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InContext / An inside look at the business of digital content

Two truths and a lie: Why what you think you know about identity will hurt you

September 13, 2021 | By Mike Woosley, COO – Lotame @Lotame

Current uncertainty about the tech underpinning digital media has left most of us wondering what happens when cookies disappear on Chrome. It’s easy to forget that Safari and Firefox deprecated cookies a long time ago. This, in turn, created a natural test bed for newer and better post-cookie technologies. The good news is that these changes create opportunity and prospects for a better industry. If you are a publisher, here are two truths and a lie for you to consider, and five ways to ensure your business is not disrupted. 

Truth one: Don’t count on FLoCs

Google has said its FLoCs are private and can be used as a proxy for enhancing traffic with data. But, Google has only released the results of a single test on this black box technology, which has murky methodology and opaque applicability. Even Google’s publicized test showed results less effective than cookie-based advertising.  

Meanwhile, Google has been hit with criticisms that FLoCs use consumer data without consent. The company postponed its testing in Europe, where the technology may not comply with GDPR. Over the summer, it became evident that Google is becoming mired in uncertainty around the technology. It’s actions also raised concerns around Google’s market dominance. Bottom line: If you were counting on FLoC, you may want to take another look at your options.

Truth two: Don’t count on context

The same can be said for those leaning towards going all in for context. These state-of-the-art circa 2006 solutions don’t just limit the breadth of data you can associate to a profile. However, they almost always curb the concept of identity to a single domain. 

Contextual providers are telling you that without cookies, third-party data will vanish (which is not the case). First-party data will be much more valuable, they continue. The thesis is that first-party data is like gold, becoming more valuable when it becomes more scarce. This ignores a fundamental economic truth in marketing: A marketer can afford to pay only her target acquisition cost and not more. A dearth of data means the marketer may need to pay a lower CPM on less-enhanced impressions. If she can afford to pay $5 CPM for “women”, then $2.50 will be the max that can be paid for “people”. Those digital impressions aren’t like gold — they are more like gold-bearing ore. The value depends on the assay. 

Lie: Programmatic was/is/forever will be bad

Contrary to what we often hear, programmatic has been good for non-gigantic and independent publishers. Most non-giants don’t have the scale to hire a sales force, or the traffic to attract marketers without aggregation, or enough contextual insights to sell that traffic for what it was worth. Smaller publishers rapidly adopted programmatic five years ago because it gave them the opportunity to be paid based on what their traffic did somewhere else.

Programmatic is often criticized for data leakage in the bidstream and allowing buyers to come in with more insights on traffic than the publisher. But let’s remember the volume of impressions surfaced in the auction gives sellers inherent protection against cherry-picking. If impressions are better characterized via third-party data, bidders can find that auto intender among a “lover-of-cats” crowd that had been relegated to air freshener promos. The publisher selling the cat lover should want that asymmetric knowledge in order to get the best bid.

Five ways you can prepare for a cookieless future

So how in this new and changing landscape, should publishers sustain monetization when cookies are completely gone? Here are my top five recommendations of the very real steps publishers can take to prepare for 2023. 

  1. There’s a chance that Google has pushed back the cookie deadline because it needs more time to refine its own tools, with the intent of preventing or abolishing third-party ID interoperability. Take every opportunity to be vocal about your right to bring your own tech to the party.
  2. New identifiers emerging in the marketplace will promise scale and interoperability — but you’ll need to test any solution early. Real interoperability is elusive, but out there, so exercise caution. 
  3. The industry may see great value in the 40% share of the browser market that Chrome doesn’t own. You can start testing solutions with Safari and Firefox today. 
  4. Delaying the adoption of new identity solutions may simply prolong the headaches from the third-party cookie model. Third-party cookies are costly to sync, carry privacy risks, and take more time to show ROI than newer technologies. Don’t hope for Google to provide another reprieve.
  5. Definitely use context in your strategy.  It’s data. You have it. Use it. Context should be part of the monetization equation. However, be realistic that context alone won’t save you. It simply can’t compete with technology that delivers richer information across domains. Don’t get hung up on old solutions just because they’re familiar or wrapped in a sexy new buzzword like “edge computing”.

It’s not all doom and gloom for publishers in the next two years. For independent publishers, the cookieless future is filled with opportunity. Just don’t embrace the false narrative that your traffic is inherently gold. You need the right tools to make sure your assay is strong, realizable, and increasingly lucrative.

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