The post-third-party cookie advertising ecosystem: A guide for brands and agencies
Back in 2019, the Chief Economist of IAB Europe commented that “programmatic is on the path to become the default infrastructure for digital advertising.” At the time, the programmatic ecosystem had grown 88% to reach €23bn, and 77% of display and more than 50% of video had been traded programmatically.
Since then, the programmatic ecosystem has been shaken by a seismic event: the deprecation of third-party tracking cookies and mobile advertising IDs (MAIDs).
Until now, agencies and advertisers have relied on the cross-site tracking data provided by these IDs to target people programmatically with personalised and timely content. The IDs give publishers the ability to link web or app visits to identities, which are then sold to agencies and advertisers as audience segments used to offer the personalised content that people demand. Similarly, brands have used third-party cookies from their own sites to track users to gain insight into their likes and behaviours.
However, the internet is becoming increasingly privacy centric, driven both by the demands of regulators and a greater awareness among consumers of the privacy trade-off that comes with tracking IDs.
While third-party tracking cookies will remain in use on Chrome until at least 2024 (Google keeps delaying the withdrawal of tracking cookies) they are already restricted on most other major browsers. The direction of travel is clear and if the programmatic industry is to thrive in the future, adtech vendors and service providers must produce a privacy first alternative capable of delivering high scale addressable audiences that can be activated safely and in real time.
After all, without reach to large addressable audiences and their associated audience cohorts, digital advertising runs the risk of reverting to expensive “spray and pray” advertising techniques, or at best relying only on context as a proxy for consumer interest.
Securing addressable audiences in a cookieless world
Current fallbacks for securing addressable audiences fall short. Major internet giants like Google, Facebook, and Amazon can build addressable audiences through authenticated logins, but these audiences are restricted to each walled garden. While agencies and advertisers can make use of this data, they also need an alternative that extends to the open, unauthenticated web.
Scale is also a consideration for agencies and marketers. Authenticated identifiers such as Universally Unique IDs involve users agreeing to the process of authentication, something that only around 20% of users agree to. Other approaches to building audiences fail to respect the privacy concerns of regulators and consumers, with device-inferred identity being the main culprit in this regard. Privacy concerns around inferred identifiers are already leading to some browser owners installing technology to restrict their use.
Digital advertising in a cookieless world
Necessity is the mother of invention, and few sectors are as inventive as adtech. Currently, new approaches are emerging that will enable a privacy-first approach to creating addressable audiences and leveraging personalised, programmatic advertising. One approach is particularly promising, as it will unlock significant new opportunities for advertisers.
The approach combines two new identifiers, a telco-verified ID and a dynamic transaction ID for audience activation, which leverage the full power of consumer consent. Used in isolation, first-party cookies are of limited value as they are session-based and unable to support cross-device user recognition. However, when brands and publishers’ first-party cookies are securely and safely verified against known visits, they become exponentially more powerful.
Telco-verified IDs: enabling real-time marketing
Novatiq’s approach is to use a patented in-network first-party verification ID to join the dots between consented users’ first-party cookies. Importantly, no personally identifiable information (PII) is transacted – all that occurs is that a telco verifies that an anonymised publisher ID matches an anonymous user on its network – so the approach is fully compliant with all relevant privacy regulations and capable of securing the trust of consumers.
By using privacy-safe consented telco intelligence in this way, agencies and advertisers can recognise visitors to their site/app and identify return visits – irrespective of which device they’ve used to connect. Publishers and brands can thereby confirm audience IDs, across both authenticated and unauthenticated users on the open web. That in turn means they can provide marketers with addressable audiences at scale that can be activated in real-time.
This model delivers several benefits for agencies and advertisers:
- Recognise and profile audiences in real time and at scale using consented first-party data for personalised advertising.
- Safely activate audience cohorts through buy-side platforms and carry out frequency capping, measurement, and attribution in a privacy-first manner.
- Win the trust of customers with relevant and engaging content that respects their privacy.
- Seamlessly and efficiently enable consumers to consent for their pseudonymised intelligence to be used for advertising.
