Going cookieless is not a crisis but an opportunity - From a focus on clicks to marketing that emphasizes user experience

The end of highly targeted advertising, made possible by cookies that track user behavior on the internet and display personalized ads, is upon us.

The trend towards respecting privacy protection is growing worldwide, and Apple and Google are moving to phase out the use of third-party cookies. The "cookieless era" will soon arrive. How should marketers deal with this change, which will have a major impact on marketing? Yasuhiko Hirose of Nomura Research Institute and Yoshiaki Hirao, CEO of XICA, exchanged opinions.

(Right) Nomura Research Institute, Ltd.
Data Science Lab Senior Researcher
Yasuhiko Hirose

He graduated from Keio University and completed his master's degree at the Graduate School of Social Informatics at Aoyama Gakuin University. After working for a major printing company, he joined Nomura Research Institute in 2001. He specializes in internet PR strategies, training data scientists, and qualitative research using the Modified Grounded Theory Approach (M-GTA). He is a lecturer at the Japan Productivity Center Management Academy.NRI Data Science Lab Official YouTube Channel" is currently disseminating information.

(Left photo)XICA Co., Ltd.
CEO
Yoshiaki Hirao

After his father's bankruptcy, he strongly wanted to "eliminate the hopeless sadness in the world." He encountered statistical analysis while studying at the Faculty of Policy Management at Keio University, and founded XICA Co., Ltd. in February 2012, just before graduating. Before founding the company, he also had a unique career as a band member.

In the cookieless era, targeting accuracy is declining and marketing accuracy is increasing

── Even before cookieless became a hot topic, you had concerns about the current state of internet advertising.

(I.e.　Until March 2021, I worked in the Public Relations Department at Nomura Research Institute, where I was responsible for formulating and executing online PR strategies. One of my responsibilities was to run a newsletter called "NRI JOURNAL" brand advertising was carried out to attract users to the site.

What I felt while interacting with internet advertising was,The accuracy of targeted advertising has reached its limit

Advertisements follow us in real time, as if they are anticipating our actions. For example, the moment I search for something like, "Should I buy a new business bag soon...", I am bombarded with endless ads recommending bags that fit my budget and preferences.

While it's amazing how accurate this has become, from a UX/CX perspective it's not good at all.I wondered if I, as an advertiser, was doing the same kind of thing. I wondered what the future holds for internet advertising.

── Just then, the cookieless trend arrived. Many marketers are concerned that the accuracy of internet advertising, which has been improved to the ultimate level through the evolution of ad technology, will decrease.

(I.e.　Internet advertising has been highly valued by marketers as a cost-effective method of advertising because it allows them to pinpoint ads to target users.

Although alternative technologies are being developed, there is currently nothing that can beat cookies in terms of accuracy and convenience. If third-party cookies become unavailable, it will be difficult to use them, especially in BtoC, where users are targeted to an unspecified number of users.We must be prepared for the fact that Internet advertising may temporarily lose its cost-effectiveness to mass advertising such as television commercials.It will be.

However, there are not only disadvantages.From the perspective of corporate branding, which aims to build long-term relationships with users, going cookieless will be a "tailwind"I feel.

The reason is that the evaluation of internet advertisements these days has become click-biased, placing emphasis on "how many clicks". As it has become possible to reliably reach targeted users, the goal has become to get them to click, regardless of the user experience. I remember being shocked at the situation, not only in the direct marketing field, but even in the branding field.

I have long felt that this conventional wisdom about ad evaluation needs to change, and I am hopeful that the move to cookieless advertising will be the catalyst for this.

Hirao　I understand what you're saying. By going cookieless,The "precision of targeting" may decrease, but on the other hand, the "precision of marketing" will increase.I do not think so.

Our company uses "Marketing Mix Modeling (MMM) (*1)" to comprehensively analyze and evaluate online and offline marketing strategies.We felt that there was a problem in that targeted advertising tends to be overestimated beyond its actual effectiveness.

To use soccer as an example, in the last 10 years that targeted advertising has been popular, players have been concentrated around the goal. Even if the ball just happens to touch the foot and go into the goal, it is praised without reservation. However, soccer is originally played by someone who passes the ball. There are cases where the person who passes the ball should be more highly evaluated than the striker, but the rewards are biased towards those who score goals, and the people who pass the ball are gradually disappearing... I think the marketing industry was falling into such a situation.

In other words, just because the targeting was highly accurate does not necessarily mean that the marketing was highly accurate.Many companies are unable to design optimal marketing strategies because they are solely focused on advertising, which is a one-sided approach to displaying ads and making sales, with the goal of "harvesting" customers.

