Will AI drive programmatic advertising in cookie-less world?

Gillian Brockell, Video Editor with The Washington Post, wrote in a piece three years ago: “Dear tech companies, I don't want to see pregnancy ads after having a stillbirth”. The piece highlighted how algorithms drive “targeted advertising” on social media and other apps, thanks to third-party cookies.

While Safari and Firefox have already blocked third-party cookies to protect users’ privacy, Google Chrome, which controls two-thirds of the global browser market, will pull the plug next year. This will see the end of third-party cookie tracking.

Advertisers and agencies are now scrambling to come up with alternatives to the personalized tracking that forms the base of digital advertising business, which is projected to cross Rs 48,000 crore in India in the current year. This has brought the focus on Artificial Intelligence (AI) and the solutions it offers to this situation.

“AI-driven Programmatic will be affected once cookies are phased out, but AI will offer solutions too,” asserts Dimpy Yadav, General Manager, Xaxis India, a GroupM company. “AI is driving massive innovations in the digital media segment. These innovations will help both digital and programmatic to grow further.”

Pizza Hut’s ‘voice-activated conversational ads’ is one such example, Yadav pointed out. Xaxis Creative Studios (XCS) created voice-activated conversational ads a few months ago, engaging listeners in a dialogue to drive awareness of Pizza Hut’s ‘Buy One Get One’ offer.

XCS accessed advertising inventory on the Gaana music app and used voice-activated AI advertising technology to help handle conversational elements. The overall voice engagement rate saw an increase of 8.29%.

“This was our pilot project and results show that interactive ad formats can be very effective for mobile-first consumers. With conversational audio ads, there is an opportunity for brands to craft a targeted and personalized customer engagement strategy,” Yadav said, adding that innovations like this will help programmatic grow further.

The Mechanism

Programmatic advertising, an AI-enabled automated process of bidding for ad inventory, promises brands greater transparency, better return on investment (ROI), attribution, cost-efficiency, and campaign effectiveness. Its real-time reach to tap consumers of specific interest, gender, behaviour and demographics makes it extremely specific to derive better derivatives.

Hence, it did not come as a surprise to many when the Pitch Madison Annual Report 2022 said that programmatic buying of digital ad space was growing steadily in India. In 2021, the share was 42%, a 12% increase from 2019, the report said.

The Solution

“Phasing out cookies will lead to an uptake in the adoption of first-party data that prioritizes users' consent. Marketers will rely on platforms and publishers that collect first-party data by means of sign-up and consent to receiving ads,” Yadav explained.

She emphasizes programmatic will continue to grow by riding on innovations and AI only. “AI can be used to assess how a consumer behaves on a website at any given time. You can then utilize these insights to anticipate their requirements and preferences in the future. Then a ‘contextual ad’ can be placed before them.”

Contextual marketing

Contextual advertising works by matching the content of a webpage with the content of an ad. Instead of using a persistent identifier stored in cookies for personalized targeting, the automated system displays relevant ads before consumers based on the content of the webpage he or she visits or interacts with.

Rahul Vengalil, Managing Partner of Isobar, a dentsu group company, says contextual marketing is more concerned about the consumers' current needs than what they’ve done in the past. “For example, if a client is selling home appliances, and a consumer is looking for kitchen appliances, ad spots will be bought on articles about the kitchen appliances.”

Vengalil points out that contextual ads are far more useful and less intrusive for consumers. “The event-based model protects privacy, serves relevant ads and can have a phenomenal impact.”

Although Google has pushed the deadline to abolish cookies from 2022-end to 2023-end, advertisers have already started to opt for alternative methods to generate audience insights, ad targeting, and measurement by either investing in consumer data management or collaborating with publishers to obtain second-party data.

Ambika Sharma, Founder and MD, Pulp Strategy, is certain that tech innovations will go a long way in helping the new advertising requirements in the cookie-less world. “The shift toward privacy-first advertising will impact the entire advertising ecosystem. While advertisers will bring the contextual advertising back in their strategy, AdTech agencies will have to focus on creatives to win the game.”