Though there isn't a universal formula to improve ad effectiveness and revenue, you're probably aware that conveying the right ad message to potential buyers is critical in advertising. No one wants to spend money showing ads to people who don't resonate with the product or service. Perfect targeting benefits both the publishers and advertisers.
But how is it possible to narrow the target audience down to people who are most likely to make a transaction? Maybe with data? Well, this is where cookies come in. Cookies not just help improve a user's experience, they also assist advertisers in placing their ads on the right platform in front of the right audience.
However, since cookies are domain specific, only the website administrators can access them. For example, if a user visits a website called xyz.com, only the administrators of xyz.com can access the user's information stored by its cookie on the user's device. This doesn't allow the cookie information to be shared for advertising purposes, especially targeted advertising. It's where cookie syncing is important.
But what is cookie syncing, and how does it work? Let us present a comprehensive guide to cookie syncing. In this article, we discuss cookie syncing, how cookie syncing works, what are its benefits and drawbacks, and most importantly, what the future holds for cookie syncing.
Table of contents:
What is Cookie Syncing?
Cookie syncing (also known as cookie matching) is a process that synchronizes cookies and shares user information across different platforms so that every platform involved in an ad transaction has a common understanding of the audience. It helps ensure a relevant ad is displayed in front of the appropriate user instantly.
One of the reasons this makes targeted advertising highly effective is the fact that it shows users what they are most interested in. The process of collecting the user IDs, sharing the information across multiple platforms, and providing users with relevant ads is more straightforward than ever with ad tech. However, there are different advertising technology platforms that work differently, and they need a common understanding of the user data to execute a perfectly targeted ad.
Adtech tools, such as Supply Side Platforms (SSPs), Data Management platforms (DMPs), and Demand Side Platforms (DSPs), may have a different understanding of the same user. It means they can't identify the data about the same user from another platform because they know the same user by different names (or user ID).
Cookie syncing process basically shares the user information, matches it, and makes it understandable to all the platforms involved. It enables synchronization and sharing of a user’s data gathered from different websites among various adtech partners (SSPs, DSPs, CDPs, and DMPs). This syncing and sharing of data helps effectively target users with relevant ads as the DSPs are able to identify the interests, location, and demographics of a user.
Let's say a user visits a website and allows it to drop a cookie. The user then visits another website that has the same adtech partners as the previous website. In that case, the user can be recognized with their cookie IDs. However, allowing DSPs that do not have the access to the website to identify the user and place the right bid is important. Cookie syncing makes it possible for such platforms to identify the user, and show users the relevant ad.
Also Read: DMP vs DSP: What is the Difference?
What are Cookies?
Cookies are small files that hold a user's information. Websites use them to store information on the user's browser. The user information, such as names, email addresses, preferred language, and location, is essential for advertisers and publishers to plan effective ad campaigns.
Understanding the types of cookies is important to grasp cookie syncing. There are commonly two types of cookies: first-party and third-party cookies.
The cookies that the website you visit creates are first-party cookies, whereas the cookies that other websites or services create on the website you visit are third-party cookies. Cookie syncing is done with third-party cookies.
With the information that third-party cookies collect, advertisers create a profile of a user to display them more relevant advertising. The information also helps advertisers track a user throughout the web.
How Does Cookie Syncing Work?
Cookie syncing process basically involves two (or more) different advertising platforms sharing the information they have gathered about the same user and matching them.
When a user visits a publisher's website for the first time, the user's browser sends an ad request to a Demand Side Platform (DSP), which creates a user ID and stores it in a third-party cookie.
A DSP then redirects the ad request to the DMP (Data Management Platform) on the pixel URL. The DMP writes its own cookie or reads it if it already exists, and saves the DSP's user ID in the match table alongside its own user ID.
The DMP also passes back its user ID in the URL parameter. The DSP then reads its own cookie and stores the DMP user ID along with its own user ID in the match table.
This way, both platforms have each other's IDs for the same user, and the process is similar for almost every ad and across the ad-tech ecosystem.
Let's take the example of a publisher's website. The publisher uses a Supply Side Platform (SSP) to monetize its inventory and Data Management Platform (DMP) to manage or exchange user data. Both platforms monetize inventory and audiences via the Demand Side Platform (DSP), which is basically the tool an ad buyer uses to publish its ads.
