This article was originally published in IAB Europe on November 17, 2021.
Everyone involved in the advertising industry – from marketers to media owners, to agency heads and small business owners – understands the need to reach and engage new consumers to effectively scale their business. And they know that programmatic advertising is one of the best methods to do this.
But today we are at a crossroads. One path returns us to an internet that resembles the original walled gardens of the past (e.g., AOL, CompuServe, and Prodigy who owned and operated the infrastructure of the internet in the 1980s). The other path leads to marketers and media owners continuing to retain their choice of business partners to operate and grow their business.
This is due to multiple internet gatekeepers preferring to substitute their own solutions to help media owners and marketers conduct advertising. But, from a consumer perspective, given that the identical personal data is being collected and processed to support these business-to-business use cases, we are primarily talking about market competition, not privacy. Thus, if we want to truly protect choice for people, media owners, and marketers, we must balance people’s important privacy rights with the ability for businesses, especially smaller ones, to benefit from working with supply chain partners.
Towards this end, we should be clear about what data poses threats to people’s privacy (such as sensitive categories of information or activity linked to their identity) and what data has undergone privacy-by-design protections, such as relying on random or de-identified identifiers that pose far lower risks.
With over 20 years of experience in product management, innovation, as well as advocacy for consumers’ privacy rights and the ad-funded open internet, I’ve had innumerable conversations around addressability. In these conversations, I continue to see the same misconceptions across the industry that do little to help improve people’s privacy, much less help marketers and media owners plan for the future of addressable media — and I’d like to clear up those misconceptions now.
Misconception 1: Cookies Are Identifiers
The confusion over cookies is one of the most common misunderstandings I hear. Many people confuse a cookie storage mechanism with the identifier it often contains. These identifiers can be used in digital advertising or for remembering what’s in an online shopping basket. Cookies are merely files that contain identifiers, similar to the address on the outside of an envelope. These identifiers help marketers deliver messages to people by helping them understand how to improve their audience engagement, quantify how well it is performing, and improve how they can allocate their budgets going forward.
There’s also a growing perception that first-party cookies are good, while third-party cookies are bad. This is because many people think that cookies alone cause privacy issues, but privacy issues occur from the data collection and processing of personal data — regardless of whether the organization that collects and processes data is first or third party.
That’s why it’s crucial for organizations of all sizes to ensure they adhere to strict privacy-safe operations for data collection and processing of personal data. If they must receive data associated with people’s identity (such as merchants who ship goods to people’s homes), it is important they implement appropriate technical and operational measures to keep this information separate from the de-identified data required in general to run and grow their business.
Misconception 2: Addressability is Going Away
The truth is walled gardens will continue to offer fine-grained audience targeting, frequency capping, and real-time optimization. Most will also continue to support CRM onboarding where they link people’s identity or other forms of cross-site data linking to improve their own advertising solutions. Thus, addressability is here to stay. The only question is whether addressability will be available to their smaller rivals, especially those that rely on pseudonymous, random identifiers to conduct these same advertising operations. This is why addressability is a competition issue – not a privacy one.
According to a 2020 study by The Harris Poll, 66% of consumers’ time spent online happens on the open internet. However, there’s an asymmetry in marketing spend, as marketers only allocate 37% of their ad spend to the open internet (the other 63% goes towards walled gardens). This is why it is so important for independent media owners and marketers to have access to responsible addressable media identifiers.
Misconception 3: Marketers Value Addressable Targeting Without Measurement
A key aspect of addressability is improving how marketers engage with audiences — current customers and new prospects alike. But delivery (or reach) is just one part of the process. Measurement of what is working, and more importantly, what is not working, helps marketers improve the allocations of their limited spend, change their bid prices, alter their messaging strategy, and in short, optimize their return on ad spend. This is why addressability is crucial to successful advertising campaigns.
Yet addressability is not only about media owners and marketers. Without addressability, consumers would suffer poor experiences due to over-exposure to the same ad as a result of the lack of frequency capping or miss out on opportunities to connect with brands and products they would benefit from knowing but don’t yet have a relationship with.
Moreover, time-delayed reporting and aggregate APIs are not adequate to support digital advertising. Such long delays mean marketers will waste spend proportionally to the delay in this feedback. The greater the delay, the lower the effectiveness, which leads to lower revenues for publishers.
Misconception 4: Contextual signals or Hashed Emails Are a Complete Replacement
Hashed emails can provide superior cross-device user experiences, but they’re not a complete solution for addressable advertising. Only non-logged-in user IDs will be able to provide a complete picture across the wide range of consumer experiences.
For example, even if a marketer were to target only people who logged in on various news sites, this alone wouldn’t provide marketer view-through attribution for people who arrive at their website a few days later. This is because most marketers don’t require people to log in when they first visit their website.
Similarly, contextual targeting enables marketers to engage the right audience while in a mindset associated with the content surrounding the ad. But without the measurement of which contextual targeting is working better — even on the same site, much less targeting the same topic across different sites — marketers cannot improve the return on their ad spend. Moreover, contextual alone cannot provide the frequency capping or attribution marketers rely on to increase the effectiveness of their campaigns.
This is why pseudonymous, random identifiers provide marketers even more value to sites that rely on hashed email or contextual solutions.
Misconception 5: Publisher-Supplied Data Can Replace Cross-Organization Identifiers
The truth is that while publishers’ first-party data is very valuable since publishers know their audiences better than anyone, it isn’t a standalone replacement. This is why publishers should enrich their inventory with the first-party data that makes it more valuable to marketers.
However, like other engagement tactics, it doesn’t support cross-publisher frequency capping or attribution. Marketers still need responsible addressable identifiers to bridge the exposure on the publisher site to the activities that happen on their own site.
In short, engagement is just one of the three important aspects of addressability, along with measurement and optimization.
How Marketers and Media Owners Can Move Forward
It may feel like there are many details up in the air when it comes to the future of addressability. However, there are steps that marketers can take now to drive success both now — and in the near future. These include improving the management of first-party data, as well as enriching first-party data with information that the marketer or media owner doesn’t already have.
This can be achieved by working with partners who can provide the technology and services needed to grow their business using responsible addressable identifiers. Marketers and media owners can also make their voices heard by joining industry conversations with Prebid.org to collaborate on the best paths forward for addressability.
There are steps in our collective control, and we just need to take them and learn as we go. If you’d like to hear more about the future of addressability, you can watch my IAB Industry Insider Webinar here.