“Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Karima Zmerli, VP of digital audience management and data management platform (DMP) solution lead at Merkle.
With the evolution of digital targeting comes the rise of addressable targeting platforms, which enable brands to conduct individually personalized, people-based marketing at scale. Does this trend mean the end of cookies?
Not necessarily, if we use history as a guide. You may recall the early 2000s, when everyone expected digital to summarily replace direct mail. In the ensuing 15 years, there was a modest shift, but not nearly to the degree of significance expected, in terms of marketing spend. And today, both channels still appear to be peacefully coexisting.
Addressable Is The Future But…
Addressable or people-based platforms allow surgical targeting in digital media. For years, digital media was a black-box channel, where the most sophisticated and performant tactic was remarketing, also known as retargeting.
Addressable platforms are a big relief for marketers and, more specifically, data scientists. Addressability is the translation of the precision targeting of direct mail and email to the previously anonymous worlds of digital media and TV. Marketers and data scientists can finally leverage intimate knowledge of their customers, in conjunction with the online and offline data assets and intelligence they collect across touchpoints, to inform their digital marketing initiatives and TV media buys.
The future notwithstanding, we can’t limit targeting tactics to only addressable platforms just yet. One reason is scale, or the lack thereof. With the exception of Facebook, Google, Twitter and other key players, addressable platforms are not large enough to give advertisers a high penetration against their prospect audiences or a high coverage of their customer relationship marketing (CRM) audiences.
Also, addressable media cost per thousand (CPM) is still high, and it’s more geared toward premium media placements. This means that, given today’s strict cost-per-acquisition (CPA) ROI goals, it is hard to leverage addressable media buys for direct acquisition campaigns.
Marketers must contend with the operational complexity. With addressable marketing, an advertiser needs to sync customers with the publisher based on some kind of a key, typically email or another type of personally identifiable information (PII). This means that additional processes and data transfer need to be done publisher by publisher. And additional costs are associated with leveraging a third party to connect the advertiser and publisher.
Finally, there is an issue with transparency: Most large addressable platforms are walled gardens, which allow very limited access to data and measurement. This limits the availability of insights, tracking and attribution, and also precludes standardized performance measurement across the media buy.
Cookies Are Not Dead
Cookie-based targeting is still relevant. I would argue that, for several reasons, it is even more relevant today than ever before.
For starters, cookie platforms can now connect and sync to IDs in the CRM database, both on and off advertiser web properties. It allows marketers to target and reach customers through buying methods, such as programmatic media or real-time buying (RTB).
Cookie platforms also have access to third-party data, including online behavior data and offline data, along with first-party web and channel data. This data allows advertisers to enhance targeting, such as going after in-market prospects. The data is not always as valuable as PII; however, if we have more than 30 attributes on a single cookie that cover intent, interest, shopping, demo and geo of the cookie, among others, we can qualify the cookie for targeting with great precision.
Cookie-based platforms are becoming smarter. The built-in intelligence, such as artificial intelligence, segmentation, modeling or indexing, allows enhanced performance and efficiency. There are many new tools, services and technologies available today to allow more precise cookie targeting and better inventories. DMP technologies allow cookie data management and audience building, viewability measurement, multitouch attribution and more. These features provide transparency and improve the trade-off between quality and price.
Cookies also provide scale and lower CPMs. Demand-side platforms and ad networks operate at a very large scale and have a high coverage of the Internet population, making reach higher in comparison to other platforms. In a programmatic RTB environment, CPM is lower than anywhere else. With the right analytics and tools, it is hard to beat the CPA and ROI generated through cookie targeting.
Where Is The Balance?
So is it cookies or addressable? Both targeting approaches are vital to marketing success, and they are complementary to each other. As such, any modern marketing budget allocation should reflect the performance of each.
Addressable may be the future, but don’t be too hasty in rejecting cookie-based marketing. Marketers must strike a balance between preparing for the addressable future and capitalizing on the present opportunity. Be ready to see addressable inventory grow. Test and learn to better leverage when and where addressable media works. Understand how to stage first-party data and identify the best partners that can help you take advantage of the addressable platforms.