What if the cookie, device and IP were not the problem?
“Market dislocation”—though a term most often reserved for economists and Wall Street analysts, it could aptly describe the state of online identity today.
Recent reports suggest that Apple and Google are considering removing the IP address from their respective devices’ and platforms’ reporting. This move, which also nods to regulators and privacy advocates, comes on top of removing third-party cookies and possibly preventing the use of precise location identifiers.
In an otherwise poorly articulated reaction to the threat of online tracking, regulators have leaned into legislative actions against one form of identity after another, while market participants, from adtech providers to top brands, lead with privacy and seek to replace the market efficiency that is likely to be lost. But markets are designed to seek efficiency; when programmatic advertising was introduced, it was in response to advertisers seeking to reach the right person at the right time. This, coupled with measurement, introduced efficiency that would dramatically accelerate online advertising, online shopping, startups and small to medium-sized businesses to new heights.
With the deprecation of cookies, the open internet ecosystem is already beginning to fracture day by day. Major, and now minor, walled gardens are proliferating to protect their businesses’ most valued asset—their claim on first-party data. Perhaps this trend is just “business Darwinism,” evidence that adtech has matured, but there are real risks to be considered.
Initially, the third-party cookie provided an audit trail for advertisers, and device identifiers filled gaps, as did the IP address, especially as the market shifted from browsers to connected TVs. Brands leveraged programmatic and came to depend upon a formula where objective evidence of their return on media investment could be provided. This has been especially true for emerging and small businesses; programmatic advertising has fueled the long tail of commerce, allowing competition for mind share to occur across the entire economy.
What if that objective evidence was no longer available? And what if the cookie, device and IP were not the problem?
Reinventing the concept of identity
Rather than cleansing advertising of the identifiers that fuel qualified audience outreach and campaign measurement, what if all identifiers were managed in a secure environment and required authorized consent? As a practical matter, this may already be happening.
Some brands have leaned into universal IDs and clean rooms; adtech titans now hide their identifiers behind walled gardens; identity solution providers and media platforms have moved to privatize with a closed system of hashed email IDs. In the name of privacy, we increasingly operate in black boxes and bundle our solutions with an agenda of protecting our own business models.
A first-party-centric marketplace will undoubtedly elevate the performance of those with the data, but there is a real danger that it will come at the expense of consumer choice and open markets. What we should not be doing is embracing a protectionist model that eliminates access to all third-party consumers and skews or removes consumer choice. If new brands and businesses can’t transparently identify prospects or prove that their investments are working, they will stop investing and may never even get started.
Don’t get me wrong. This is not (yet another) plea for free third-party cookies. Our industry should be giving a uniform thumbs-up to data security, clean rooms, and the requirement to protect sensitive data. We should also endorse the use of public data and require consent. We should not abandon, but rather secure, our current identity framework by providing advertisers and consumers with a proper audit trail for the use of IDs.
An identity space that requires both an ID plus a timestamp for onboarding and media activation—secured through an opt-in process and coming with a systemic, assigned expiration date—would dramatically reduce the ability to reuse or abuse identity.
One inherent advantage of an IP address is that it is time-sensitive, systemically protecting users from unauthorized resale and abuse. On April 1, an IP-to-household assignment has a 40% chance of being unusable by May 1st and a near 100% chance of being unusable by June 1st. An IP address is also included and works in parallel with nearly all other forms of ID sharing—devices, emails and media platform IDs—making it fluid and ubiquitous. If an audience is opted-in, then syncing that secure audience with the media exposure by IP promotes full measurement of cross-platform campaign performance with 100% coverage—but only for that specific campaign and application.
So what if IP usage in the adtech ecosystem was encoded and included a “watermark” of a timestamp and the brand or data provider? An actual OpenID that is unusable except for the permissible purpose of a campaign would be better for the industry, the economy and consumer privacy.
While the fluidity of IP assignments makes it a poor choice as a permanent ID alternative, it also offers the potential to rationalize the pursuit of privacy in the identity space. An IP with a timestamp is potentially the best choice for the open internet, providing secure, verified reach and measurement that is also in the best interests of the advertiser and the consumer at this moment in time.
Ray Kingman : September 19, 2022
