In the world of internet, cookies are used to remember everything. These are small codes that collect users’ preferences and information. And then store the data in a name-value (pair) form that is only accessible by the website (publisher).
Cookies are domain specific, the data collected by a cookie can only be accessed by the parent domain. If you are on abc.com, this means only abc.com can set cookies on your browser. This limited ad industry to share cookie information to run targeted ads. However, adtech had developed a way around this problem by introducing cookie syncing.
What is Cookie Syncing?
Cookie syncing, also called cookie matching, is a process of mapping a user from demand-side platform to data management platform by giving him/her a unique ID. Basically, different platforms (SSP, DSP, DMP, publisher, advertiser, and agency) store varied information of a single user. In order to create a detailed user profile, all these platforms work together to identify the user by sharing their data stored for the same user.
Let’s take the simple example of retargeting to understand the need for cookie syncing. Suppose a user likes a pair of shoes on an e-commerce website, adds it to cart but doesn’t make the purchase. Now, that e-commerce website wants to retarget the customer by showing the ad of same shoes ultimately leading to a conversion (purchase). Hence, DSP of this e-commerce website is assigned the task to find the user on web and show him/her the shoe ad.
Now the user goes on surfing the web and lands on a blogger’s website that runs targeted ads. Then blogger’s site drops cookies on the user’s browser and quickly recognizes the user as he/she has visited the blogger’s website before. Quickly, SSP is assigned to show relevant ads to user.
Here we have a DSP looking for the user to show him/her ad for the pair of shoes. And we also have the SSP looking for a suitable advertiser meaning to show the same user with some relevant ads. But how do DSP and SSP know this is the same user? The answer is cookie syncing.
Cookie syncing is an idea based on providing ad tech with benefit of better ad targeting. This can be tricky at first. So, let’s move to further understand it better.
How Does Cookie Syncing Work?
It’s a simple data sharing process. Parties like SSP, DMP, DSP, advertisers, and publishers interested in cookie syncing match the data they have about the users using behavior matching algorithms.
On the basis of similar behavior, users are given identifiers called cookie IDs. Once an ID is established for each user, any information received about that user is shared and saved under that ID by each party.
Using this information, advertisers are able to target users in real-time auction. Hence, increasing the profit for everyone involved.
Challenges With Cookie Syncing
Cookie syncing, so far, is a successful technique for audience targeting, but not without challenges. The first challenge is to collect and match the data. Ad ecosystem is huge. Here, finding and matching a user based on the records from so many DSPs, DMPs, publishers, and advertisers can be tedious and troublesome. Moreover, not all walled gardens are willing to share this data. Meaning, 100% coverage of the online population is difficult in current situation.
Next, cookie matching is not perfect. Only 60% of data is correctly matched. There are multiple users with the same profile. Similarly, there are also cases where multiple profiles exist for the same user. This means 40% online users’ data is still not being monetized optimally creating a big gap in audience targeting methods.
Also, targeting based on cookie matching is a real-time task. When a user loads a web page, the advertisers look for the user’s cookie ID and then match it with the existing pool of cookie IDs they have stored. If a match is found, the advertisers recognize the user based on the ID and go for the bid, and if the bid is won, creative is placed. Given the number of syncs involved between DSP’s, SSP’s and DMP’s, all this process makes the ad loading slow. The delay is of a few seconds(depending upon the number of parties involved in the sync), and sometimes, it can majorly affect the experience.
Finally, cookies are limited to the only browser-based environment. Hence, they become redundant for app-based targeting. Also, the fact that login services (like Facebook) target their users perfectly in their walled garden. They have no need to coordinate with other ad tech players for the cookie sync. This creates a challenge for rest of marketers to match their level of targeting.
Is There Any Alternative?
Yes, initiatives like the advertising ID consortium and Digitrust (now acquired by IAB tech Lab) are designed to offer people-based identifier. This is done by leveraging cookie data from every possible source (demand-side, supply-side, advertisers, and publishers). The intent is to create a standard platform for audience targeting.
The problem with cookie syncing is, one user is identified using many ID’s causing data fragmentation and loss. Consequently, the targeting is limited and creates a poor user experience. However, implementing advertising ID consortium at scale can solve such issues. Here, the advertising ID consortium aims to solve the sync issue by:
- Creating a standard cookie ID and device ID.
- Identifying users rather than their devices or browsers.
- Creating an interconnected channel for ad tech to share data while ensuring security of user data.
- Getting every member of the consortium to respect the privacy of user data and protect it at every cost.
Talking about privacy, there is still a need to keep data privacy laws (GDPR and CCPA) in mind while drafting the future of cookie syncing and targeting. Creating a standard ID for users around the globe, where one can access user’s data for targeting, sounds too good to be real. However, this is something most marketers are looking forward to in the next couple of years.