As SVP of Platform Automations and Analytics Steven Ohrnstein writes in Adelphic’s newest white paper Measurement Tactics for a Cookieless World, for far too long brands have been uprooting multi-million-dollar media budgets based on the measurement of same-device conversions. They haven’t been doing so because most conversions occur on the same device on which an ad was shown (they don’t), but because that’s all third-party cookies and mobile ad IDs have allowed for.
Times, as we all know, are changing. Today, there are indeed alternative identifiers that satisfy privacy requirements and offer the scale and accuracy brands need. Below, Ohrnstein breaks down what marketers need to understand about digital advertising identifiers and what living in a world without third-party cookies really means for measuring digital advertising.
There’s so much talk these days about the so-called “future of ad tech” that it’s created a lot of anxiety in the industry. But in many ways, that future is already here. Is it fair to say we’re living in a cookieless present?
Absolutely. Today, only 21% of conversions occur on the same device in which the ad exposure took place, and this number is expected to drop to 5% once the cookie apocalypse becomes official and the mobile ad ID starts to decline. With the proliferation of Connected TV (CTV) advertising in recent years, measuring conversions across CTV has been impossible, as cookies don’t exist on CTV and the need for a solution only intensifies as CTV budgets grow. Per eMarketer, CTV is expected to grow 21% in 2021 and 225% by 2024 to a whopping $18.29 billion dollars.
Think about your own digital habits. Where do you normally buy things online? On a phone, CTV, tablet or desktop? The answer to that more times than not is most likely a mobile device. In fact, 65.2% of all conversions happen on a mobile device today. Now, are you converting on an app or on the web? Around 70% of mobile conversions happen in app – think Starbucks, DoorDash, Southwest Airlines, Nordstrom and so on. There are no cookies in an in-app environment, so right off the bat, you can’t measure a majority of conversions. On top of that, a majority of the impression volume occurs on the web (there are no impressions on the aforementioned apps, for example), which makes measurement all the more difficult.
Measuring cookies only works when both the ad impression and conversion occur on the same desktop (for select browsers and limited users) or on a mobile phone on the web only (for select browsers and even more limited users). Hence, marketers are only measuring 21% of conversions today, and once Google blocks third-party cookies, measurement will fall to 5%.
So yes, we are living in a cookieless present.
How important is measurement on a 1:1 scale in reality?
It’s becoming less important because the ability to measure 1:1 is simply not there (as mentioned, only 21% today, 5% tomorrow). In addition, more and more of our purchasing decisions occur at the household level, from where the family will go on vacation next and what car they plan to buy or lease next to what food should be ordered for dinner. By shifting measurement to “1:few,” a brand can open the door to not only CTV measurement, but a majority of the other 79% of conversions that occur on an alternate device from which the ad took place.
What is your perspective on Google’s FLoCs – are there specific industries for which this solution would work well? What are the challenges facing the use of FLoCs?
First off, for context, FLoC stands for “federated learning of cohorts,” which basically aggregates and indexes different groups of users on their propensity of being in a desired audience – think 1:1000+, from which measurement is done within a third-party privacy sandbox and aggregated results are provided back to the brand. FLoCs are good alternative options in the absence of any other data or when there are legal requirements. The pharma vertical is a great example, as it is illegal to 1:1 target any medical condition without consent from the individual. Using allergy relief as an example, to protect patient privacy, a FLoC could list high-propensity zip codes that index high toward seasonal allergies.
The challenge with Google’s FLoC will be brand adoption. Brands historically love the cookie because conversions, conversion rate and cost per conversion (CPA) are ubiquitous within any demand-side platform (DSP), so it makes it really easy to optimize on the fly. FLoC will create extra legwork as measurement is done by a third-party and any extra hurdle for the programmatic trader will slow brand adoption and make it difficult to translate aggregated results into meaningful tactics within a DSP.
You speak a lot about the importance of lift and incrementality. Why are these concepts so important, and what do marketers need to understand about them?
Every marketer wants to know their media dollars are returning a positive return. If marketing didn’t exist, any notable brand would have some level of existing business. So the question becomes how much more business am I getting because of my digital advertising? And understanding that can only be accomplished through building proper control groups from which lift and incrementality can be derived and become actionable within a DSP. Without understanding this, you’ll never really be able to tell exactly how effective your brands advertising is.
What led to your idea of creating a step-by-step measurement guide?
Never in my more than 11 years in the industry have I experienced so much transformation in such a short amount of time. Brands desperately need scalable and actionable measurement solutions and to stop uprooting multi-million-dollar marketing decisions based on measuring only a small minority of same-device conversions when times have changed due to programmatic evolution being CTV. It’s clear that it’s never been more important for brands to determine their marketing objectives up front and with confidence.
To learn more about how to understand the real-world outcomes of your advertising, download Measurement Tactics for a Cookieless World: A 4-Step Guide to Proving the Value of Your Media Spend now.