How A Connected World Reshapes Audience Buying

steve“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Steve Williams, chief operating officer of Mediaglu.

Over the past several years, an abundance of ad-tech companies have constructed large businesses completely dependent on their audience data. This data is often described as proprietary, but many times it is not.

The largest example is retargeting. Throughout the 2000s, we saw the launch of at least a dozen companies focused on retargeting consumers in unique ways and, in many cases, they’ve been very successful. In the last few years, the real-time bidding (RTB) world has given them even more scale and growth.

However, these “desktop-first” companies now see their targetable audience dwindle as consumers increasingly shift more time to the cookie-free, app-driven world of mobile, which is on pace to overtake desktop as early as this year, according to eMarketer.

The lack of data available on mobile users has paved the way for a new wave of ad-tech startups that are promising extended campaign reach by matching consumers from their desktop machines to mobile smartphones and tablets. Creating that match typically involves some degree of super publisher login information, householding or device fingerprinting.

With mobile privacy standardization yet to take a firm hold, many of these solutions use varying levels of personally identifiable information – albeit hashed – or profiles in which the user cannot opt out. Recently, US Sen. Charles Schumer, D-NY, has been working with the FTC to tackle these privacy issues and enforce a new code of conduct specifically for mobile tracking.

Regardless, this desktop-plus-mobile transition phase won’t last forever. As the line between desktop and mobile continues to blur, it is a matter of time before mobile wins and users shift their desktop behavior to inherently mobile devices. These devices may still power a desktoplike experience in the workplace, but the ad-serving technology behind them will be firmly rooted in mobile. Microsoft and Google have already tried to blur the mobile and desktop operating system divide, while the recently released OS X Mavericks continues the trend towards iOS-like features.

Finding A Replacement For Cookies

While desktop-to-mobile connections are a temporary solution to the data problem on mobile devices, cross-screen marketing itself is definitely here to stay. The long-term challenge advertisers face is creating unique multidevice consumer profiles in a privacy-friendly way, without the help of desktop cookies.

As ad-supported mobile apps increasingly adopt an RTB-first mentality, mobile exchanges are commoditizing the data available to advertisers since third-party sources are limited. The Android ID and Identifier for Advertising (IDFA) allow advertisers to persistently identify a device across the network, but there is no unique behavioral data currently associated with that mobile user at the time of the request. This, along with an underdeveloped creative experience and small form factor, both outside the control of a DSP, is why mobile CPMs remain far lower than their desktop counterparts. It is possible however, to construct a behavioral profile of a mobile device by aggregating all the information RTB exchanges provide for a given bid request over time.

Only when every bid request from a particular Android ID or IDFA is stored over an extended period of time and analyzed can advertisers begin to decode user behavior in a way similar to what a cookie allowed. The biggest advantage here is that the shift to mobile will result in exponentially more data about consumers, not less. It is no longer just about keywords, aggregated publisher data and site visits, but about how these factors change with location over time. This adds a new level of comprehension about consumers that can provide rich detail in behavior-driven movement and understanding consumers at a specific point in time.

The death of the desktop as we know it will in no way shrink the number of devices per user. Connected TV will become the new home desktop, and the “Internet of Things” will create a world of connected devices whose impact on advertising is yet to be determined. Each of these new devices could be partially ad-supported or may simply provide signals advertisers can use to enhance multidevice consumer profiles. Cross-screen solutions will have to be device agnostic in their approach to process these signals and connect devices in a privacy compliant fashion.

These multidevice consumer profiles will essentially mimic the data currently stored within a cookie, but could potentially provide even more insight when mapped to consumer movements. Despite increased privacy concerns throughout the marketplace, the industry will without a doubt continue to be data driven. The future of audience targeting depends on how companies can take the increasingly large amounts of commoditized information and make unique and useful inferences from it in a cookie-free, device-fragmented world.

Follow Mediaglu (@mediaglu) and AdExchanger (@adexchanger) on Twitter.

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