Delivering ad personalisation in a privacy-first way
The first of these benefits is worth analysing in detail as it is so central to the vision of programmatic advertising.
Consumers clearly want personalised content. One recent study, for example, highlights that 43% of consumers believe that it is important that the ads they see online are personalised across factors such as geography, interests, and behaviours. Eighty percent of consumers are more likely to make a purchase when brands offer personalised experiences. This makes sense. The greater the relevance in advertising the more likely it is to resonate with people, to add value to their lives, and therefore to be a welcome part of the digital experience.
However, consumers are not for personalisation if it comes at the cost of their privacy. Just 17% of US and European internet users believe it ethical to track their online activity for the purpose of personalising ads, for example. Agencies and advertisers therefore need to understand how they can deliver personalised content and experiences that people can really engage with, without tracking them or impinging on their privacy.
A new model for ad personalisation
The use of telco-verified IDs now provides agencies and advertisers with a privacy-first means of delivering personalisation. Novatiq’s own Fusion platform is a case in point.
Through this approach, the full benefits of being able to personalise content and experiences at scale and in real-time can still be realised, but crucially it is done without any PII being transacted over the adtech ecosystem.
The approach also makes the customer consent process simple. Consumers need only give their consent to publishers for their telco intelligence to be used for verification and can revoke that consent at any time. When it comes to the use of first-party information for audience activation customers can activate or deactivate the use of their information at any time simply by instructing the relevant brand, publisher and/or telco.
A new and better approach to addressability in digital marketing
Of course, personalisation only works if agencies and advertisers can reach a significant proportion of their addressable audience. Here, match rates are important. The match rate is the percentage of users from any given audience that a buy-side platform can recognise. It is the overlap between the data held in a brand or publisher’s customer data platform (CDP) or data management platform (DMP), commonly derived from their CRM systems, with that held in a buy-side platform.
Match rates therefore tell agencies and marketers what proportion of an addressable audience their content is reaching. However, as tracking cookies and MAIDs have long been the main tool for calculating match rates, it is time for a new approach. Indeed, the change should be welcome to agencies and marketers, as cookie-to-cookie / MAID-to-MAID matching has been beset with challenges. For example, if a cookie from one site isn’t passed on to the buy-side platform, an important part of the picture is lost. This is a common occurrence and leads to cookie match rates of between just 40% and 60% on average. Additionally, cookies are tied to a device, and are of little help if a user is switching between computers, smartphones, or browsers.
Beyond audience matching
Telco-verified identifiers will once again come to the rescue. In this case, the dynamic transaction ID is key, as it enables agencies and marketers to activate audiences in real time. The ID is transient and exists in every transaction. So rather than trying to find matches for known users as in audience matching, Novatiq’s Fusion platform enables advertisers to link a relevant cohort to each unique advertising slot. As well as being pseudonymous, the ID is also transient, so it can’t be reused downstream in the adtech ecosystem, which makes it secure and privacy-first.
Telco-verified IDs mean agencies, brands, buy-side platforms, and SSPs can be confident that the audiences they are reaching are attributable and privacy safe. That translates to near 100% audience relevancy that can also be used for retargeting across devices.
Cross-device marketing
Combined with the publisher ID to enable publisher or brand specific cross-device retargeting, brands can deliver their messages to the right people every time, and at the right moment, driving better campaign performance and ultimately ROI.
Cross-device engagement enables brands to achieve this aim, allowing agencies and marketers to serve content to the same person across the full range of smart devices such as laptops, smartphones, tablets, and more.
The approach enables a much richer experience for consumers that choose to opt into such experiences. For example, an advertising experience left off on a laptop can be seamlessly picked up on a smartphone. Additionally, by understanding an audience’s habits and preferences across devices, brands can improve their audience profiles and related campaigns.
However, cross-device marketing is also under threat as a result of the deprecation of third-party cookies. Already, only 6% of marketers today say they have an adequate single customer view, largely because they are limited by fragmented, siloed, and outdated cookie-based solutions.
Cross-device scalability
Telco-verified IDs offer a perfect solution to achieving privacy-centric, cross-device profiling. This is because they leverage telco intelligence. Only telcos have complete visibility of every digital transaction and the trusted customer relationships needed to work with brands and publishers to connect web visits and enable each of them individually to build 360-degree profiles of their audiences.
