting to this new reality, moving away from intrusive practices and instead focusing on more transparent, privacy-conscious methods. Contrary to the panic that has swept parts of the industry, there is a clear path forward where profitability and privacy can coexist – if you’re willing to adapt.
First-Party Data: You’re Very Own Goldmine for Personalized Advertising
Instead of relying heavily on third-party cookies, first-party data has emerged as a key asset. This data—collected directly from consumers through interactions like website visits, app engagement, and purchase history—is not only more compliant with privacy regulations, but also often more valuable than third-party data.
According to data gathered by Digiday across the publication’s audience of publisher, agency, brand and tech insiders, the reliance on first-party data is seeing an uptick as publishers started bracing themselves for the effects of Google’s widely debated Privacy Sandbox. By leveraging first-party data, brands can continue to deliver personalized, relevant ads that respect user privacy. Companies that invest in building strong relationships with their customers, creating transparency, and obtaining consent will find themselves at a significant advantage.
This first-party data also offers a direct connection to consumer behaviors, giving marketers insights into what drives purchasing decisions. Retail media networks, for instance, are capitalizing on this data to create highly targeted advertising opportunities at the point of sale, both online and in-store. By tapping into these networks, brands can refine their strategies and reach consumers at crucial moments in their buying journey.
Auction-Based Advertising: It’s all in the Context
Regardless of how third-party cookies evolve, auction-based advertising models will continue to thrive. Programmatic advertising, which relies on contextual relevance rather than tracking user behavior across websites, is gaining traction for this exact reason. Advertisers are shifting focus to align ads with the content users are consuming in real time, making ads more relevant without the need for invasive tracking.
For instance, a consumer reading an article about fitness might be shown an ad for workout gear, not because of their past browsing habits but because the content they are currently engaging with is contextually relevant. This shift aligns with growing consumer expectations around privacy while still allowing for targeted, effective advertising. As brands adapt to this model, they can continue to see strong returns on ad spend without violating consumer trust.
Take for example, Sodimac, a Latin American home goods retailer that shifted from an in-house fixed price monetization model to a fully customizable auction-based advertising platform. Sodimac’s fixed-price ad model was limiting their ability to scale, as it required manual efforts for campaign management, optimization, and reporting, resulting in inefficiencies and constraining the growth of their ad business.
Seeking innovation, Sodimac aimed to implement auction-based sponsored placements in 2021, with the goal of creating a more user-friendly system that would offer their sellers greater scalability and transparency. The result was 33% ad spend growth year-over-year, 6.4 times growth on return-on-ad-spend, and 95 million impressions on sponsored listings.
Retail Media: The Boom that Keeps on Booming
The rise of retail media networks offers another powerful tool for advertisers in a post-cookie world. According to eMarketer, “worldwide retail media ad spending is on track to increase by nearly $100 billion between 2020 and 2025”, outpacing “growth rates in nearly all other forms of ad spending”. These networks allow retailers to leverage their first-party data to deliver ads within their owned digital environments, such as e-commerce sites or mobile apps. Because these platforms collect data directly from their customers, they can offer highly relevant, personalized ads without relying on third-party cookies.
Retail media is unique in that it integrates ad placements directly into the shopping experience, giving advertisers the ability to influence consumers at the point of purchase. For example, Glovo, a super app company, used retail media to offer sponsored listings in its app, resulting in a significant increase in advertiser engagement and return on ad spend. By using data collected at the moment of purchase, retail media networks give advertisers unprecedented access to consumers who are already primed to buy.
The Future of Advertising: Out with the “Creepy” and in with the New
The cookieless future presents both challenges and opportunities for brands. By embracing first-party data, programmatic advertising, and retail media networks, advertisers can continue to thrive in a world that prioritizes consumer privacy. The shift away from third-party cookies is an opportunity to build stronger, trust-based relationships with customers while still driving profitability.
In this new era, transparency and trust are the most valuable currencies. Brands that can strike a balance between consumer privacy and personalized advertising will not only survive but thrive, proving that a cookieless future can still be highly profitable.