This bias should be curbed by reducing the targeting accuracy of internet advertising. As a result, many companiesMarketing investment allocation is being reviewed and optimizedI think it is.

(*1) Marketing Mix Modeling (MMM): A statistical method of measuring effectiveness that can quantify the impact that any marketing initiative, whether online or offline, has on results.

── Internet advertising should be able to contribute not only to "harvesting" but also to branding. The move to cookieless advertising could be an opportunity to reassess the value of Internet advertising itself.

(I.e.　It looks like a return to basics will occur in a good way.

When I think back to my childhood, advertisements were my gateway to learning about the wider world. Many advertisements were beautiful or interesting in themselves, and were complete works of art. Just as watching TV programs was fun, I remember enjoying watching TV commercials as well.

As advertising gradually began to take on the appearance of "hard selling," I felt sad as a consumer that my "happy encounters" with advertising were becoming less frequent.Going cookieless will also have a positive impact in terms of reviewing the quality of advertisingI hope that this will be the case.

── Internet advertising has flourished in the past 10 years, and currently the investment allocation between Internet advertising and mass (offline) advertising is roughly equal. Do you think this investment allocation will change as the targeting accuracy of Internet advertising declines?

Hirao　Earlier, Mr. Hirose mentioned the keyword "returning to basics," and when it comes to advertising investment allocation, I think we will also have to go back to the basic premise that "the optimal advertising investment allocation differs from company to company."

Until now, it has been common for companies in industries that are not suitable for targeted advertising to actively invest in it.There is a growing trend to break away from the assumption that "Internet advertising is more cost-effective than mass advertising" and to determine the optimal investment allocation for each company.I predict that.

As a result of the ongoing review of marketing, it is unclear at this point whether Internet advertising will continue to grow or mass advertising will make a comeback. Either way, I think the composition of Internet advertising will change significantly.

(I.e.　This will eliminate advertising investments that are too focused on CPA (Cost per Acquisition).Money and effort will be spent on improving the quality of the user experience on the page content beyond the ad.Isn't it?

in this way,It will become more important to build long-term relationships with users.It can be said.

However, it is difficult to prove that "reducing bounce rate," "increasing completion rate," and "increasing dwell time" are more meaningful than just increasing click-through rate, that is, acquiring users. It is necessary to be able to evaluate the effectiveness of marketing measures from the perspective of improving the quality of user experience.

In the cookieless era, marketers need to understand their users better

── We've heard such a positive story: going cookieless will allow for more appropriate ad evaluations, enabling companies to carry out more appropriate marketing activities for both themselves and their users. With that in mind, what are the challenges marketers need to address in the coming cookieless era?

(I.e.　It is certain that targeting based on user attributes and behavioral history will become more difficult. In the future, it will be necessary to know "what kind of things are they interested in?"Group and approach users based on their interestsI believe that this will be important.

When I was in public relations, I used to scrutinize Google Analytics to the max. I was trying to understand the interests of users who frequently visited our company's website, and combine that with the behavior of users who attended our annual physical events to identify our loyal customers. Now, I'm trying to uncover a person's profile by analyzing what people are interested in, what actions they take, and how their consciousness changes.

We believe that by gaining such a deep understanding of users, it will be possible to develop advertising and communications that do not miss the target audience.

Hirao　It is said that the cookieless approach will make it more difficult to measure effectiveness across both online and offline.This will be the first year for companies to once again engage with integrated analysisI believe.

If you only track internet advertising, which is easy to understand and measure, you will not be able to properly evaluate its effectiveness. For example, consider a user who "watches a TV commercial, then watches a transit ad while on the move, searches online, clicks on an ad that appears, and finally makes a purchase at a mass retailer." In this case, if you do not analyze online and offline measures in an integrated manner, you may mistakenly conclude that "internet advertising was extremely effective," and make the wrong decision to invest heavily in internet advertising.

I hope that the cookieless movement will be an opportunity to once again tackle the effectiveness measurement that "we thought we were doing but were not able to do." During the long period of CPA-heavy emphasis, many marketers developed a strong awareness of "we must measure the effectiveness!", but instead of mindlessly chasing individuals,Shifting to "holistic measurement"I think this will be a good opportunity.

── Capture users based on their interests, not their behavior. Correctly measure results using an integrated method. Is there anything else marketers should do in preparation for the cookieless revolution?

Hirao　It will become more important to design the entire marketing effort from the user's perspectiveIt can be said.