Even with the loss of third-party cookies, cross-device advertising isn’t going anywhere. Indeed, due to innovations like Novatiq’s Fusion platform, the practice is becoming more accurate for agencies and marketers and far more acceptable for consumers, who can carry on reaping the benefits of personalised and relevant content.
Solve digital ad fraud once and for all
Another significant benefit of telco-verified IDs to agencies and advertisers is that their use has the potential to stop ad fraud in its tracks. It has been estimated that 30% of media budgets are lost to digital fraud making this a crucial challenge for agencies and advertisers to solve.
Ad fraud comes in a wide variety of formats including:
- Click fraud: When a bot clicks on a pay-per-click online advert to inflate a company’s advertising bill.
- Domain spoofing: Where a fraudster impersonates a company’s domain to sell low quality inventory as high quality. Instead of going to a premium site, a brand’s advertisement is posted on a low-quality website maintained by the fraudster.
- Pixel stuffing: Where fraudsters embed a normal-looking ad with a fraudulent pixel “stuffed” with multiple ads. As a result, users view multiple ads when the page loads.
- Ad stacking: Like pixel stuffing, but with multiple ads stacked one on top of the other.
- Cookie stuffing: Where a website drops third party cookies onto a visitor’s web browser, causing merchants with affiliate programmes to misattribute traffic to the fraudster.
Ad Fraud in programmatic advertising
Programmatic methods bring greater speed, and scale to advertising by automating the selling and buying of inventory. However, programmatic has also enabled the automation of ad fraud, allowing it to be conducted on a much larger scale. Given the volume and velocity of ads being served to websites and apps, fraudsters find it easier than ever to spoof legitimate publishers to steal advertising dollars.
For example, fraudsters have been known to set up apps that automatically send clicks to publishers once downloaded by a user. These clicks will appear legitimate to publishers and advertisers alike.
For agencies and advertisers, the consequences of ad fraud are clear. At a basic level, they are not receiving the advertising reach they think they are receiving and for which they are paying. Overall, the impact is corrosive to the programmatic model as it erodes trust and can lead to advertisers seeking safer alternatives.
How to stop ad fraud
Currently, agencies and marketers are investing heavily in anti-fraud tools such as verification filters, publisher blacklists, Domain Name System monitoring and others. However, judging by the fact that fraud losses continue to rise, it is apparent that these tools are not fit for purpose.
Given the range of fraud types and the sophistication of fraudsters, there will be no one magic bullet for ad fraud. However, a significant blow can be struck in the battle against fraud by addressing click fraud and the use of bots to mimic real users.
Here, telco-verified IDs have a role to play. As we have seen above, with pseudonymous, telco-verified identifiers, such as Novatiq’s Zenith ID, telcos check their network intelligence to verify that a brand or publisher ID corresponds to a known subscriber. In doing so, the telco enables brand and publishers to authenticate that a visitor to a website or an app is a real person and not a bot.
Agencies and advertisers can then use a second, dynamic transaction ID (such as Novatiq’s Hyper ID), verified as human in the same way, to activate their campaigns, knowing that their content is being seen by human eyes – and the right human eyes to boot.
By providing attributable audiences, telco first-party data verification means that agencies and marketers need only pay for valid traffic, which given that ad fraud cost $68 billion in 2022, can provide significant savings.
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Conclusion
As third-party cookies make their exit, adtech innovation is accelerating and the industry is starting to coalesce around a system that reconciles programmatic, personalised, cross-device marketing at scale with privacy and the need to address fraud.
We believe Novatiq’s Fusion platform and IDs it supports will play an important role when it comes to building addressable audiences and activating cohorts against them. It offers an approach that goes beyond audience matching to provide relevant audience cohorts for each individual ad request, while ensuring that no information remains to be used further down the bid stream. This model is engineered for privacy, meeting the needs of consumers and regulators, while continuing to offer advertisers and agencies the scale and relevancy they need to grow their brands.
The web is transforming, but programmatic advertising is going nowhere.
