The Future of Identity in the Addressable Advertising World

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Across the digital marketing and advertising space, there have been many noteworthy announcements around how advertising is being disrupted by the death of the third-party cookie. Including for example, upcoming changes to the Chrome browser announced by Google and now Apple’s announcement of a new consent framework to the mobile ID that is expected in iOS 14 this year.

Even before these announcements about the third-party cookies, there have been many reasons for the addressable advertising marketplace to find and develop alternatives. The third-party cookie has been crumbling under pressure in several areas including managing legal consent, reaching cookie-less environments such as mobile and connected-TV, and cross-device reach. The replacement(s) for third-party cookies therefore will have to address these issues and many more.

The many players that help make up the ecosystem, from the publishers that build content and apps, consumers who consume content, advertising companies, tech companies, and the brands that market to consumers, now have the opportunity to build the next wave of the open internet. When we think about what this might look like we have to talk about how many of these players became so dependent on the third-party cookie and anonymous mobile advertising IDs.

For many years, publishers have supported the content they produce through advertising. Publishers obviously have wanted to maximize their revenue and they have done this by providing advertising space to the highest bidder. In order for advertisers to know what they were bidding, they had to know their audience. The third-party cookies enabled many firms in the marketing tech ecosystem to begin to profile individual cookies, track those cookies across different publishers, and provide various levels of measurement.

This implicit agreement publishers made with consumers is that their “free” content was supported by advertising. However, this didn’t originally come with notices that the advertising that was being shown was monetizing the user through tracking across the web.

This is where the ecosystem has the opportunity to improve upon the web, by making this agreement explicit, that consumers will have to consent to letting the publisher share personal information to drive personalized advertising. This is where there will likely be much innovation in the coming years for all parts of the ecosystem.

There will likely be two key areas of how this will work in the future. The first will be an advertising system based on consented encrypted PII matching. There are different ways that this could develop in the coming years, LiveRamp’s Authenticated Traffic Solution and The Trade Desk’s Unified ID 2.0 are some of the first to launch, but we are likely to see other frameworks for managing authenticated consented exchanges between advertisers, consumers and publishers.

While transparent, consented personalized advertising that is based on authenticated encrypted user information will be part of the new ecosystem, there will be many parts of the advertising ecosystem that will have to work with an unauthenticated state. How this part of the marketplace evolves will be the most interesting. With Google’s privacy sandbox announcement, we can see where some of the thinking is headed but there is still a lot of ambiguity. We know that the ability to identify the individual user will be stripped away, and that much of the insights will have to be drawn from bucketing users into different cohorts and site contexts and reported at a level of aggregated values. How granular and adaptable these behaviors can become will be the most interesting area of development.

This means that advertisers and brands will have to start shifting their measurement and planning to a layered approach for addressable media. With one layer being advertising at the individual level using consented authenticated and precisely measurable inventory, and the other level done based on cohort behaviors and context.

This facilitates a lot of opportunities for innovation in how publishers build relationships with users, how brands learn to personalize, and hopefully toward systems that can give users transparent views in how they define their buying intentions and how their site behaviors define who they are.

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