By Chris Hogg, Chief Revenue Officer at Lotame
It’s the end of 2022, and the question of post-cookie identity remains unsettled, despite the regulatory storm clouds overhead. In Europe, the digital advertising industry continued to wrestle with the regulators this year, as Belgium’s challenge of the IAB’s Transparency and Consent Framework showed that the region is still some way from settling into a post-GDPR status quo. Meanwhile, in the US, California’s updated privacy laws are due to come into effect in the new year, with similar legislation on the way across various states.
At a global level, the wind is blowing in a privacy-first direction, yet there has been a sense that much of the industry is dragging its feet on adopting an identity portfolio that is adapted to this rapidly approaching future.
Google’s repeated delays to third-party cookie deprecation haven’t helped. In 2021, Lotame research found more than half of the marketers and publishers were glad to have been given extra time to prepare, alongside a healthy dose of scepticism towards Google’s motives. Deja vu hit hard in 2022 when Google kicked the can down the road again, but the response from marketers and publishers has been very different. Rather than meandering in pre-deprecation limbo, there is a growing desire to finally move on.
The identity market heats up as marketers and publishers play the field
Selecting a post-cookie identity solution is now an urgent priority for 36% of marketers and publishers, more than double what was reported the same time last year, which means Google’s latest round of delays didn’t cause the industry to take its foot off the pedal like the last did. Perhaps this is due to pressure from the worldwide regulatory clampdown or the fact that — as the IAB pointed out — 50–60% of third-party cookie’s signal fidelity has already been lost thanks to Apple and Firefox.
Those exploring the identity market for the first time will discover a diverse ecosystem. One of the consequences of the third-party cookie’s slow extinction is that it’s created space for multiple approaches to identity to stake a claim in the privacy-first frontier, each with their own use cases. Marketers and publishers can pick and choose from a range of solutions to build a bespoke tech stack suited for their objectives.
Our research found that among those not currently using a solution, testing interest is evenly spread across probabilistic, contextual, cohort-based, and email-based identity, as well as Google’s Topics API, which became available for testing in July. This is Google’s second attempt at developing its own identity solution after its FLoC flop, and its difficulty in building a Privacy Sandbox that satisfies marketers, users, and regulators is surely a prime factor to its repeated extensions of the cookie deprecation deadline.
As for what marketers and publishers are using now for identity, Topics and authenticated email top the list, with the former boosted by the buzz of a new Google product and the latter its lynchpin position in many first-party data strategies. Email adoption may have hit its peak however, due to its heavy reliance on third-party cookies and limitations as a means of acquiring new customers or scaling audiences, while interest in probabilistic solutions — which can make up for email’s shortcomings — is surging.
Overall, we have found satisfaction in identity solutions is high amongst those who use them, with nearly all marketers and publishers reporting far more positive effects — such as more efficient inventory buying, improved CTR, and access to more premium inventory — than negative.
Looking forward, now that Google’s delays no longer seem to decelerate identity adoption, we expect that testing will continue to ramp up. Much needed consolidation in the identity market is inevitable, as the hundreds of companies in-market face industry scrutiny. As more marketers get hands-on with identity and share their findings with those still on the fence, the number of providers will be trimmed down to a handful of market leaders.
Though the next few years are sure to bring further upheavals to identity as the industry adapts to privacy regulation — amidst the backdrop of global recession — the post-cookie future is finally coming into sharper focus.