The Future of Advertising is Adless
After nearly two decades of digital advertising, developments in the industry and consumer behavior trends are forcing businesses to re-evaluate their approach and integrate new solutions.
Modern advertising has gone through countless changes and evolutions. Technology has been a driving force of these changes, pushing businesses into new directions and creating new experiences for consumers seeking products and services. Now, we are on the cusp of new developments and the nature of advertising is shifting. Where online ads were once intrusive and annoying, new privacy-forward AdTech is being utilized to deliver value in ways that weren’t previously possible.
This most recent phase of advertising was largely triggered by Google’s decision to end support for third-party cookies by the end of 2024. While the death of cookies can be viewed as the spark that ignited this new era in advertising, customer preferences and Web3 decentralization are also driving the industry forward. Advertisers are now seeking new ways to connect and engage their audiences in a world where privacy has become the centerpiece of global conversations about the internet. Old tactics and platforms that were once the bedrock of digital ad campaigns are now underperforming artifacts of a nearly bygone era.
In order to better understand where advertising is heading, let’s explore these forces driving an adless future.
The Life and Death of Cookies
In 1994, Lou Montilli, a web browser programmer at Netscape Communications, created cookies. The concept was a simple one; allow internet users that visit e-commerce sites to store their items in a virtual shopping cart. This advancement represented the first ever instance of website data being stored on a user’s computer.
It wasn’t long before concerns arose regarding the use of this data and how it could impact consumer privacy. This was before cookies were being used for advertising, yet savvy internet users were aware that these small text files could be used for more nefarious purposes.
Single Browsing Sessions – Tracking activities on a site within the same session, providing a seamless experience and smooth e-commerce transactions
Multiple Browsing Sessions – Identifying specific users over multiple visits to a website, saving preferences and history in order to improve experience.
Two Types of Cookies
Cookies can be differentiated by understanding who the cookie belongs to. From this perspective, there are two types of cookies. Each possesses the same technical specifications and characteristics, however their origin and usage are different. Once understood, these differences bring clarity to Google’s decision to kill the cookie in the name of user privacy.
First Party Cookies
Belonging to the owner of the website, this cookie is created by the host domain and is used to manage a single browsing session. This cookie remembers what users do on the site, including where they visit and what changes they make. The function is to improve browsing experience while collecting information that is accessible to the website’s owner.
Third Party Cookies
This cookie belongs to owners outside of the website, such as a social media or AdTech platform. The purpose of third-party cookies is to track a user’s internet activity beyond a single website. These cookies are the ones being used for advertising, however they are also used to provide third-party services such as live chat.
Third-party cookies have become a critical element of websites being visited daily, allowing third parties to gather information on a user and create a detailed profile on their habits, interests and activities. When an ad company accesses this information, it becomes very easy to target users with ads across sites and platforms that are related to their interests.
Website owners can make money from advertisers by renting ad space or invisible pixels on a site, making third-party cookie collection easy. Prior to regulations from big tech giants like Google and Apple, users could be tracked by a multitude of third party cookies simultaneously. This made it possible for browsing history, consumer preferences, interests and other data to be known by a range of other websites and utilized for targeted advertising.
The End of Third-party Cookies
The collection of information related to the user’s personal preferences and habits has always been met with skepticism. Concerns related to the collection of cookies were quickly raised upon the birth of this technology, however their phasing out has been a multi-year effort. GDPR laws urged changes, but loopholes in the form of consent pop-ups were used to trick users into accepting cookies, continuing to fuel questionable advertising practices.
Apple has been a leader in the stand against cookies, starting in 2015 with the addition of third-party ad blockers that stopped ads with hidden cookies from being placed on user’s computers. Since 2015, Apple, Mozilla and Google have all taken steps to increase user privacy by limiting cookie-based advertising and prioritizing alternatives. This culminated in the 2020 announcement from Google to gradually phase out third-party cookies by early 2023.
Now, in 2022, third-party cookies are all but obsolete. First party cookies don’t seem to be going anywhere, but the collection of third-party cookies is coming to an end, as big tech giants and the advertising industry are forced to reckon with these changes. Interestingly enough, this has returned cookies to their initial purpose, improving the browsing experience without privacy infringements.
Decentralized Ad Data and Web3 Consumer Identity
Developing in parallel with the death of third-party cookies is the emergence of the next era of the internet… Web 3.0
This next step in the evolution of the internet represents a shift away from platform-owned data, and towards an internet in which users have more control. Individual sovereignty is the focus of Web3, wherein users own their data and dictate how this information is used and who has access to it.
