Cookie Life - Part 5: Universal Identifiers

As presented before, the technology behind cookies has made digital advertising extremely efficient. By offering precise information on consumer preferences and behaviours, advertisers could select the personas and demographics which best fit their product to maximize the ROI.

Publishers needed to provide the right environment to motivate these audiences to dwell on their platforms, within or outside the walled gardens.

As explained in Part 3 of the series, it is possible to find alternatives avoiding the use of cookies. However, this would mean that agencies and clients have to agree to consider these alternatives as potential opportunities to grow differently, then test them for validation purposes.

Why need cookie alternatives like universal identifiers?

As mentioned in our article about the current cookie status quo => Simple. Money.

When cookies are gone, it will be impossible to directly identify website visitors based on their browser history.Therefore, it will be unfeasible to serve them personalised ads adapted to their profile.

For advertisers, this will limit the capacity to attribute, target and monitor campaigns.

=> Not wasting money and making more money.

It is a question of targeting for advertisers - not wasting advertising money on audiences who would never consider or buy their products or services. When an advertiser chooses to bid “blindly”, it will buy cheap impressions but its cat food ads can be served to dog lovers, which would be pure waste. One can say that some products - like washing powder or shampoo - can actually be served universally, but Italian luxury brand Salvatore Ferragamo used the Times’ first-party demographics and interests data for segmentation to drive a 0.47% CTR in its campaign (Source: WARC) - i.e. 9.4 times higher than the IAB benchmarks costs.

For publishers, it is a question of revenue. An identified bid request is paid way more than an unidentified one. Offering no visitor segmentation whatsoever diminishes the quality of ads served in the specific ad slot too and requires diversifying sources of income - the ad slots - to maintain the revenue, which decreases the general content quality of the website.

An individual publisher, however big it is, cannot create the same audience group or interest pool as the walled gardens with its visitors alone, therefore potential collaboration with others is beneficial. That is the reason why the universal identifiers came around - the status quo that the industry needed to find new ways to scale.

“We don’t want one ID, but we also don’t want 20 plus either”. Mathieu Roche, CEO and founder of ID5

How do universal identifiers work?

The goal is to be able to keep following users across the web. Why? Because it enables the control over the number of exposures and successful touchpoints of each advertising campaigns.

Users are now connecting digitally through devices beyond mobile and desktop, fragmenting the market further. They are now exposed to ads in various channels and marketers aim to maximise the efficiency of their activities at the cross-channel and cross-device level.

Moreover, the pressure to respect privacy of each user is growing and being enforced more rigorously.

Two types of identifiers have emerged on the market:

- Deterministic

These identifiers are a combination of the first-party website ID and hashed and encrypted PII such as an email address or telephone number. This kind of ID will remain open and ubiquitous while introducing significant upgrades to consumer privacy (compliant with privacy laws) and transparency.

The problem for now is that this technology needs to be scaled in order to be properly applied: the capacity to match the IDs across platforms depends on the adoption rate (the number of participating publishers) - the larger the group of publishers using them, the more relevant and ubiquitous their data will be.

- Probabilistic

Providers are using machine learning algorithms to extend the ID with signals such as clicking, visiting a page, or buying products. It is mirroring the ID partners from its sources to other ID-sourced partners to offer broader identification opportunities.

The idea itself is great and could compensate the scalability problem that the deterministic IDs have.

Some of the competitors on the market

• Deterministic: Zeotap ID+, Unified ID, Liveramp ID, Nielsen ID sync, NetID
  
• Probabilistic: ID5, Liveintent nonID, Neustar Fabrick ID, Panorama ID
  

Ok, now. What should marketers do about universal identifiers?

The problem is, we do not know yet what the future holds and which ID solution(s) will prevail. The market is going through a transformation and the landscape is still shaping itself but marketers should not sit around and wait until they see the results.

As explained in this series, strategies and solutions are already available to go beyond the third-party cookies, and identifiers are one of the possible solutions under development that marketers need to keep track of.

Brands have a role to play in building tomorrow’s market by joining the conversation and ensuring that the different technologies can work with one another.

Any provider has to be transparent about its privacy compliance, hence the technology behind the identification. Marketers should get familiar with the technologies and solutions in order to avoid surprises, understand limitations and be comfortable with market changes.

As for the walled gardens, advertisers should not build a dependence on a single source of audience insights for campaign efficiency assessment.

MMT Consulting can help marketing teams assess their dependence on third-party solutions and provide recommendations on how to create the most relevant future-proof data-driven solutions to run your marketing campaigns. MMT is independent from any providers, keeping an agnostic point of view adapted to advertisers’ and agencies’ needs. Get in touch!

Sources

• Market research on the advertising identity ecosystem - 2019 https://www.bvdw.org/fileadmin/bvdw/upload/publikationen/ovk/RZ_BVDW_LF_Advertising_Identity_engl_ES_Final.pdf
  
• Warc Guide - 2021  the future of identity