Advertising Guest Columns
4 mins read

There’s no ‘magic bullet’ solution to the identity crisis: Why a multi-pronged response is required

The gradual loss of third-party cookies has been leading debates amongst the industry for what feels like forever. And with Google delaying the removal of third-party cookies from its Chrome browser until sometime in 2023, this is set to continue for at least another 12-18 months.

This is undoubtedly a defining moment in the history of digital advertising. The deprecation of third-party cookies will impact a huge range of advertiser activity, including frequency capping management, consumer retargeting, conversion attribution, CPA optimization, and behavioral targeting. For publishers, the depreciation of third-party cookies undermines addressability and the programmatic monetization of their inventory.

Failure to provide effective targeting not only affects marketers’ ability to create impactful campaigns, it could also damage the sustainability of the open internet: the websites, apps, games, and video streaming platforms that we all currently enjoy, largely for free. The open internet is powered by advertising and supported by the value exchange between consumers, content owners and brands. If it can no longer provide an arena for effective advertising, then advertisers will shift even more of their digital ad spend to ‘walled gardens’.

Content providers on the open internet, meanwhile, would be forced to look for other revenue streams, such as placing content behind paywalls and user logins, which risks damaging their user experience if not executed well.

Incredibly though, despite the extensive level of debate seen so far around ‘addressability versus user-privacy’ issues, as of June 2021, 80% of online transactions were still dependent on the use of third-party cookies. Those waiting until the last minute in the hope of a ‘magic bullet’ solution to the loss of cookies are going to be disappointed. It’s crucially important that publishers take time to understand the complexity of the challenge facing them and the range of alternative strategies available before it’s too late.

A ‘first-party’ future?

To properly adapt to the new ‘post-cookie’ reality, publishers should work on clarifying the value exchange with their audiences and advertisers alike. Consumers need to understand how the content they rely on is supported and advertisers need to understand why a media brand, its audience and the context is valuable – this is something publishers can support.

With authenticated and consented first-party data being central to many of the proposed alternatives, educating the consumer in this way will be vital. A steady flow of consented data is key to a prosperous open internet. It will be hugely important for publishers to streamline any consent process to provide a consumer-focused dialogue that states exactly what, why, and how their personal data will be used. And in return, publishers can continue to offer targeted audiences to buyers but with user privacy at the core.

Key alternatives like Industry IDs and clean rooms require opted-in users. Industry IDs allow publishers to expand their access to demand by using their anonymized IDs or logged-in audience data so that sellers and buyers can consistently identify users. Curated marketplaces are bespoke marketplaces within larger marketplaces that allow publishers or trusted third-parties to easily package up first-party audiences for targeting in the DSP. Clean rooms, meanwhile, provide publishers and advertisers with the ability to match first-party datasets without exposing customer data to either party.

Beyond individual identity

There is a further range of alternative ad targeting solutions that does not rely explicitly on first-party data. These alternatives include contextual targeting, modelled solutions and browser and app frameworks.

Contextual targeting – where ads are served based on the environment that the user is in at the time of the ad delivery – is not a new idea, but it has evolved to become an extremely sophisticated, versatile and effective tool for marketers. Recent research suggests that 74% of vendors consider contextual targeting a top strategy for the upcoming loss of third-party cookies. Being able to personalize content based on context and environment while maintaining consumer anonymity is a major attraction.

With the rise of machine learning and artificial intelligence, modelled solutions allow publishers to predict and draw conclusions that can power audience expansion, frequency management and measurement. Browser and app frameworks can help address advertising plan campaigns without the need for cross-site identifiers. All of these can be done without any threat to users’ privacy.

Collaboration between partners within the ecosystem will be more important than ever. The incentive is that, by doing this right, will help to ensure an open and sustainable future for publishers online.

While there is no simple solution to the identity challenge facing publishers, at Xandr, we’ll be focused on scaling addressability, simplifying first-party data activation, accelerating the connection between marketers and publishers, and thinking beyond identity to drive relevant advertising in non-addressable environments. 

Colette Munnelly
Solutions Engineer, Xandr

About: A business unit within AT&T, Xandr powers a global marketplace for premium advertising. Our data-enabled technology platform, encompassing Xandr Invest and Xandr Monetize, optimizes return on investment for both buyers and sellers. For more than 143 years, AT&T has used data and technology to inform and improve the consumer experience.