Third-party cookies play a pivotal role in constructing comprehensive user profiles, allowing data collectors to segment consumers for targeted advertising. By focusing ads on specific segments rather than the general population, the relevance—and consequently, the value—of each advertisement significantly increases.
Advertisement sellers, such as demand-side platforms linking to the ad-exchange marketplace, and ad networks (that links ad supply and demand directly) like Google Ads, thrive on this model. Their business hinges on offering advanced targeting technologies that leverage both user privacy data and broad access to ad markets.
Key Insight: Market Power in Advertising
The real power of ad sellers lies not only in their exclusive market access but also in their capability to utilize superior data for precise targeting. This duality is critical for maintaining a competitive edge.
How Do Advertisers Target Their Audience?
Advertisers harness the power of ad providers’ third-party data along with their own first-party data to fine-tune their audience targeting strategies. In other words, oftentimes the targeting data is provided by the platform. For example, Google Ad’s targeting options:
Google’s audience targeting capabilities, showing how demographic and behavioral data are utilized for ad placements.
Because Google sells within their “wall-garden”, they somehow are able to use behavior data (for example, searched term) to improve match of ads and audience interest.
Inside the walled garden of Google’s ad landscape—encompassing everything from sponsored keyword searches to YouTube ads—Google collects extensive data. They use both third-party cookies and first-party information to segment massive consumer bases for advertisers.
Almost the same for demand-side platforms:
A glance at how demand-side platforms orchestrate ad targeting based on user preferences and browsing history.
And a deeper look into how ‘segmentation’ actually works—there are large number of pre-specified audience choices provided by ad sellers, to allow advertisers to choose their favourite audience.
The better targeting, the high value for ads, the more revenue generated.
Targeting is almost the most important feature to sell ads—according to survey, advertisers care mostly about whether they can effectively and precisely target their audience. Both demand-side platforms and Ad Networks like Google needs to compete in this sense.
Ah, and of course, demographic information is always readily available.