AI Forward: The Future of Digital Audiences
New technologies and changing regulations are reshaping the way marketers want to reach their audience across digital platforms.
Table of Contents
- Executive Summary
- Key Findings
- How Marketers Want to Grow Their Digital Audiences
- Benefits and Limitations of Existing Audience Solutions
- Improving Efficiency & ROI with AI
Executive Summary
Connecting with audiences is the foundation of advertising. As more and more of our lives become digital, advertisers increasingly need to reach their consumers online. And when it comes to where consumers spend the most time online, the answer is the open internet.
In fact, U.S. consumers spend 59 percent of their time on the open internet compared with just 41 percent on walled gardens, a 2023 report from The Trade Desk found. To marketers, the open internet refers to any place where they can independently purchase advertising and do not need to use individual tools that are unique to only one website or platform. The open internet includes apps, websites, connected TV (CTV), podcasts and more. The Trade Desk further found that U.S. consumers recall ads more easily across open channels like newsletters/blogs, magazines, and video game streams than they do across social media platforms.
How Brands Reach Relevant Consumers
But the open internet is a massive arena, and brands need ways to make sure they’re reaching consumers with relevant information. Traditionally, advertisers have relied heavily on syndicated audiences that deliver pre-defined demographic, psychographic, and behavioral groups through the vehicle of third-party cookies.
Cookie targeting emerged in the early 2000s, and 75 percent of marketers still rely on third-party cookies, according to recent Statista research. Nearly half (45 percent) of those marketers say they spend upwards of half their marketing budgets on these activations.
But attitudes toward third-party cookie segments have recently shifted. In 2020, after Google announced they would deprecate all third-party cookies, advertisers began looking for alternatives to reach relevant consumers across the open web. Despite Google’s recent announcement that they will keep third-party cookies, the “cookie-pocalypse” changed the way marketers think about reaching consumers.
Today, just 35 percent of marketers say they will primarily grow their audience reach with third-party cookie segments, while 48 percent are looking toward predictive AI and 53 percent plan to invest in contextual targeting.
In September 2024, Wodwo and Sapio surveyed 200 marketing decision makers across the U.S. to understand how marketers want to grow their audiences in 2025. At an overall level results are accurate to ± 6.9% at 95% confidence limits assuming a result of 50%.
In this report, we explore:
- Key findings from the research
- How marketers want to grow their audiences in the near future
- The benefits and limitations of existing audience solutions
- The new tools marketers can use to reach potential customers
Key Findings
- Third-party audience segments have long been the industry’s audience-growth solution. But an overwhelming majority of marketers (94 percent) believe in the benefits of using custom audience segments.
- Attitudes toward AI are swiftly evolving. Just 16 percent of marketers worry about AI replacing their jobs, while 73 percent believe AI will help them focus on higher-level work and/or improve their marketing efforts through higher return on investment (ROI).
- The cookie-pocalypse left its mark. More marketers plan on using contextual targeting (53 percent) and predictive AI (48 percent) as the primary tools to reach new audiences in the next one to two years. Only 35 percent say they will continue using cookies to help grow digital audiences.
- Marketers are actively looking for new tools and technology to help them reach the right audience. Seventy percent say they are either looking for tools to replace cookies or have no plans on using cookies. Three of the biggest concerns marketers have about using syndicated audiences are changing cookie and privacy regulations, transparency, and competitive overlap.
- Marketers have frustrations with their current audience amplification tools. Only 25 percent of marketers report being very satisfied with the results of third-party cookie targeting. And 39 percent of marketers say their biggest challenge with growing audiences is that cookies are costly and do not deliver results.
How Marketers Want to Grow Their Digital Audiences
Marketers are excited for the future and nine out of ten (86 percent) say they want new tools to reach highly potential customers. Over the next two years, only 35 percent say cookies will be the primary way they grow audiences, while 53 percent plan to use contextual targeting and 48 percent plan to use predictive AI.
It’s not just that marketers plan to use AI in the future—three in four marketers (73 percent) feel positively about the impact of AI on their role, with 42 percent citing AI will allow them to focus on higher-level work and 31 percent say it will improve their return on investment (ROI).
~9 out of 10 marketers want new tools to reach highly relevant audiences.
Top 3 Ways Marketers Say They Will Grow Their Audiences
Benefits and Limitations of Existing Audience Solutions
To see what marketers want out of new solutions, it’s first helpful to understand what works well and what does not work well with audience segments and contextual targeting.
Third-Party Audience Segments
Audience segments can be pre-defined (syndicated) or custom (unique to each brand). Syndicated audiences are most frequently delivered via third-party cookies.
One reason third-party cookie segments are so popular is that they help advertisers easily reach relevant customers at scale. Advertisers can select syndicated audiences directly in their demand side platforms (DSPs) to quickly and easily ensure they’re reaching the right consumers online. But this is an old technology that emerged in the early 2000s during an era of flip phones and dial-up internet, when digital advertising was in its infancy.
Although third-party cookie segments are ubiquitous, the fact that they fall behind new AI solutions and contextual solutions raises questions about their efficacy. Only 25 percent of marketers report being very satisfied with the results of cookie targeting. And 39 percent of marketers say their biggest challenge with growing audiences is that cookies are costly and do not deliver results.
With this in mind, it’s not surprising that 70 percent of marketers are either looking for tools to replace cookies or have no plans on using cookies. Three of the biggest concerns marketers have about using syndicated audiences are changing cookie and privacy regulations, transparency, and competitive overlap.