As all of the above platforms work for different domains, they have different user IDs for the same users. They all have different cookies and different ways to identify the same user.
To tally the user, SSP sends a bid request to DSP with its buyer's user ID. Similarly, DMP sends its audience segment with its buyer's user ID to DSP. The platforms then confirm that the different IDs from different platforms belong to the same user with the help of a match table.
The information ensures the DSP identifies the user information from SSP and makes an appropriate bid. SSP also stores the unique user id to call for a bid request next time it identifies the user. Similarly, the DSP reads cookie data from the DMP with the very information.
If an advertiser is looking to publish their ad, their ad tools can simply communicate with the DSP, place bids, and publish their ads on the advertiser's platform instantly. Cookie syncing matches DSP's ID and SSP's ID for the same user and helps make appropriate bid requests.
However, it's crucial to understand that there are many advertising technology platforms in the market. So, the DMP and SSP of the publisher's website don't just communicate with a single DSP. They communicate with the entire ecosystem.
What is a Match Table?
A Match Table is a database where different IDs of the same user acquired from different domains are matched to have a common understanding of the user. In other words, match tables are created during cookie syncing for mapping user IDs to ensure data A from one domain and data B from another belong to the same user.
Whenever a platform, such as DSP receives a user ID, match table ensures it automatically understands that the user ID belongs to the same user that it knows with a different name (or user ID). Match tables are crucial because a DSP doesn't make a bid if it fails to read a unique ID.
What is Real-time Bidding?
Real-time bidding (RTB) refers to the process of buying and selling adverts in real-time on a per-impression basis. A supply-side platform (SSP) or an ad exchange is responsible to facilitate real-time bidding.
When an ad impression loads in a user's browser, the cookie data is sent to an ad exchange, or SSP, which auctions it off to advertisers. The winning bidder's advertisement is then loaded into the web page instantly.
Advertisers often rely on demand-side platforms to assist them to buy the right impressions and decide how much to spend.
What is Ad Tech?
Ad tech stands for advertising technology. The technology involves a variety of software platforms and tools that help advertisers display their adverts to potential buyers effectively and efficiently.
The software and tools not only make the whole process fast but also help advertisers make informed advertising decisions based on data and automation, whereas publishers use ad tech partners to automate the monetization of their ad inventory.
Adtech platforms use cookie syncing to make a common understanding of users across the web and show the right ads to the right audience. Some examples of adtech platforms are DSP, SSP, and DMP. Supply sides or publishers use SSP to request ads, whereas demand sides or advertisers use DSP to make the right ad bidding. DMP is a platform where the data is collected, organized, and activated.
What is a Demand Side Platform (DSP)?
A demand-side platform is software advertisers use to buy ads from an ad market. DSPs allow advertisers to manage their ads across the real-time bidding ecosystem, rather than just one platform, such as Google display networks, Facebook ads, or Amazon ads. DSPs are independent of any ad network.
For instance, if you're managing ads through ad networks, you should buy impressions on publishers of that ad networks only. But with DSPs, you can purchase, analyze, and manage ads across many networks from one place. In addition, DSPs provide advertisers with the information they need to buy ads from a publisher by communicating with supply-side platforms.
What is a Supply Side Platform (SSP)?
An SSP is an ad tech tool that publishers use to manage their ad inventory on their websites and apps in an automated way. SSP allows publishers to display ads to their visitors in a more effective way, helping improve the monetization of their websites and apps. Here's our detailed guide on best SSP for publishers.
Traditionally, supply-side platforms would need an ad exchange to list the inventory details of an advertiser. However, with technological advancements, most SSPs today don't require ad exchanges to communicate with DSPs.
What is a Data Management Platform (DMP)?
A DMP is a software tool that manages and stores user data and builds a user profile to share it with adtech platforms across ad tech ecosystem. In brief, it's a platform specifically built to store user information. This platform stores data acquired from third-party cookies and is useful for building audience profiles and optimizing spending in paid media.
However, the job of DMP is not limited to storing and managing data. A DMP communicates with a DSP or SSP to help run an ad on a publisher's website.
