Forget Cookies – Private Data Networks Are the Future

The Sell Sider” is a column written by the sell side of the digital media community.

Today’s column is written by Bob Walczak, CEO, MadTech Advisors

The future is cookieless. This we all know. But the industry faces a long road ahead before cookieless audience targeting becomes the norm. Sure, context and cohort targeting provide a decent temporary solution, but they ultimately fall short. These methods simply can’t deliver the granular data points that brands will require in order to succeed in the future. 

So, what’s the solution? How can publishers sell and brands buy cookieless data that provides meaningful audience targeting capabilities while respecting consumers’ online privacy? 

Brands, advertisers and media companies need to retool now in order to prepare for this inevitability – but easier said than done, right? While an end-to-end solution to manage the process does not yet exist, we can mitigate the incipient headache of our shift to the cookieless age with a few strategic implementations.

Bring in the AIPs

Alternative Identity Providers, or AIPs, have been around for a while. Over the past two years, top players like LiveRamp (RampID), The Trade Desk (UID 2.0) and ID5 enabled some of the world’s top brands to stay ahead of privacy regulations as they loomed over the rest of the industry. Now, as the mid- and long-tail market march toward the cookieless horizon, we can expect AIPs to assume an even more prominent position. 

AIPs behave like skeleton keys. Or, more precisely, like the factory that produces them. They take user opt-in data in conjunction with some form of PII (personally identifiable information, like an email address) and create an anonymized ID for a first-party registered user. But the beauty of the process is that AIPs function at scale. These pivotal players solve a major problem for publishers and brands grappling with poor identity resolution.

The basic AIP model looks like this: AIPs give away their ID solutions to publishers for free, with the promise of increased spend and improved CPMs. This, in turn, incentivizes publishers to integrate all of the top ID providers. However, since brands pay for their IDs, they can pick the one ID they like best, causing inevitable fragmentation. 

Using AIPs comes with other challenges, too, such as a lack of ubiquity and scale across publishers, or the fact that the “ad tax” now encompasses identity as a component. Still, challenges notwithstanding, the upside for all parties utilizing AIPs remains tremendous.

Create PDNs

Brands and media owners now commonly interface and exchange data via mutual clean rooms from companies like InfoSum or Permutive. These shared environments, sometimes called bunkers or volts, function as private windows through which sensitive data may be viewed but not shared. 

These clean-room environments serve as critical junctions where a single brand and a single media owner can link up and create individual data deals. Incredible, convenient – but also agonizingly unscalable. So, what’s the fix?

First, we need to shed the misconception that clean rooms behave as static environments. In reality, they function more like data streaming hubs, where connections are left open between a media owner, a data provider and a brand. Now, scale that concept up. The result is a consortium of approved participants, all observing the same data hygiene process, co-participating through a private data network (PDN). 

Think of PDNs as the logical next step – an evolution of the data cleanroom – affording greater access to relevant, pooled cookieless data.

Enter the cookieless age

Now, with data flowing through PDNs and a scalable cookie-alternative with AIPs, the inevitable cookieless future looks less intimidating. And by using the already existing programmatic infrastructure of our industry’s perpetually renovated basement, we just need to repurpose the plumbing to accommodate this new type of data. 

Simply put: same pipes, new flow points. Buyers and sellers can then activate their desired audience, sprinkle on some first- and third-party data and get back to audience targeting without any browser-based cookies.

Better data days ahead

Along the way, players will assuredly grapple with adopting and implementing new media strategies, balancing investment budgets or engaging in complex data partnerships. 

But there’s good news: Streaming user data into clean-room PDNs will function  similarly to how we already handle third-party cookies today. In other words, we already set ourselves up for success. We have the tools, we own the infrastructure, and, once we retrofit our systems, all that remains on our to-do list is to establish an operational consensus. 

The future is bright for our industry. This we all know. And despite cookie deprecation and new privacy laws, there’s no doubt that our resilient industry will unquestionably arrive, as it always does, in a better place. A place where consumers – and their privacy – come first.

Follow Bob_Walczak (@Bob_Walczak) and AdExchanger (@adexchanger) on Twitter.

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