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Online Identity in a Future Without Cookies

Posted on Nov 06, 2019

Platform161 Nordics MD Carl Liverstam spoke on a panel at Pubmatic’s PubAcademy event in Stockholm on 26 September, alongside ID5 Co-Founder & VP, Product & Operations Scott Menzer.

The session covered some of the most pressing questions facing online advertising right now – what’s happening with cookies, and the future of online identity.

Here we present some of the highlights of their discussion, which was chaired by Pubmatic Sales Director Jakob Nilsson.

Where is the market is going in terms of identity, and what are the challenges for the industry if we are indeed moving towards a cookie-free environment?

Carl Liverstam: ID should be a shared commodity, rather than a competitive advantage for one party. That allows the wider tech ecosystem to each focus on their own USP and drive more revenue for publishers. Further to this, the industry needs independent providers of identity so that the open internet can thrive.

People often refer to data as the new oil. A market controlled by one gatekeeper benefits no one else but them – as we saw with Rockefeller did in the late 1800s, where both the raw material – but also all transportation, pipelines and barrels were controlled by the same company.

Is it viable to have a scaled identity solution for the open internet that can compete with the walled gardens? Or is it a false dream?

Scott Menzer: Yes, absolutely alternatives to the walled gardens are feasible. We wouldn’t have created ID5 if we didn’t believe this to be true.

Carl Liverstam: Yes. For sure. I also believe that such a solution outside of the major tech giants is really important for the benefit of internet users too. Looking at us as digital citizens, we are in need of easily accessible information, freedom of choice in what media we want to consume and the freedom to express ourselves. And with an internet fully “run” by just a few, closed gatekeepers, those rights will necessarily be more limited.

If you want a specific example of this – see the changes to Facebook’s algorithm we saw last year, deprioritizing news – though in response to its own, separate problems around disinformation and data leakage, there was clear, unintended collateral damage in the publishing community.

The success of any solution will be determined by buyers actually using it. What will encourage buyers to reduce their reliance on the walled gardens and embrace new identity solutions?

Carl Liverstam: Just like most of the challenges we see in our industry right now (fraud, viewability etc), this won’t be determined by buyers alone. Rather, what’s needed is for the whole ecosystem to understand its options around identity and build a unified front towards adoption. To the question of how buyers can be encouraged to move outside of the walled gardens – it’s all about our increased chances to reach target audiences with increased efficiency. But it takes two to tango.

Scott Menzer: The buyer (trading desk, agency, etc) is generally the one who determines where budgets go; but they’re not the ones who ultimately have to implement shared ID solutions – that falls to the DSPs. And DSPs are incentivized to adopt solutions like ID5 for a number of reasons:

  1. better match rates / more supply available, better ability to reach the data segments of their buyers.
  2. reduced costs of cookie syncing / match tables.
  3. if they can show performance improvements, their buyers will spend more through them.

What, if anything, should media companies be doing today to prepare for a future without cookies and increasing regulation?

Scott Menzer: Cookies aren’t necessarily going away at all, but 3rd party cookies are, eventually. Therefore, moving to 1st party data is clearly the smart option. But that still doesn’t alleviate the need for identity solutions, because 1st party data will still need to be anonymously synced. And doing that today today still relies on 3rd party cookies – part of the problem we are trying to solve.

Carl Liverstam: I think that in any case we should focus on alternatives. Server-side tracking is one of them, innovation from telcos another. Then we have independent solutions such as ID5 and IAB initiatives such as Digitrust. I believe the best way of preparing yourself is to explore alternatives and elaborate on all of them to some extent.

Much of the current privacy legislation has been driven by a lack of consideration around consumer concerns in connection with advertising and data. How can consumers benefit from the move to new identity solutions?

Scott Menzer: First, moving to 3rd party cookies for every player, to just a few IDs clearly centralizes user identity, so if they want to opt out or review their consent, it’s much easier – they don’t have to do it for every platform, but rather through a more centralized interface. Second, an identity solution that is built with privacy-by-design in mind will help enforce the consumer’s choices throughout the ecosystem, ensuring that their data only goes where they have approved it to.

There are many concerns around what the decline of third party cookies means for the industry. Is the market right to be extremely worried or are you both confident things will continue to work effectively in a post cookie world?

Carl Liverstam: I believe that the Firefox example in Germany is a sign that you should start prioritizing this rather than just worrying about it. There is some talk around Google releasing ITP as well, but my personal belief is that won’t happen though. Ad driven media isn’t going away anytime soon – for the simple reason that people can’t afford subscriptions to 30 different media sources. By the way, Google is also very dependent on publishers for search – which is still its main business, so they need to act on that.

Scott Menzer: ITP is worth keeping an eye on, but it doesn’t prevent solutions like ours from working, since we’re in the publisher’s domain – even their most recent update of ITP 2.3 (released Monday) isn’t a problem

How long do you think it will be before we have a cookie-free internet?

Scott Menzer: Again, cookies aren’t going away, just 3rd party cookies. I don’t know if Chrome will ever fully remove 3rd party cookies. But they could certainly make changes that look like removal for the purposes that ad tech has previously relied on them. My guess is that we’ll see noticeable changes in mid-to-late 2020.

Carl Liverstam: I can’t see into the future, so it’s hard to tell – what I do know is that it’s something we need to think about right now. And to start looking at different options for publishers to optimize their sales and for buyers to reach their audiences effectively.