Why advertisers should blaze the identity trail

  • Posted by Joanna Burton
  • On Jun 29, 2022

Identity is the backbone of digital advertising. The ability to identify users enables brands to reach their audience effectively and implement essential campaign strategies such as targeting, frequency capping, and measurement.

Today we live in a hybrid world where some environments are addressable and others are not. Historically, advertisers have relied upon third-party cookies and mobile ad IDs (MAIDs) to implement the campaign strategies that have made digital advertising so effective. However, third-party cookies are already blocked in Safari and Firefox, and Chrome is set to do the same in 2023. Where MAIDs are concerned, the use of Identifier for Advertisers (IDFA) is limited to an opt-in basis only, and the same will happen to Google Advertising IFA (GAID) in two years’ time.

Brands are missing a valuable opportunity

Since traditional identifiers are unavailable in some browsers and operating systems, the majority of advertising budgets are invested in addressable environments. With third-party cookies still being available in Chrome, most advertisers compete to reach a limited amount of the internet traffic in this browser, ignoring the opportunities that cookieless browsers offer. This happens because the industry is still heavily reliant on an obsolete cookie-based identification infrastructure. 

The issue is that even though Chrome is the most used browser globally, accounting for 65% of the global traffic, the fact that user identification is done through cookies, makes the addressable audience even smaller for various reasons. One is that people can opt out of being identified through third-party cookies. Another one is that the pool of identifiable users is reduced by 10-20% each time platforms synchronize/match cookies with each other, creating lost opportunities for advertisers to reach their audiences.

The fact that most advertising budgets are invested in Chrome has also a big impact on CPMs, which are up to 50% higher in Google’s browser than in Safari and Firefox. The bottom line is that the current identification infrastructure only enables to effectively address a small percentage of the internet traffic at a high price. 

Better solutions for today and tomorrow

In the past few years, the industry has been developing different identity solutions that enable advertisers to effectively reach their audiences also in cookieless environments.

Forward-thinking advertisers looking to reach their unaddressable audiences effectively today can already leverage various approaches.

  1. Universal identifiers – Universal IDs enable websites to recognize users in a privacy-first way for targeting, frequency capping, and measurement purposes. Some universal identifiers use deterministic methods to reconcile IDs across domains, involving the collection of hard signals such as hashed email addresses. This method provides increased accuracy and is best suited for hyper-targeted campaigns. Other universal identifiers use probabilistic methods, involving the collection of soft signals including IP address, page URL, user agent, and timestamp. This method provides increased scale and is best suited for prospecting campaigns. The adoption of universal identifiers is growing across the board. This includes the ID5 ID, which leverages both deterministic and probabilistic methods, and has been identified as the most adopted cookieless ID module via Prebid. 

Advertisers who want to increase reach and benefit from more competitive CPMs in cookieless environments can establish direct relationships with alternative ID solution providers or ask their demand partners to integrate with them. Click here for a recent case study with Virtual Minds demonstrating these very successes thanks to an ID5 ID integration.

  1. First-party data strategies – The collection and activation of first-party data is another beneficial approach that doesn’t rely on conventional identification systems. First-party data enables brands to identify and better understand their audiences by collecting and analyzing meaningful information about their customers. Besides collecting their first-party data, advertisers can also leverage publishers’ first-party data, which most media owners have started to gather in preparation for the post-cookie era. By leveraging alternative IDs and by signing direct deals with publishers, marketers can activate first-party data effectively to reach their audiences across all environments.
  2. Data clean rooms – Marketers can also activate their first-party data using Data Clean Room technologies. These platforms allow brands to upload their first-party data in a protected environment, compare it, and cross-match it to the aggregate data that has been uploaded by other companies. Data Clean Rooms enable advertisers to target and measure the performance of their campaigns and are particularly effective for those brands that have collected a large amount of customer data. You can expect a deep dive into the role of the data clean room for Part Six of the series.

The easy but dangerous choice

Yet another avenue that is ever so tempting to advertisers is to simply place all of their advertising budgets into walled gardens, such as Facebook and Google, which today capture the majority of marketing dollars and growth. Investing in tech giants’ platforms that know everything about consumers might seem like an obvious choice. However, it comes with bigger implications than you might think. Is it the best scenario for brands to put even more power in the hands of a few dominant technology companies that are monopolizing the industry? Is being dependent on two or three platforms that are halting competition and innovation a smart long-term strategy? And most importantly, is it fair to take budgets away from publishers and therefore, substantially reduce access to free information for consumers?  

Besides ethical reasons, advertising on Google and Facebook is not cheap. Investing more marketing dollars in the Walled Gardens will result in even higher CPMs for brands. One of the biggest downsides of operating in a monopolized market is that dominant player/s can easily control prices and increase them as much as they wish.

Advertisers have the power and resources to influence an ecosystem where all stakeholders can thrive. The path they choose will have a big influence on their businesses as well as on society.

Advertisers: the ball is in your court

The more advertisers recognize the value in leveraging cookieless solutions today, the more guaranteed it will be for the future of the Open Web to reach its full potential.

If you’re yet to begin your migration to alternative identity solutions, start by analyzing your current reliance on third-party cookies and MAIDS and explore alternatives that you can implement on your own. Speak with your technology partners about what solutions they can integrate, develop and deploy to help you reach your audiences across all environments and increase ROI. There are plenty of solutions available today that can benefit brands’ advertising efforts right now and help them be better prepared for Chrome’s cookie deprecation.

Let’s not forget that migrating the entire industry to a new cookieless identification infrastructure takes time. With Chrome’s deadline set for 2023, it may seem like time is on our side, yet, taking action now is more important than you might think. We’ve estimated that it takes up to eight months for an advertiser and its partner to be able to integrate identity solutions, test, and make the adjustments necessary to operate in a cookieless world

The keys to driving positive change for the industry are firmly in the hands of the advertiser. The journey to the cookieless world is not one that brands can take on their own. They need the entire ecosystem to come along without procrastinating any longer. Starting today ensures the success of this mission as well as immediate benefits. Advertisers, it’s time to blaze the trail.