Cookie-based marketing is dying, and contextual relevance is coming back into vogue.
If marketers want to succeed during the transition, they’ll need transparent technology partners who can give them the information they need to optimize their buying strategies for maximum performance.
With the cookie set to become obsolete over the next year or two, marketers will no longer be able to rely on retargeting to identify and price their most likely customers. Rather than making spending decisions based on who the consumer is and what sites they’ve browsed in the past, advertisers will instead need deep insight into the context surrounding every click.
Unfortunately, there are still some marketers who don’t know which domains their ads are running on, and many more who don’t know which channel the end-user arrived from. Without this information, brands wind up overspending on publishers that don’t deliver results, and they have no means of shifting budget toward traffic sources—e.g. Facebook, Google search, or direct visits—that give them the best return on investment.
The era of the cookie is coming to a close, and marketers will have no choice but to return to the pre-cookie days of making their decisions based on context. And in order to get context-based marketing right, they’re going to need lots of transparency.
Only transparency can help marketers maximize their customer lifetime value.
Fundamentally, marketers are most successful when they’re maximizing a ratio known as lifetime customer value to customer acquisition costs (LTV-to-CAC). Without a transparent buying partner, marketers don’t get the context they need to pursue this goal effectively.
If you’re unfamiliar, LTV-to-CAC compares the total amount of money a company earns over the course of its relationship with a customer to the amount of money spent to acquire that customer. When your LTV is greater than your CAC, you’re profitable.
Transparency empowers advertisers to make smarter decisions that take their LTV-to-CAC to the next level. For instance, if you know that the traffic you acquire from Publisher A is more profitable than referrals from Publisher B, you can adjust your bids accordingly. And if you find that Publisher’s visitors are more profitable when they arrive from Facebook than they are when referred by other traffic sources, you can refine your spending further still.
All this optimization can be done without a cookie, based solely on the context surrounding the user’s visit.
Transparency gives you the information you need to set and pursue your own business goals.
It’s also important to remember that every marketer has their own specific needs and that those needs change depending on circumstance. When you have the transparency described above, you can decide for yourself which users to pursue and how much they are worth to you.
After all, one marketer’s low-value inventory is another marketer’s treasure. A publisher whose traffic does little to move the needle for one brand may be perfect for another. With domain-level transparency, you can take advantage of these opportunities by shifting your budget to the publishers that work best for your business objectives.
Transparency is also powerful if you want to adjust your goals. For instance, you’ll always want a high LTV-to-CAC in the long run, but there may be times when you’re willing to sacrifice it in order to temporarily pursue other metrics. As an example, you might need to acquire customers as quickly as possible to claim market share, even if it means setting higher bid prices and cutting into your LTV-to-CAC.
With a transparent ad-buying platform, you can set the business goals that make the most sense for your specific circumstances and then pursue the consumers who are most likely to help you achieve them.
It’s time to demand transparency and realize your digital marketing potential.
Of course, transparency isn’t a silver bullet all by itself. In order to make the most of your contextual data, you’ll need capable partners who can help you process this information and uncover the insights that allow you to adjust your bidding strategy for maximum performance. But
without transparency, you’re simply flying blind.
Indeed, you could have the world’s best buying algorithm, but if you don’t have the right information to fill it, it’s as good as useless. Rather than continuing to fumble around in the dark, it’s time for marketers to demand transparency and take the first step toward unlocking the full potential of context-based marketing.
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ABOUT THE AUTHOR
Steve Yi, Co-Founder and CEO, MediaAlpha
Steve Yi is the co-founder and CEO of MediaAlpha, the leading provider of marketplace solutions for vertical media. MediaAlpha’s technology creates efficient, transparent marketplaces for the programmatic buying and selling of vertical search media. The company is projected to enable more than $700 million in advertising transactions across the insurance, travel, education, and personal finance verticals in 2020.Steve has worked in the internet advertising industry for the last 20 years, after starting his career as an investment banker with Goldman Sachs and a management consultant with Oliver Wyman. Steve has a J.D. from Harvard Law School and an A.B. from Harvard College.