As can be seen from the fact that the rise of internet advertising was driven by the evolution of ad technology, traditional marketing has been designed to be "technology and method-driven." It was not at all uncommon to consider measures based on the assumption that more precise technologies and methods would be used.

As Hirose pointed out at the beginning, the targeted advertising that has been popular in recent years has not been an experience designed from the perspective of the user or customer.

We work backwards from the interests of our customers to come up with the optimal strategy. Starting from "What are the people who are thinking of buying this bag interested in, what is their lifestyle, and what is their current state of mind?"The experience that should bethink of.What information do we need to provide to create that experience?is derived.

It may seem like a simple thing to say, but I think there are still very few companies that are actually able to put it into practice.Isn't now the time to put user-driven marketing into practice?.

The potential of "context matching" as an effective alternative to cookies

── Mr. Hirose, you are drawing attention to "context matching" as the optimal advertising method for the cookie-less era.

(I.e.　I remember being amazed at how convenient DSP (Demand-Side Platform) was when I first started managing internet advertising: all you have to do is specify your target, and it will automatically select the most suitable media at the optimal price and place your ad, and it even guarantees cost-effectiveness.

DSP is an extremely convenient and efficient system if you use it for the purpose of "collecting clicks." However, it is difficult to control "where and how ads are exposed," and we felt there were risks and challenges in terms of whether it was appropriate for the user experience provided by our company.

So we started to focus on"Context Matching"This is the technique.

Context matching isA method to understand and match the context of an ad with the content that follows it.

By analyzing responses to ads, the content (articles or columns) in which the ads appear, and the pages that open when the ads are clicked, the "interests and attributes" of the user are determined. The identified interest attribute information is combined with other information, such as zero-party data, to understand the user's deeper intentions.

Source: Internet advertising and the use of AI in the "cookieless era" (Intellectual Asset Creation, July 2021 issue) https://www.nri.com/-/media/Corporate/jp/Files/PDF/knowledge/publication/chitekishisan/2021/07/cs20210703.pdf

── What are the benefits of using context matching?

(I.e.　"We can turn advertising into a delightful user experience."

To build a good relationship between users and companies, information and content must be provided sincerely.It is important to have a natural encounter, not to be displayed as if you are "anticipating" or "ambushing" the other person, as well as the content.

"As I was reading an article that interested me, an ad that matched the article was displayed. I clicked on it and found that the information on the next page also matched my interests," creating an experience that makes users feel glad they read the article. That is the benefit of context matching.

This method allows:It can restore the user experience that was left behind in the click-heavy era.I hope that this will be the case.

-- What is the current state of accuracy of context matching? Also, what kind of ideas are needed to further improve accuracy?

(I.e.　The effects of reducing bounce rates and increasing completion rates have already been recognized to a certain extent.Context matching is accurate enoughThis proves that. In addition, in the research I am conducting at the graduate school of Hokkaido University,It has the effect of giving potential customers a positive impression of the advertiser company.It has also become clear that

What needs to be improved is that the interest attribute information that can be extracted by context matching is currently just a "list of words." It only presents the fact that "people who look at these groups of words are compatible with these groups of words."

Technology that brings out the deeper intentions of users and a mechanism to bridge advertising and marketing strategiesAs the range of options expands, I think it will become an even easier method to use for marketers.

Hirao　I,The "main players" in the cookieless era are MMM and context matchingI am convinced that this is the case.

The number of companies adopting MMM as an integrated analytical method to optimize advertising investment allocation is likely to increase rapidly. Among them, I believe that context matching is the most effective method for making the most of Internet advertising more effective than ever before.

It is important to capture users using zero-party and first-party data that users have given permission to use, but there is little benefit for users to provide personal information, and the number of IDs that can be collected is currently limited.If it is proven that context matching can provide a "happy user experience," users will be more willing to provide personal information.maybe.

Context matching is a fascinating technique.

Traditional internet advertising is displayed based on user actions such as searching and purchasing, so there is no "fresh surprise" involved.

But,The experience that advertising should give users is a "fresh surprise, excitement, and thrill" that makes them think, "This is exactly what I wanted! Thank you for the useful information!"That's right. As data science advances, context matching should be able to create even more of these unexpected encounters. I can't help but feel that there is great potential.

── The cookieless era is not a crisis but an opportunity. Effective ways to take advantage of this opportunity are MMM and context matching. Based on this common understanding, I hope that marketers will use this time of change as a good opportunity to reexamine their own marketing.

[Interview and text] Chiaki Saito
[photograph]Daisuke Koike
[Planning and editing] Yuko Kawabata (XICA)