Challenges with Cookie Syncing
Cookie syncing is an effective method of targeting users to maximize revenue but it comes with its fair share of challenges.
The first and foremost is the vastness of the ad ecosystem which makes it difficult to collect and match user data. Locating a user based on a plethora of information shared by multiple DSPs, DMPs, advertisers, and publishers can be a laborious task. Furthermore, Walled Gardens like Facebook, Amazon, etc. do not share the data with other platforms which makes it difficult to ensure access to all the online users.
Another major challenge is flawed cookie matching. There are several cases in which the same users have multiple profiles and vice versa. This hinders user data monetization which impacts the effectiveness of user targeting methods.
Cookies are only built for web browsers which makes them inessential for app-based targeting. Major players like Facebook and Amazon are capable of effectively targeting audiences in their walled gardens and do not intend to share the data with other ad tech platforms. This makes it tough for other marketers to achieve their level of targeting.
What are the Benefits of Cookie Syncing?
Cookie syncing plays a great role in conveying a target customer's information across different platforms so that they can be targeted with appropriate ads from multiple angles. Detailed User data helps narrow down the ad recipients to people who are more likely to engage, helping save ad dollars and improve conversion and click-through rates.
Imagine the efficiency of paying for ten ads knowing every ad recipient is a likely customer against showing one hundred ads to an unknown audience pool and hoping ten of them will probably connect. Some major benefits of cookie syncing are as follows:
Targeting and Re-targeting
Cookie syncing helps create a universal identification of users across different platforms, helping advertisers serve the right ad to the right person. The process also helps to retarget the same person over and over again because the advertisers will recognize the user every time they make an activity on the internet.
Without cookie syncing, it's really hard to identify the same user across the internet based on their activities.
Exclusion of Converted Users
Sometimes, advertisers may not want to serve the same ad to an already converted customer. If that happens, it could lead to inefficiency. However, being able to identify a user across different platforms gives the advertisers a choice to not serve ads. Cookie syncing helps advertisers identify converted customers and stop serving them ads automatically.
Every business has its buyer persona—someone of certain age and interest who needs or wants a similar product or service. Therefore, many advertisers need users' demographics and interest-based data to identify their audiences. This is where cookie syncing is important. Based on the data stored on cookies, publishers can identify a user and their interests. Cookie syncing shares this data on different platforms, helping advertisers connect with their buyer persona.
Disadvantages of Cookie Syncing
While it seems like cookie syncing is a flawless process that helps advertisers improve their ad revenue, it comes with some disadvantages. Sometimes trying too hard to push ads can lead to a compromised user experience, which can backfire and make users navigate away. Moreover, there will always be some kind of issue with someone else's personal information at your disposal. Here are the disadvantages of cookie syncing:
The ad tech ecosystem is huge. In order to maximize the connection, publishers try to synchronize their user IDs with every platform in the ecosystem. It may help a publisher display more accurate ads to its users and increase revenue, but on the flip side, it creates a huge number of pixels in the background, impacting the page performance.
For instance, ten platforms synchronizing information with each other require ninety pixels. Imagine synchronizing with each and every platform out there to improve ad revenue. More pixels mean a significant effect on loading time. It overloads a user's browser and is one of the reasons why some clicks take forever to redirect to the intended page. It will have a negative impact on user experience and mostly lead users to bounce off rather than convert.
Since the whole process of cookie sync happens in the background, unknown vendors can make a call without the publisher's consent. It will likely allow shady vendors to steal important user information from the publisher's platform. There have been many instances where someone without any relationship with the publishers has run an ad on the publisher's platforms.
One of the biggest issues of Cookie sync has been privacy concerns for some time. Since there is a chance of data leakage, going data into the wrong hands can have scary consequences. This is one of the reasons why 42.7% of global internet users use ad-blocking software in 2022. People are highly concerned about their private data being shared and used online.
Unscalable Match Rate
The larger number of platforms bring more complication to the ad tech ecosystem. Syncing with more platforms compromise page speed and user experience, and there's also another problem: Cookie Syncing only matches about 60% of the total data perfectly. Having only a sixty percent match rate on a segment means only that amount of data is available to buy. It means there's a loss of a potential 40% of the revenue.