Cookies Are Not Future-Proofed
Using cookies is subject to market whims. Google first announced cookie deprecation in 2020, and then delayed that deprecation twice before reversing course and saying Chrome would not deprecate cookies. Still, the damage had been done. For years, marketers (nearly half of whom invest more than half their budget in cookies) were told to start preparing for a cookie-less future. As a result, 73 percent of marketers now say they worry that ever-changing regulations will impact their marketing strategies.
Syndicated Audiences and Cookie Segments Are Too Broad
But future proofing isn’t the only concern. In fact, when it comes to syndicated audiences, only 11 percent of marketers say they have no concerns. Nearly one out of four marketers who do use cookies are concerned their competitors access the same cookies and the lack of transparency when using syndicated audiences. Because anyone can use a syndicated audience, there’s a high likelihood that syndicated segments that are relevant to one marketer are relevant to their direct competitors.
23% of marketers are concerned their competitors access the same third-party audience segments.
Third-Party Cookie Segments Raise Questions About Data Quality
Because syndicated segments are pre-baked, there’s no transparency into what’s being bought. Nearly a quarter (23 percent) of marketers cite lack of transparency as a primary concern with cookie segments.
In-market audience segments, for example, reach users who are looking to make a purchase. This kind of data relies on recency, frequency, and monetary amount (RFM). But RFM data is timely and requires frequent updates to maintain its credibility. Third-party segments do not provide transparency into how frequently they update RFM. And the more removed and abstracted data becomes, the harder it gets to provide truly deterministic, layered data like RFM.
23% of marketers are concerned about a lack of clarity surrounding third-party data.
Contextual Targeting
Contextual targeting allows marketers to target relevant content through relatively seamless interactions. In many ways, it offers a return to marketing strategies that align not “aligns” content and messaging.
A marketer for consumer-package goods (CPG), for example, might find value in advertising alongside food content or people who are looking at recipes. But contextual targeting is not a reliable replacement for third-party audience segments because it only looks at one variable: content relevancy. This means an auto retailer, for example, could target content about cars, but they would not have insight into important demographic data such as household income or family size.
Relevant content is also never deterministic. It may suggest interest at best. And advertisers often need to balance precision and scale when it comes to contextual targeting. Reaching recipe content may be helpful but, ultimately, has a narrow remit.
Custom Audiences
Custom audiences offer an alternative for third-party cookie segments and contextual targeting, and 94 percent of marketers say they see the value in custom audiences, citing data quality, constantly growing their own data as their audience grows, and better ROI as the top benefits.
But traditional custom audiences are not seamlessly activated like third-party cookies and contextual targeting. Although 94 percent of marketers see the value in custom audiences, the reality of developing these audiences has made them less ubiquitous than third-party cookie and contextual targeting.
Custom audiences require working with data scientists who create unique audience models. Of the marketers who do work with data scientists, 41 percent use external partners, which can be costly and time consuming. In fact, just 15 percent say they do not have concerns about creating custom audiences. The other 85 percent of marketers worry most about costs, small data sets, and the length of time it takes to create custom audiences.
What Marketers Say Are the Top Three Benefits of Custom Audiences
The overwhelming majority of advertisers (93 percent) further say there are benefits to not just custom models, but to using their own first-party data, citing transparency into who you’re reaching, higher quality data and audiences, and data control as the top three.
It makes sense that a similar number of advertisers see the benefits in custom models and first-party data because the two ideas go hand-in-hand. When building custom audiences, first-party data can be used as the seed data to create “lookalikes” audiences. These lookalikes share attributes with a company’s existing customers, so they represent segments most likely to transact.
What Marketers Say Are the Top 3 Barriers to Creating Custom Audiences
Top 3 Benefits of Using First-Party Data
Improving Efficiency & ROI with AI
The average marketer spends nearly a third of their week optimizing digital campaigns. And this number increases as company size increases. Marketers at companies with fewer than 250 employees say they spend 28 percent of their time optimizing, on average. But marketers at companies with over 1,000 employees spend 40 percent of their time on optimizations.
Mean Amount of Time Spent Optimizing Each Week by Company Size
28% 1-249 employees
36% 250-999 employees
40% 1,000 employees
One reason marketers are eager to embrace AI is the amount of time manual tasks like optimizations take. Seventy percent of marketers say they have higher level projects they want to work on, but they do not have time.
Using Custom Audiences to Drive ROI and Efficiency
Custom audiences can take the guesswork out of optimizing. Third-party cookie segments offer proxy audiences, who marketers think are most likely to find their products compelling. But that’s not always the case.
Predictive AI is making custom audiences as seamless as activating third-party cookie segments. Predictive AI can use a company’s first-party data and layer thousands of variables across hundreds of millions of anonymized users to deliver deterministic, bespoke audience segments.
Introducing Wodwo—the First AI-Powered, Custom Modeling Tool Designed Specifically for Marketers
It’s clear that advertisers are excited about AI and want to use their own first-party data to create custom models but worry about privacy and cost. Wodwo is a first-of-its-kind modeling platform that lets marketers securely generate custom models in just one hour with their own first-party data in a completely secure platform where no one but the marketer touches their data.
To do this, Wodwo’s data scientists developed AI algorithms that use seed data, i.e. first-party data, and Wodwo’s database to build completely custom audience segments. With the power of AI—and in under one hour—Wodwo builds between 400-600 models, accessing over 2,000 deterministic data attributes. Wodwo then synthesizes the highest performing models to deliver the optimum audience to marketers.
To learn more, email us at [email protected] or visit wodwo.co
