AI Advertising: How It’s Replacing Third-Party Cookies

AI Advertising: How It's Replacing Third-Party Cookies

Websites can collect data using third-party cookies; these are files that store the user’s data using a website other than the one they are viewing. Currently, and in the past, most marketers use these cookies to help deliver ads. But there is a big problem with this. People have always been concerned with how their data is used and sold online, and now regulations are catching up to these complaints, regulations like the General Data Protection Regulation (GDPR) in the EU and the California Consumer Privacy Act (CCPA) in the US. In fact, regulations are coming down so hard that Mozilla has banned cookies, and Google is following suit. The good news is that these laws give people more control over their own data, including the right to delete it or correct it where relevant, and also mean that companies have to be more transparent about their use of data. 

But what does that mean for marketers? Where can they turn to get business services and products in front of the right people? Indeed, marketers will need to be more creative to reach the right audience in this new online landscape, which is where Artificial Intelligence (AI) comes in. In this blog, we will look at how AI is overtaking the use of third-party cookies and what that will mean for advertisers moving forward.

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What Will Replace Third-Party Cookies?

Online advertisers are using AI to replace traditional third-party cookies in a few ways. This should make ads more effective and actually help to sell more, not less, so losing third-party cookies is actually a gift in disguise. This is because AI algorithms are able to collect a lot of data, including first-party data, contextual signals, and even user behavior, in order to send consumers targeted ads. Using AI allows advertisers to avoid compromising user privacy, too, which is a win all around. Below are three ways AI can be used to avoid privacy issues. 

Chatbots

Chatbots open up the ability to gather data and use it, as it is freely offered and, therefore, not as regulated. The data is collected by engaging the user in conversation and asking questions about why they are on the website and what they need. 

Personalization

Sometimes, advertisers place their audience into segments based on ads they click on or things they interact with on their websites. Unfortunately, this isn’t perfect. Individuals may interact with elements for different reasons, making unique needs hard to pinpoint. AI is changing that. AI can predict and follow user behavior in real-time and identify what they actually need, meaning less work for the advertiser and better ads for the user. 

Contextual Ads

Instead of offering advertisements based on what a user has interacted with, contextual ads are ads that match the products/services shown on a particular website. For example, if someone searches for vacuums and enters a site selling vacuums, another business can advertise their vacuums on that page, knowing the user is interested in them. AI can help understand the website and show the correct ads. 

How AI is Changing Advertising?

AI isn’t just replacing third-party cookies, it’s completely changing the way that we advertise. AI algorithms can be used for:

  • Real-time ad targeting: AI looks at user behavior in real-time to send out relevant ads. 
  • Creative optimization: AI can analyze which campaigns are working best, which CTA’s convert more, or which formats appeal to the most people. Advertisers can do this, too, but AI achieves it faster. 
  • Predictive analytics: AI can even predict the future of someone’s behavior, such as whether they are about to purchase something. 

Because of these features and more, ads will become more relevant to users, so businesses can see more return on their investment. There will also be more efficiency for the advertisers, and the time saved can be used towards other important goals. Lastly, it will be much easier for ad performance to be measured, so money is saved all around. 

How Will Google Ads Work Without Third-Party Cookies?

Google ads are a big part of many business’s marketing strategies to find relevant customers/leads, so many have wondered what will happen when cookies can’t be used. It’s true that Google announced in 2020 that they would phase out third-party cookies on their Chrome browser altogether, but they’re not going to leave advertisers scrambling. To replace it, they have developed something called the Privacy Sandbox, which is powered by AI. This will allow advertisers to find the right audience. 

Google aims to use the latest privacy techniques with this technology, such as:

  • Differential privacy: This is a system for sharing information about data that reveals an individual’s behavior without compromising privacy.
  • K-anonymity: This is just a measurement of your privacy. 
  • On-device processing: Meaning that computation will happen on your device and not by using third parties. 

IBM and Meta Are Creating AI Solutions Too

Google isn’t the only one jumping on the AI advertising bandwagon. Meta and IBM want a piece of the pie, too. IBM wants to target users at the right place, at the right time, by using contextual advertising with their IBM Watson Advertising Accelerator. This tool will analyze lots of data to place audiences into groups that allow ads to be targeted without compromising individual privacy. 

Meta is taking a different approach with their conversions API. Meta’s old advertising service was called Facebook Pixel, but this required cookies to use. Meta says their new algorithm will reduce cost per action and honor privacy, as they will be able to access more accurate and up-to-date data about users. However, some are still concerned Meta will still encroach on privacy using the methods they are suggesting. Only time will tell. 

AI Advertising Will Replace Third-Party Cookies

By 2024, most third-party cookies will be phased out, and the new reality of AI-based advertisement will be realized. This is great news for everyone, as privacy is protected, and personalized, targeted ads that convert more will become the norm. It’s important for businesses to prepare for this new way of advertising immediately by partnering with marketing agencies that are well-versed in AI advertising.

If you need assistance with custom content that ranks and gets clicks, improves your brand’s exposure online, increases quality traffic to your site, and converts visitors into customers, contact ClickGiant today. We are a leading digital marketing agency serving clients nationwide. 

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