What is ‘on-device’ ad tech & how does it benefit the ad industry?

Traditional digital advertising solutions are built around a personal identifier (ID) representing you, the user. They then track your online behaviors as you live out your life across the internet, linking online to offline activity, such as your brick-and-mortar credit card purchases. Personal data is taken from a consumer device into the cloud for processing and then reconciled to users using personal IDs. Personal data is bought and sold. It might be accurate, fabricated, or incorrect. Some will be matched to the wrong user, some will be matched to no user at all and, of course, publishers and end users will have very little control or visibility over any of it. 

That is all changing. Consumer privacy concerns are more pressing than ever. Regulators and big tech platforms are rightly acting to protect users from excessive tracking and personal data collection. If you started from scratch today, you just wouldn’t – perhaps couldn’t – build an ad ecosystem in the same way. 

The ‘on-device’ approach uses edge computing principles to provide one compelling alternative. It is attractive because it promises high-quality audiences, increased reach and revenues, and a substantially improved privacy profile. 

An on-device ad tech architecture flips the traditional ad tech ecosystem on its head. Data is not sent to the cloud for processing. Instead, data stays where it is, encrypted, and all the clever stuff happens locally on the user's own device  – on their phone or laptop for example, often within the app or website they are using. Because data does not leave the device, personal IDs are not needed to reconcile a user to their data. When designed well, there is no way to link any data to an identifiable individual. 
 

How are audiences defined? 

In Covatic’s system, a publisher client has access to an ‘audience builder’ platform. They use this to combine traits and define an audience. For example, you might define a basic 'sports fan' audience as someone who consumes three sports articles per month. This definition is published to all devices as a set of ‘rules’ and the software on-device decides if the user belongs to the sports fan audience or not. Audiences are ultimately built on-device, not in the cloud.

When an ad request is made, instead of exchanging a user ID, an IAB standard or an obfuscated audience cohort code is passed to the ad engine or Supply Side Platform (SSP) as a key-value pair. So the sports fan cohort might be represented by the code ‘783675’ and advertisers wishing to target sports fans can do so via their normal methods.

The sports fan audience offers a simple example for purposes of illustration, but most audiences that can be built in the cloud can also be defined on-device, from demographics through to interests and intent. 
 

What are the benefits of on-device ad tech?

On-device gives consumers what they should have always had – relevant ads and the freedom to navigate the web and their world without companies tracking their activity and exploiting their personal data. 

For publishers the benefits are equally compelling – opportunities to deliver high-quality ad and content experiences for clients and users, to work across direct or programmatic sales and, ultimately, to make more money and minimise strategic and privacy risks. 
 

Boosting publisher revenue. The power of on-device solutions

On-device solutions typically offer greater addressable reach to high-quality audiences; and operate at superior speed and efficiency than traditional solutions. Addressable reach is higher because the privacy profile of on-device is superior so fewer permissions and consents are required. For example, a well-designed on-device solution will not trigger GDPR consents or Apple’s AppTrackingTransparency (ATT) prompt. 

There is also no need to match IDs. Today’s match rate (and so addressability) is often in the realm of 40-60% and these rates are falling all the time. Additionally, as third-party cookies are phased out, the quality of data supporting these matches is also deteriorating.

In terms of speed, on-device solutions can start building audiences from a user’s very first contact with the page or app. Traditional solutions require vast databases to churn through many billions of data points, adding users to audiences on a slow, perhaps daily, cycle by which point addressable opportunities and revenue can be lost.   
 

Mitigating your privacy risk

Many on-device solutions, including ours at Covatic, are designed so as not to expose personal data. If you get hacked, or are careless, or are presented with a subject access request, there is no personal data on cloud servers or anywhere else that is accessible or visible to anyone.

Such elevated privacy credentials help future-proof publishers against changes in the privacy landscape - be that regulatory change or new privacy initiatives from major platform providers. A new regulation comes into force? No problem, you are already well under the new bar. 

Finally, on-device solutions tend to be holistic, coherent, and managed systems. They are easier to get to grips with and manage than more complex cloud systems with so many parties, interdependencies, and proprietary algorithms at play. On-device solutions allow publishers to exercise full control over what audiences are built, what data is used, how audiences are defined, what permissions are requested, and so on.  
 

Who's leading the charge with on-device solutions & just how popular have they become?

IAB members with pure on-device solutions include Covatic and NumberEight. Elements of Permutive’s solution can similarly be described as on-device as can aspects of Google’s Privacy Sandbox. On-device is one of Apple’s five privacy principles and one highly relevant example of this is Apple’s App Tracking Transparency (ATT) policy. This makes a specific provision for on-device processing, carving it out from ATT permissions. Apple is clear that on-device approaches to advertising do not trigger ATT because they do not impinge upon user privacy.

Covatic’s solution is widely deployed in hundreds of different website and app brands across Europe and in the US as well as on smart speaker and CTV (both in apps and natively to set top boxes).

Is switching to on-device an all-or-nothing decision?

While ID-based solutions remain the most popular form of audience segmentation, their reach and power are waning. Publishers and advertisers wishing to experiment with on-device can create a hybrid system, complementing existing ad tech stacks with parallel on-device solutions. This can help maximise addressable reach, foster positive advertising experiences, and offer the additional advantage of future-proofing the business. It enables companies to slowly phase out outdated solutions while simultaneously expanding their on-device reach and capabilities.