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“Contextual is the future”: Extinction of the third-party cookie opens up new revenue opportunities for publishers

Dutch public broadcaster Nederlandse Publieke Omroep (NPO) stopped using third party cookies and switched to contextual targeting in January. It has seen its revenue increase in the following months

Revenue was higher by 62% compared to January 2019. February saw a 79% increase over the previous year. The growth continued across March (27%), April (9%), May (17%) and June (17%) as the pandemic spread across the world, shrinking digital ad revenues and pushing many countries towards a recession

“NPO is far more lucrative now than in 2019,” writes Dr. Johnny Ryan, Chief Policy & Industry Relations Officer at Brave. “Year-over-year revenue growth continued even as Covid-19 decimated the advertising market.”

Source: Brave

Additionally, NPO and its sales house, Ster, “produced vast sales increases even with sites that do not appear to dominate their categories,” notes Dr. Ryan. “This may be a tribute to Ster’s ability to sell inventory across NPO’s media group as a collective, but this benefit would have applied in 2019 and does not account for the revenue jump in 2020.”

A publisher does not therefore need to have market dominance to abandon 3rd party tracking and reproduce NPO’s vast revenue increase.

Dr. Johnny Ryan, Chief Policy & Industry Relations Officer at Brave

70% increase in click-through rate when using context

“With Google and most other ad servers, advertisers are bidding on the user,” explains Wired writer, Gilad Edelman. “With Ster’s new ad server, advertisers are blind—they receive no information on the user. Instead, they get information about what the user is looking at. 

“Pages and videos are tagged based on their content. Instead of targeting a certain type of customer, advertisers target customers reading a certain type of article or watching a certain type of show.”

This approach known as contextual advertising is not new. Before third party cookies and microtargeting of users became popular, advertisers wanting to reach a specific audience would buy ads with publications that were likely to have them.

Now contextual targeting has become a lot more precise and advertisers can target readers based on specific content they are consuming. So advertisers looking to market tourism-related products do not necessarily need to buy ads with a travel-focused publisher only. They can buy ads on pages with tourism-related content with other types of publishers as well. In fact, NPO found that a travel brand’s click-through rate increased by 70% when using context as opposed to tracking.

When do people want to buy a Snickers? It’s not because someone is in a specific age or in a specific region or has a high income; it’s because they are hungry and they are looking at food at that moment.

Tom van Bentheim, Manager, Digital Strategy, Operations & Technology, Ster  

Advertisers can pay to advertise on specific content on NPO. The publisher also offers 23 curated “custom interest channels” like sport and fitness, love and dating, religion and faith, and politics and policy, according to Edelman. 

“More intelligently leverage data”

Other publishers, including The New York Times, Vox, Condé Nast, Insider Inc., The Washington Post and The Telegraph have also launched advertising solutions that do not involve third party data. 

The Times announced in May that it will stop using third-party data to target ads by 2021. The publisher is building a proprietary first-party data platform, reported Axios’ Sara Fischer.

Like NPO, it has built 45 new proprietary first-party audience segments for clients to target ads. These are broken up into 6 categories: age, income, business, demographics and interest. By the end of the year, the publisher plans to introduce 30 more segments.

Insider Inc. launched its audience-data platform, SÁGA in March to “more intelligently leverage data” for its audience and business partners. “SÁGA yields powerful first-party insights that enable marketers to engage with the right consumers,” the publisher said in a statement. “This knowledge is based on what consumers tell us by their behavior and the actions they take on our sites — rather than by who they are.”

“We’re only bringing in deterministic first-party data,” Jana Meron, SVP Programmatic and Data Strategy, Insider Inc. told Digiday. “It’s less about telling us the email address to target [audiences] with. It’s ‘did they fill out a mortgage calculator or take a survey?’ This data will inform the strategy which will inform audience targeting which provides insights. It’s an endless loop and all the data informs the content we create.”

One of the publisher’s clients who typically used third-party data to reach its audience, saw a performance lift of 11%, when it used first-party data in its campaign. 

This is the vision we have for where we want to take business and be more consultative. This is a move away from demographics and third-party data which has proven itself to be not very valuable. This vision precedes cookies and is more about a better product rather than a reaction to the industry.

Jana Meron, SVP Programmatic and Data Strategy, Insider Inc.

“Deeper, richer partnerships with advertisers”

The Telegraph also saw positive results when it used its own first-party data segments to target audiences on its site. The publisher which is working with first-party data through its Telegraph Unity initiative saw an increase of 43% on average in engagement rate, measured by time in view and time spent in targeted versus non-targeted ads. 

“[This is] changing the conversation, now it’s about deeper, richer partnerships with advertisers and how we can work together to support the power of their audience,” Karen Eccles, Senior Director, Commercial Innovation at The Telegraph, told Journalist Lucinda Southern. “It’s about moving from third-party to first-party and from anonymous to known audiences. It’s an opportunity that sits squarely under our reader-first, subscriber-first strategy.”

“I don’t think there are many who believe that the way that things work today are ideal,” said Jarrod Dicker, VP of Commercial at The Washington Post in a Digiday Plus Talk. Third-party cookies “are not ideal for users, they’re not ideal for consumer experiences, there’s fraud, there’s inability to attribute and track.”

“Lot of advantages for publishers creating quality content”

“The problem with cookies is that many consumers don’t want to be tracked online,” comments Rob Williams, Contributing Editor, Publishing Insider. He cites an eMarketer survey according to which 42% of consumers feel digital advertisers are too aggressive in following them on every device or browser.

“Concerns about privacy have led to stricter regulations on data sharing in several regions, notably the European Union and California, while tech companies like Apple and Google have given people ways to be more anonymous online,” adds Williams.

“We’re going to have a more private internet. It’s either going to be through tech or regulation, or through users making choices with what they download or the extensions they use or how they interact with publishers through subscriptions or other mechanisms,” Aram Zucker-Scharff, Director for Ad Engineering in The Washington Post’s Research, Experimentation and Development, told Wired. 

I think that contextual is fundamentally the future of web advertising, and what they’re doing at NPO is pretty much what every publisher’s going to end up having to do.

Aram Zucker-Scharff, Director for Ad Engineering, The Washington Post, RED

“The supply right now of advertising is dictated by users and third-party cookies, but the future is going to be based around content,” he added. “When it’s based on users, what those users are reading matters less than this long history of where the users have been. But in a contextually targeted world, there’s a lot of advantages for publishers creating quality content, because that becomes what dictates where ad money is going to go on the web.”

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