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Tuesday, November 25, 2014

The Email Address & The Cookie: A Darwinian Tale of Survival

“It is not the strongest that survives; but the species that survives is the one that is able to adapt to and to adjust best to the changing environment in which it finds itself.” - Leon C. Megginson

As the end of the year approaches, I felt it was the perfect time to reflect on 2014 as well as the year ahead.  The foundation laid this past year will reverberate within the Ad & Marketing Tech ecosystems for many years to come. 2014 will be remembered as the year the 3rd party cookie was officially labeled “Critically Endangered”. 1st party cookies are alive and well but their 3rd party relatives are unfortunately facing extinction, their demise is now only a matter of time. A sad occasion for most in the Ad Tech space, as much of the technology built and deployed today is reliant on these small bits of code. But environmental factors have a notorious history in determining the survival of all things, cookies included.

Compare today’s environment with the environment of 10 years ago and you will start to see why the 3rd party cookie is going the way of the dodo bird. Life back then was far simpler, MTV still played music videos and Internet users typically had a single device and more than likely one browser. Making the 3rd party cookie a perfect mechanism for tracking browsing behavior and ad targeting. Fast-forward to today and we not only use multiple devices but multiple browsers within each device. The cookie was just not designed to operate in such a world; it was designed with the assumption that there is a 1:1 relationship with a person and a browser. This is clearly no longer true and that reality has been moving the 3rd party cookie up the Endangered List for the past 2 years. And it certainly doesn’t help that along with all of these challenges, browser makers like Apple & Mozilla have by default turned off support for this already ailing tracking code. The 3rd party cookie was unable to adapt and so the saying goes, you either adapt or die. Simple math…

Looking back at 2014, one company can be singled out as hammering the final nail in the 3rd party cookie’s coffin. That company is Facebook and they delivered the final blow with their release of Atlas. What is Atlas? This is what Facebook has to say: “Atlas is the people-based way to serve and measure campaigns as buyers move between devices or into the offline world.” A shockingly simple concept…target actual people not pixels. When you target a known audience that is people based, amazing things can happen and the rewards will be enormous for the companies that can facilitate this type of buying. Why? Because targeting people not only allows advertisers the ability to reach their audience across channels and devices but people based marking can close the online/offline attribution gap. Let that sink in for a moment…

As more advertising & marketing dollars make their way online, CMO’s are being asked to deliver more transparency into campaign results and return on investment. Will there always be a place for “soft” metrics? Yes of course! Every brand needs to fill the top of the funnel to build awareness and intent but at the end of the day if you’re building awareness that doesn’t translate into actual sales, profit, revenue etc…unfortunately you may end up joining the dodo and the 3rd party cookie. Now with the ability to start tying ad exposure data to revenue, the pressure is going to be ratcheted up and that pressure will start from the CMO and will filter down to every vendor, agency & media partner.

So if you are a media company that has hitched your wagon to the 3rd party cookie as a means to identify and sell your audience to advertisers, how can you ensure that as the cookie goes away you’re not following it? The answer is simple, the email address. The often overlooked, unsexy, workhorse of the web is the key if you want to adapt to the current environment. No other technology, channel, communications protocol etc…that I can think of has been declared extinct more times than the email address. Yet it’s not. Not only did email never die, email is now more important than it ever was. Mainly because the email address has always been the unique identifier of the web, which in turn has helped make it remarkably adaptable. The truly ironic part of this story is the fact that Facebook has primarily been responsible for email’s resurrection. The social networking site once heralded as an “email killer” has single handedly brought email (and the email address) back to the forefront of Ad Tech. Facebook did this first via their Custom Audience solution (which I wrote about here: To Facebook: Thanks For Everything, Email) and now with their release of Atlas by Facebook.

The impact of Atlas on email’s role within Ad & Marketing Tech cannot be understated and absolutely must not be underestimated. Why? There are a few reasons but it boils down to two:

1.     People Based Marketing – email has always been a people based digital marketing channel. People subscribe to and open emails, not robots.  And because email is people based, brands can tie tremendous amounts of data (transactional & behavioral) to an individual profile that can be used for segmentation and targeting on a 1:1 basis. Just look at the scale and reach of major retailers in the US, from an email database standpoint and that should help provide some context as to why email is so important. Targeting known & addressable audiences AKA people, provides a ROI that is unmatched by any other marketing channel in existence.
2.     Attribution - This really should be quite clear. When you advertise to people not pixels, you are then able to significantly narrow the attribution gap. Not only the online attribution gap, which is limited because of the use of 3rd party cookies but the online to offline attribution gap. And how do you tackle the online/offline attribution challenge? Well, real people buy products…the challenge has been how do you match those real people buying real products back to online advertising? The answer is the email address of course. Which is exactly how Facebook via Atlas as well as with their DataLogix partnership, is able to attribute offline sales back to online campaigns. For the sake of clarity, I will re-state what makes this all possible, the email address.

This quote is directly from the Atlas site and should provide a glimpse, from the advertiser perspective, as to where Facebook is headed:

“Identity data gives advertisers 20/20 vision for ad serving or tracking. Atlas offers clarity into the whole picture of ad campaigns for on and offline conversions.”
-       Braden Hoeppner, CMO at Coastal Contacts

And here I am, thanking Facebook again for all their hard work and effort in educating the marketplace on the benefits of marketing to human beings. For far too long, many of us at LiveIntent have been standing on a soapbox, shouting at the top of our lungs that email subscribers are your companies best and most valuable asset. Our message hasn’t been ignored but for media companies who for a very long time had no reliable way to monetize & ad serve into email, the channel has more often than not ended up on the backburner vs. being the focal point of an ad product strategy. But the tides are about to turn and all of us at LiveIntent will no longer need to evangelize the benefits of people based marketing, the marketplace will do that for us…

As with any enormous market opportunity, there is always more than one competitor. In the case of people based marketing, Facebook is certainly not the only player in the space. The value of logged-in user data at scale has opened the door for new media players to evolve, which happen to be some of the largest and most well funded companies in existence:
  • Amazon
  • Walmart
  • eBay
  • Alibaba
  • Apple

Amazon is on pace to do $1B in advertising revenue this year. I repeat, Amazon is on pace to do $1B in advertising revenue this year. Making them the 7th largest seller of digital ads in the world. And Amazon “is stepping gingerly into digital advertising”. If this does not serve as a wake up call to anyone selling digital ads, then nothing will. Every one of the above companies can measure ad effectiveness against actual transactions; they are your new competitors and they are going after the same pool of ad dollars as everyone else…

Now the question becomes…can you adapt?