As Cookies Disappear, Next-Generation Ads Will Be Powered By AI

The day when Google, Meta Platforms, and other top technology companies draw the curtains on third-party cookies is edging closer, but advertisers need not fear, for they already have an alternative system for delivering laser-targeted ads.

Artificial intelligence technology has emerged as not just a viable substitute but a superior one too, with industry leaders such as AdEx and GumGum demonstrating the superior effectiveness of their next-generation ad platforms. They claim to enable more valid ad targeting and higher click rates without trampling all over user’s privacy. But how do these new, AI-based advertising solutions work? Let’s take a look and see.

Why Are Cookies Going Stale?

Third-party cookies, which track user’s behavior across the web, have been the mainstay of digital advertising for years. They provide advertisers with a wealth of detailed data about individual internet users, and without this rich information, it’s believed they will struggle to deliver the heavily personalized ads consumers are so used to seeing.

Cookies are on their way out because they are seen as incredibly invasive. While useful for advertisers, they provide users with little control over how and where their personal data is used, and this causes serious concerns. As a result of the growing distrust of cookies, users are demanding greater privacy protections. These demands have been ensconced in data protection regulations such as Europe’s GDPR and California’s CCPA, which mandate that users are able to choose who can access their data and be informed about the way it’s being used.

The likes of Apple and Mozilla have already eliminated third-party cookies in their Safari and Firefox browsers, and Google is due to follow suit with its Chrome browser soon.

How Can AI Fill The Gap?

The demise of third-party cookies has been accelerated by the rise of AI-powered alternatives. AI is uniquely able to process many different types of data, including user’s search histories, custom preferences, demographic information, and even local weather conditions. Using AI models, advertisers can analyze users’ behavior in a way that doesn’t compromise their personal privacy, identify patterns, likes, and dislikes, and deliver more refined personal ad recommendations.

The advantage of AI is that it’s more efficient and enables ads to be delivered without collecting personally identifiable information from web users. As a result, it avoids the privacy concerns relating to the traditional identity-based advertising that’s so reliant on cookies. Rather than tracking users based on their private, personal data, AI anonymizes user’s data to group them into different audience segments based on their preferences.

What’s encouraging is that the earliest AI-powered advertising platforms have shown they can leverage data more efficiently than cookie-based technologies, providing greater insights into user’s preferences. As a result, digital ad marketers have generated higher click rates, while consumers see more relevant ads that don’t affect their privacy.

With the incredible promise shown by AI-based ads, internet giants like Google, Meta, and IBM, as well as smaller startups such as AdEx and GumGum, are racing to bring their next-generation ad solutions to market.

AI Ad Technologies

Google first announced its intention to consign cookies to the dustbin in 2020, and although it has extended that deadline several times (the latest being sometime this year), it has also made good progress with its alternative advertising solution, known as the Privacy Sandbox.

The Privacy Sandbox leverages the AI-powered Topics API to analyze users’ browser histories to determine which topics are likely to represent their interests within a specific week. All data is processed locally on the user’s device to ensure it is not shared with centralized, corporate-owned servers.

The way it works is when the user views a Topics API-supported website, it shares three of the user’s topics with ad companies, enabling them to personalize the kinds of ads they’ll show to each user. The web browser deletes both the topics and the user’s data after three weeks while retaining relevant preference information without storing any data externally over the long term. The API excludes sensitive personal information, such as the user’s race and gender.

Meanwhile, the AI-based marketing firm GumGum is said to use “contextual intelligence” instead of behavioral targeting, analyzing the content and images on websites and applications to identify the most appropriate ads for them. Its Verity platform has already been deployed by publishers, including Rolling Stone, Meredith Corporation, and U.S. News and World Report. In a study, Vodafone used the Verity platform to promote the Samsung Galaxy Z Flip3 smartphone, resulting in a three percent increase in consumers with an intent to purchase.

How AI Improves Digital Advertising

Perhaps the most significant advantage of AI over third-party cookies is that it does much more than just enhance the ad-targeting process, enabling advertisers to offer their customers a comprehensive advertising solution. For instance, AdEx is building an AI integration that will optimize ad targeting and budget allocations, prevent fraud, provide insights into the most effective kinds of ads, and even inspire campaign creation.

AdEx’s automated budget allocation tool works by continuously monitoring active ad campaigns and dynamically shifting advertiser’s budgets based on their performance. Targeting is optimized by accessing anonymized behavioral, contextual, and demographic user data from external platforms, with the insights it derives leading to the creation of highly specific audience segments. In addition, AdEx offers an AI-powered Real-Time Bidding tool that optimizes advertisers’ bids based on a mix of historical ad performance data, current market trends, and available inventory. It supports dynamic pricing to adjust bids in real-time according to factors such as the time of day, user behavior, and the intensity of competition, so advertisers always pay the most optimal price to place their ads in front of the right user, at a time when they’re most likely to convert those users, maximizing their return on investment.

AI Is The Future Of Advertising

As more advertisers lean on AI to power their advertising campaigns, the technology will evolve and sharpen its data-analyzing capabilities to become an even more effective tool over time. It presents advertisers with the opportunity to phase out privacy-breaking cookies with more accurate and trustworthy personalization techniques.

Not only can AI-driven advertising help brands to expand their reach, but it will also promote greater trust in online marketing, with consumers seeing more of the products and services that appeal to them.