In this week's member guest post, we caught up with Tanya Field, Co-Founder and CPO of Novatiq.
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, 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.
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.
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.
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.
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.
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.
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.