Future of Cookie Syncing
The digital advertising industry has been heavily relying on third-party cookies for quite a while. According to a recent survey, more than half of top US marketers believe cookies are critical to their marketing approach, as at least 80% of US marketers rely on cookies (pdf link) in their digital advertising campaigns.
However, looking at how things are developing, advertisers will have to adapt to a cookie-less future very soon. Regulations will make it very hard for third-party cookies to operate in the future. Moreover, almost no browser will support third-party cookies by 2023; Safari and Firefox already don't, and Google has announced that Chrome will be following the same very soon. As more than 60% of internet users use chrome, this move is important for advertisers.
Cookie Syncing has played a great role in digital advertising, but it has equally posed a threat of data misuse. Advertising systems will no longer support cookie syncing, and it's time for advertisers to identify new alternatives and plan their ads accordingly. But what could possibly be a better option?
No more third-party data means it's time to give more attention to first-party data and other ways of advertising.
What is First-party Data?
Information the sites collect from their own sources is first-party data. There are many ways a company can collect data about its visitors from a website. First-party cookies are one of the ways a website can collect first-party data.
With the death of the third-party cookie and a move towards user-privacy across the web Google has highlighted the importance of focusing on first-party data. The good thing about first-party cookies is that user data won't be shared elsewhere on the internet.
Apart from website tracking tools, there are other ways, such as emails, surveys, and lead magnets, that can help companies collect first-party data.
What are the Benefits of First-party Data?
Since now is the perfect time for marketers to gather first-party data, let's look at its benefits.
One of the major drawbacks of third-party data is that advertisers have no access to the source data. So, oftentimes they have a very little idea about where they get the data from. However, first-party data is all about what you collect on your website. You know where it's from and who it's about.
The data collected with you own tools isn't just accurate but also reliable when it comes to building a digital advertising strategy.
Third-party data syncing means there's a high chance that competitors promote their products and services based on the same data. Since the same data is distributed across different platforms, as an advertiser, you have a minimum competitive advantage with third-party data.
However, your first-party data is something that you collect through your tools on your own domain. You don't need to share data elsewhere. The data is unique, and it can give you a competitive edge. Nevertheless, the competitiveness of your data entirety depends on how effectively you collect it. Therefore, you need to make the best use of your available resources to collect it.
Standing out in the crowd with an ad strategy built with the same set of data can be very difficult. However, with unique data at our disposal, you can plan your advertising with new approaches and identify new opportunities within your customer base.
Though you may need to pay for the tools and storage of data, you do not need to buy first-party data. Whereas, there's no other alternative to paying when it comes to third-party data. This likely makes first-party data a cost-effective alternative. Since your first-party data is reliable, it can help you make bold advertising marketing decisions.
First-party data have traditionally been more efficient in terms of boosting digital marketing performance as it's been reported that marketers have drastically improved their ad revenue by incorporating first-party data in their strategies.
More customers prefer to make a transaction with the brands that offer personalized experiences. Personalization is extremely important in modern advertising, and how well you can personalize your ad campaign affects its performance.
Personalized advertising is the top priority of more than half of marketers.
Third-party data may not provide you with reliable information for excellent personalization as they are often reported to be skewed. On the contrary, first-party data encourages you to explore personalization since you know you're planning based on accurate data.
Opportunities to Test and Tweak
You can always test and adjust your data use with first-party data. Testing is crucial because it allows you to identify the campaign's performance and improve it if required. Not all data may be useful for your unique needs.
You can always adjust how you gather your data when it comes to collecting first-party data. With third-party data, on the other hand, you get what you pay for—data without your control over how it's gathered.
How to Gather First-party Data?
Although first-party data is cheaper, it doesn't mean gathering it is as straightforward as paying a vendor and getting access to tens of thousands of data instantly. However, there are many ways that help you to collect first-party data effectively apart from first-party cookies. Some of them are:
- Using website visitor tracking tools, such as Crazy Egg, Lead forensics, UserTesing, etc. There are many tools that help you track your website visitors and gather first-party data. You may need to pay some fees for such services. However, most of these tools offer a free trial. You can always test them before incorporating them into your plan.
