With third-party cookies and other “traditional” means of identifying customers slowly fading into obscurity, marketers are looking ahead to the next generation of targeting tools.
The latest to gain traction is the concept of “cohorts”—the practice of focusing on groups of like-minded customers rather than individuals.
Sudha Reddy, Head of Product at connected TV advertising platform company Sabio, sits down with TVREV to explain how cohorts work, and the opportunity they present advertisers.
What are “cohorts?”
Cohorts are groups of consumers rather than individual consumers. Cohorts are developed when you create segments of consumers based on other factors such as timeframe or environment.
Can you give us an example?
Sure. Let’s say you create a category or segment, like “discount shopper.” A cohort of that segment would be back-to-school shoppers. The result is a more actionable group, or cohort, of “back to school season discount shoppers.
Why are cohorts gaining in popularity now?
Cohorts aren’t really all that new. But with new global privacy regulations like GDPR and CCPA, marketers can’t rely on traditional PII practices. Cookies for instance are going away. So cohorts are emerging to play an increasingly important part in the digital marketing toolkit.
Don’t cohorts rely on PII data?
Cookies rely on data but it’s not necessarily PII data. The use of PII depends on the marketer and the access to data they have but currently, the majority of the data is non-PII. We leverage several machine learning algorithms to create cohorts. Cohorts allow marketers to essentially identify large groups of people with similar characteristics and the result are privacy-compliant cohorts that are not individuals but are narrow consumption pattern groups.
How will that compare to the traditional PII/cookies model?
It’s actually better in that it’s an ecosystem built with privacy in mind first, but it also will help brands find new customers in new ways. Again, cohorts are not new. The most successful brands have been doing this to expand their market for years. Now, we’ll just see the practice become more widespread.
How will this practice of cohorts impact me as a customer?
Customer journeys may become less personalized, but ultimately better overall. Rather than focusing our attention on collecting more and more data points for some utopian one-of-a-kind marketing play, brands can use cohorts to optimize a path to purchase for many like-minded consumers. That has the potential to be far more impactful, while also respecting privacy.
Are cohorts a web-only thing, or can advertisers on all platforms take advantage?
Cohorts are applicable to all platforms— linear, CTV, mobile, OOH — at different stages of the customer journey. Brands will even have the ability to analyze cohort “footprints” from platform to platform.
Are advertisers adopting this approach?
Change can be scary, particularly when you ask brands to leave behind what has been the gold standard of audience targeting for a decade. But it’s an inevitable and necessary change, so brands will need to begin exploring new ways to expand their consumer base. Cohorts are the best and most effective solution.
Sudha Reddy is the VP of Product Innovation at App Science®, A Division of Sabio Inc. Sudha is responsible for creating products that enable brands to create stories and understand their customers at a deeper level using the App Science® Analytics Platform. She is also is the General Manager of App Science® Labs office in Hyderabad, India. Her past digital media experience includes working at 4INFO, Celtra, DataXu and xAd in roles ranging from sales engineering to Director of Operations.