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Facing a Cookie-Free Future in AdTech

Konstantin Mirin
22 Dec 2020
4 min
Facing a Cookie-Free Future in AdTech

Effective user identification is one of the most complex challenges in AdTech math today. It’s something that affects all AdTech players, as it’s the main condition for success on both the supply and demand sides of advertising. But why is it such a hot topic at the moment? We’ve outlined the answer below.

The limitations of cookie-based identification

It’s hard to overstate the value of identifying users for the advertising industry. Accurate user identification helps publishers earn more money on their inventory, advertisers achieve better campaign performance, and AdTech companies sell their tech. 

Until recently, the most common solution to the challenge of user identification was cookie syncing, also known as cookie matching. In this process, cookies collected from different sources are traditionally assembled through partnership and data buying agreements in order to build up user profiles.

Yet a number of issues now cloud the future of cookie syncing for user identification in advertising. Let’s discuss the most pressing of them:

  • Restrictive policies, regulations, and blockers are making cookie collection increasingly difficult. Both Safari and Firefox now offer third-party cookie blocking as part of their tracking prevention policies, and Chrome is set to join them soon. Moreover, ad-blocking software, manual cookie clearance, and incognito surfing options all conspire to prevent cookie collection.
  • Cookies are domain-specific. Since each cookie is tied to a given domain, cookies from one third-party tracker can’t be read by another third-party tracker. For example, a DSP can’t access a cookie set by an SSP, which creates technical complexities when running ad campaigns.
  • Cookie syncing impacts page performance. Cookie syncing requires multiple ID calls with every page load. The resulting number of necessary syncs between DSPs, SSPs, and DMPs can influence ad loading performance. This problem gets worse as the number of parties involved in the sync increases. What’s more, each additional ID sync makes it even more complicated to map the IDs. 
  • Cookie data isn’t evenly shared. AdTech companies have difficulties in competing with titans like Google, Facebook, and Amazon. These key players sit on a treasure trove of user data and form a walled garden for AdTech, as they don’t share their user data easily. 
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    Alternatives to cookie syncing for AdTech

    Given the growing number of shortcomings of cookie syncing for user identification, it’s not surprising that there’s currently quite a buzz around alternative ways of targeting and tracking. This has led to numerous tech experiments and solutions. The most promising of them are based on the concept of shared identity or shared ID.

    AdTech providers are now pushing forward with these new, standardized ways of identifying and storing user data without using third-party cookies. This is evidenced by recent investment trends: according to Know Your Audience: The Evolution of Identity Report from Winterberry Group, spending on identity solutions among US marketers is set to grow from $900 million in 2018 to a massive $2.6 billion in 2022. 

    The takeaway? ID solutions based on universal identifiers are set to be the real game changers in an imminent cookie-free reality. This solution is scalable, free, and available to all industry players outside the walled gardens. Since it relies on first-party data instead of third-party information, it’s closer to deterministic matching, as opposed to probabilistic matching with cookies.

    In the absence of an industry-wide standard for shared IDs, a number of possible solutions have been put forward. The most well known and widely used are 

    The industry’s first shared ID service, IAB Tech Lab’s DigiTrust, closed in July 2020, but DigiTrust’s cookie IDs are still being used by the Advertising ID Consortium. This perfectly illustrates the volatility of the current situation with shared IDs: partners turn into competitors, and vice versa. 

    Alongside the ID solutions mentioned above, thousands of providers have their own IDs and device-based graphs. Their aim is the same: to build up a unified picture of a user by gathering data from different channels. However, to function effectively, they require matching with other providers to identify the same user across the entire ecosystem. Some names worth mentioning in this group are Zeotap, Tapad, and InfoSum.

    Final thoughts

    Even though it seems inevitable that the cookie model will crumble, and the concept of unified IDs has been around for years, the AdTech community still hasn’t found its feet. We’re pretty sure we’ll see more tech providers partnering with each other to compete against walled gardens in the near future. Identity solutions also need to be more accurate and sophisticated, to ensure AdTech users get the most benefit from targeted advertising campaigns. 

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