“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 Jake Moskowitz, VP of data strategy and head of Emodo Institute at Ericsson Emodo, a tech subsidiary of Ericsson.
Apple’s IDFA changes and Google’s eventual deprecation of third-party cookies in Chrome have turned the advertising industry on its head. User-level targeting and measurement, as we’ve come to know them, are suddenly under significant threat.
Yet, despite much talk around the industry about these changes, critical implications are being overlooked that will impact marketers and publishers alike.
Here are four things you need to know about why the future of identity is likely to be even more radically different than you think, followed by three privacy-centric innovations that will become essential.
What you may not know
1. Change is inevitable for all players – including walled gardens
Changes to identity will affect all players, from walled gardens and open web programmatic platforms, to marketers, measurement companies and publishers of all types.
Although walled gardens have high registration rates, that doesn’t necessarily mean opt-in rates will be high. Consider the findings from a recent Insider Intelligence survey which found that Facebook is the least trusted social platform when it comes to data privacy.
A low rate of opt-in on network inventory will still impact walled gardens’ ability to monetize inventory outside of their owned-and-operated media. Even when marketers run campaigns on owned inventory, they should expect to run into measurement challenges when users don’t opt in on the advertiser’s app or a measurement provider’s app. Publisher opt-in rates will vary, but universal tracking at the scale it happens today will no longer be available.
2. Alternative IDs will not reach the scale that the industry is accustomed to
Much of the industry chatter has focused on replacing the third-party cookie and mobile ad IDs with alternative ways to deterministically track users and match them to databases, such as the Unified ID 2.0 initiative.
While these new structures will play an important role, it’s critical for marketers to keep in mind that all of them are, by definition, opt-in.
An opt-in structure is fundamentally different from the opt-out identity structures on which the industry has become dependent. No matter how creatively or aggressively publishers encourage users to opt in, there will always be substantially lower opt-in rates, and thus less addressable programmatic inventory.
3. Databases will no longer be valued only by their scale, but also by their addressability
Even if marketers or platforms are still able to maintain sizable deterministic databases, no amount of data about any user is actionable for advertising unless that user has opted in to tracking on the specific app or site where an ad slot exists.
Databases will no longer be measured and valued simply by their scale. The addressability of a database will become paramount – a bit like the value of a CD collection being depleted by the lack of access to a CD player. That’s a serious shift, and one that’s scarcely recognized across the industry.
4. Supply and demand
The sharp decline in addressable inventory comes at a particularly challenging time.
As consumers emerge from the COVID-19 pandemic, many marketers are looking to ramp up their advertising spend. Basic supply and demand economics suggest that prices for addressable inventory will increase substantially as scale drops and demand increases.
In short, the cost of doing “business as usual” will continue to climb.
The road forward
1. Not your parents’ contextual targeting
You may have heard that contextual targeting is making a comeback – and it makes sense why.
Old-school contextual doesn’t require an ID to deliver an ad, but rather targets based on the words on a particular page. Today, however, context is taking on a broader definition and can include geography, weather, publisher and category, inventory source, device OS version and much more.
Contextual isn’t just making a comeback, it’s getting a lot more sophisticated.
2. AI and predictive targeting
The future of targeted advertising will expand beyond identity by using machine learning models to predict audience addressability. Leveraging the availability of hundreds of real-time data points, advanced algorithms have the power to predict audience designations for a given programmatic ad opportunity.
True predictive targeting models can classify bid requests into audience segments in real time with a high level of cost-adjusted efficiency.
Machine learning models also enable marketers to focus on the quality of data rather than chasing the waning benefits of data quantity. The accuracy of a model is a direct reflection of the accuracy of the training data on which it was built, so it’s critical for marketers to ensure that they’re leveraging the most responsibly designed and built algorithms.
3. Immersive creative
In some ways, the ubiquity of opt-out based identity has driven marketers to be overly focused on audience characteristics and lose sight of the importance of consumer experience.
But with the iPhone 12 bringing 5G into the mainstream, the time couldn’t be better for this identity shift. 5G makes an entirely new world of immersive consumer experiences possible at an unprecedented scale, most notably through the use of augmented reality.
Our own research shows that 70% of 5G phone owners are actively asking for more AR advertising, believe AR ads reflect well on a brand and view them as more interesting and engaging than typical ads. 5G devices don’t require an ID to target or to achieve the engagement oriented KPIs for which immersive ads are ideally suited.
The future of identity
For years, advertisers have relied on device identifiers for almost every targeting and measurement methodology, including behavioral, attitudinal, location and demographics.
History is riddled with established companies fading away because they insisted on fruitlessly holding on to the past when faced with significant industry change.
Smart marketers will embrace new technologies and capabilities as a complement to their current tactics. This will help ensure that their digital investments remain just as efficient and widespread as they are today.
Campaign targeting still has a future – and, if we act now, we have an opportunity to shape it.