“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.