The force behind this transformation is blockchain technology, which addresses the shortcomings of centralization and reduces the ability of centralized platforms to abuse their power. While governments have been fining big tech platforms for data breaches and monopolization, these tactics have not done much to make these corporations accountable for their overreach. Web3 represents a long-term solution to this issue, with true potential for transformation.
What is Web3?
The internet is now accessed by billions of people, and centralization is what made this mass adoption possible. A handful of centralized platforms created infrastructure to host users across the globe, but now these same platforms have the power to decide what is acceptable and what is not.
Web3 shifts the balance of power, as it is decentralized and is being built, operated and owned by the users themselves. This delivers power to the individuals that traverse the web and not the corporations that currently make the rules.
The history of the internet can be broken down into three distinct phases, with the current primary iteration being web2. To better understand where we are heading with web3, here is a quick explanation of each phase of the world wide web…
- Web 1.0: Read-Only (1990-2004)
The first generation of the internet was primarily static websites owned by companies that offered nearly zero interaction or user generated content. Users could search for information and read it, leading to the name “read-only web”
- Web 2.0: Read-Write (2004-now)
The post-dotcom bubble internet, in which the focus shifted to social networking and cloud computing. Instead of websites providing content, they offered platforms to share and engage with user-generated content. As more users came online a small number of tech companies gained disproportionate traffic and value.
- Web 3.0: Read-Write-Own
An internet based on blockchain technology, providing increased data security, scalability and user-privacy. A decentralized web, meaning that ownership is distributed amongst builders and users. Permissionless access is provided for all participants and trustless infrastructure that uses incentives and economic mechanisms instead of relying on third-parties. One of the primary features of Web3 is native payments, facilitated by cryptocurrency that no longer relies on outdated banks and payment processors.
Web3 holds the potential to create an internet without platform or technology dictatorships, as information is decentralized and stored on networks and not servers. Access is granted without the need to sacrifice personal information, and data that is shared has a transparent and immutable record that can help prevent fraud.
The decentralization of the internet makes it possible to remove middle-men and intermediaries that now exist across industries, from banks to Saas providers and beyond. This will fundamentally disrupt many industries operating digitally, including advertising.
Personalized Advertising with Web3
Great digital advertising relies on strong data. Currently, this data is mostly owned by the massive web2 walled garden platforms that users access daily. Google, Facebook, and Amazon have a stranglehold on user data, and thus possess a lot of the advertising power that businesses need.
The death of cookies and emergence of web3 both represent a massive shift in this power dynamic, as users are now taking control of their data and thus shaping their internet experience. While big tech companies like Facebook will do everything in their power to continue dominating the internet, the adoption of web3 will undoubtedly impact how businesses advertise.
Access to User Data
As mentioned above, web3 users have more control over their data than ever before. Instead of users asking platforms for access, platforms will begin to ask users for access. This gives individuals a much more active role in how their data is used and who it is shared with.
While this shift could make it harder for advertisers to collect consumer data, it will also force them to be more transparent and creative. Many believe that the result will be a more personalized and enjoyable advertising experience. This is because users will no longer be forced to engage with ads, but rather given the option of which products and services are most relevant to them, and view adverts accordingly.
Currently, attribution is muddied and often inaccurate because users engage with and consume media on a range of platforms on top of data from various systems. A core feature of web3 is the ability to attribute value, no matter how far down the chain it is derived. Blockchain technology makes it possible to track where content originates from and who engages with it. This creates a massive opportunity for optimized and transparent management of ad campaigns.
User Identity Management
Given that web3 delivers ownership to users in an unprecedented fashion, identity management will become a critical component of this next stage of the internet. As users enter web3 ecosystems, they will be empowered to manage their own virtual identities, including who has access to their data.
The cookie-based model has clearly failed users by empowering big tech companies that have the ability to collect and control everyone’s data. Web3 advertising technology will adhere to the protocols established for identity management, allowing participants to collect and control their own data libraries. Users will be able to manage their public and private profiles across sites, with blockchain tech ensuring the control of these profiles when engaging with third-parties. In essence, this enables all parties in the advertising ecosystem to verify attribution while controlling access to sensitive or regulated data.
New Advertising Experiences
All of these changes to advertising will drastically alter the advertising experience for consumers. With the power that comes from user owned data and identities, new preferences will take shape and users will no longer need to engage with digital advertising as it currently exists. Individuals will be able to shape their advertising experiences, only making time for their preferred content from trusted sources.
Advertising will become much more nuanced and less intrusive, because consumers will have the ability to control what they see. This will force advertisers to cater the experience to users in new ways and move away from the annoying, overreaching tactics that currently exist in web2.