- Offering lead magnets. Lead magnets are free products or services that companies offer in exchange for users' details. Lead magnets can be a great way to collect first-party data since a majority of customers don't mind sharing their information in exchange for free items. You can build your lead magnets based on your buyer persona. For example, if you sell software, you can offer a free trial. Some examples of lead magnets are trial subscriptions, free guides, samples, whites papers, free consultations, etc.
- Encouraging users to register on your website. With each registration, you get more detailed insights into your customers. Registrations also help you grow your email list. However, factors, such as design and messaging, may affect the registration process. Therefore, using a plain design and offering incentives or other benefits may help increase registrations.
- Conducting surveys and contests: Surveys and contests are another ways to collect first-party data. However, as more people are reluctant to share their personal information, you should be careful about choosing the topic and deciding the rewards.
The value of mobile first-party data is growing since Apple announced to block third-party cookies. It will grow further in the coming days as more people access the internet from their mobile devices every year. Therefore, collecting first-party data from mobile apps and browsers is also important.
Being transparent about the data you gather is crucial these days and the right thing to do. Users being tracked without any knowledge was one of the most concerning features of third-party cookies. Today, data transparency is a legal responsibility in many countries.
Making sure that your website or app visitors know you're collecting their data is important. You can move one step further and make the users aware of how you'll use their data and where you'll. It can build your trust among the users.
Ad Alternatives that Don't Require Cookies
Incorporating a cookie-less advertising strategy won't be easy. There will be challenges as ad publishers are already experiencing up to 50% drops in their ad revenue in the early stages of cookieless targeting. However, it doesn't mean marketers will have to rebuild their future marketing strategy from scratch. But there are certainly a few things to pay attention to. Let's discuss some alternatives that'll help build your ad strategy without third-party cookies and cookie syncing.
Contextual advertising is a form of digital advertising that targets audiences based on a page's content rather than the user's preferences. This form of advertising doesn't require cookies, so there's no requirement for cookie syncing. For instance, running shoe ads on a fashion webpage or playing a fintech ad on a finance magazine's webpage can be categorized as contextual advertising.
Contextual advertising relies on content and keywords rather than trackers. Therefore, you do not need user information to implement contextual advertising. Moreover, as things move faster with the advancement in technology, there's a chance that the needs and wants of modern customers resonate more with context rather than their past behavior. That's why contextual marketing could be a game-changer for your future ad campaigns.
Some forms of digital marketing take a time to produce results but are cost-efficient and permanent. By saying permanent, it means you're creating something that'll keep attracting the audience to your page as long as it is active. Content marketing is a solid example of organic promotion; an article about the fundamentals of SEO will always attract people looking to explore SEO.
You don't pay vendors for organic promotions, but you may need to invest in appropriate tools and talent to build a solid organic marketing strategy. Depending on your strategy, organic promotions can help you collect user data or build a loyal customer base.
The cookie sync process is an effective tool for advertisers looking to track and target users across the internet without much effort. Furthermore, advertisement technology has made it easier for businesses to gather data from around the web and bid across different platforms based on cookie syncing.
However, third-party cookies have been a great concern for global internet users. There's a risk of data leakage and misuse. While, the end of these cookies are designed to lead to safer internet use, and increased user privacy, it doesn't have to spell doom and gloom for advertisers and publishers.
You can still benefit from cookie syncing while it's around, but it's time to start building your ad strategy based on alternative methods. Incorporate effective ways to gather first-party data because it's going to be more important than ever in the coming days.
How well you can gather first-party data will not just help you stand out in the competition but also determine the strength of your future advertising campaigns. Additionally, you may also look forward to benefiting from contextual advertising and content marketing.
At Publift we are a Certified Google Publishing Partner, helping our clients to design and implement ad campaigns with maximum revenue uplift via creative first-party data strategies.
Contact our team today to learn more.
Are cookies synced across devices?
No, cookies are saved locally on a machine and can not be synced across devices or browsers.
Do cookies transfer between devices?
Cookies are stored locally on a device to save the storage space on the website’s servers and can not be directly transferred between devices. However, various utility softwares available in the market allow you to save and export the history and cookies between different devices.