Bringing order to identity disruption amidst pending cookie chaos

Dramatic change has shaken the digital marketing landscape over the past 12 months, making it more challenging to achieve a clear and consistent picture of the consumer.

Of course, there was the upheaval of a global pandemic, which impacted consumer habits, routines, behaviours and preferences in ways that were virtually impossible to predict. But there were also key developments in the tracking landscape. For example, Apple announced in June that it is making its Identifier for Advertisers (IDFA) explicitly opt-in for individual apps in iOS 14. Alongside continually evolving global regulations around data privacy, the digital marketing industry has spent the year taking some direct punches.

Yet these developments, disruptive as they may be, are positive for the future health and growth of the digital marketing industry. Phasing out the chaotic third-party cookie is a catalyst for innovation in the identity landscape, and will result in the adoption and integration of alternative solutions more suited to an increasingly privacy-aware consumer environment.

What identity means in the new landscape

While the industry widely agrees on the importance of alternative solutions to drive relevant advertising experiences for consumers, favoured approaches vary considerably. Google is promoting its Federated Learning of Cohorts (FLoC) approach, which clusters large groups of people with similar interests. Many are in debate around whether this strategy addresses key concerns around privacy and identity, and whether it can deliver the relevant experiences marketers are looking for. 

There is also some suggestion that anti-identity approaches such as contextual advertising could replace audience targeting. This view is particularly prevalent among publishers, with Lotame research revealing 68% believe contextual is a viable alternative. However, this view does not appear to be shared by marketers, with three-quarters saying contextual alone is not a sufficient substitute for audience targeting. While contextual advertising is a useful tool, particularly for the very top of the funnel, precision, scale, and measurement are its weaknesses. Plus, premium content will come at a premium price, as it should.

In the identity camp, people-based solutions use graphing technologies to connect devices, identifiers, behaviours and privacy choices into a single view. By drawing from multiple inputs such as web, mobile, CTV and customer data, these solutions can deliver the relevant and responsible omnichannel advertising marketers want. Here we find two predominant methods used to tie devices to individuals.

Deterministic (or authenticated) identity tools enable user data to be tied to an actual person through a known piece of information such as an email address or phone number for highly accurate targeting and measurement. Although, identity graphs resulting from deterministic identity can still be liable to identity conflicts resulting from false linkages, for example, due to online orders being sent to friends and family or when someone signs into a website while using a friend’s browser. 

Then there are probabilistic (or non-authenticated) identity tools. These assign clusters of devices and browser signals to an identifier – utilising publicly available information such as IP matching, and browsing data – to create the bedrock of an identity graph by linking groups using statistical modelling and predictive algorithms.

Early estimates suggest the authenticated web will only capture 10-20% of users by 2022. To reach the other 80%, deterministic solutions that complement probabilistic graphs and vice versa offer the most logical approach – with the former providing greater accuracy and the latter enabling increased scale and the opportunity to find new customers. 

An interoperable portfolio is the way forward 

The changes set in motion over the last year will continue to disrupt the digital landscape as marketers strive to gain a complete view of the consumer. While people-based solutions that combine deterministic and probabilistic identity offer one approach, it is clear no single technology will provide a replacement for the cookie. Instead, a blend of interoperable privacy-compliant identifiers as well as non-identity capabilities that are suited to specific channels, touchpoints and situations will be required.

Research conducted by Lotame reveals 95% of marketers believe the future of advertising in a cookieless ecosystem relies on multiple interoperable ID solutions, highlighting the need for a portfolio of technologies to provide maximum coverage and effectiveness. And with a critical need for privacy-compliant solutions to engage audiences at scale, also comes an opportunity for the industry to collaborate in creating a new digital marketing landscape that drives growth and value for all while doing the right thing by consumers.