Identity in AdTech: Unravelling The ID Problem

AdTech Industry

Identity in AdTech: Unravelling The ID Problem

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When advertising moved online from the print world back in the late 1990s, the biggest opportunity for advertisers was the ability to reach people on an individual basis.

They no longer had to rely solely on contextual targeting – advertisers could now create audiences based on interests, behavior, and location, and show ads to members of these audiences as they moved around the web.

This activity has become the backbone of the online advertising industry, but despite the efficiencies brought on by technological advances of both the platforms (DSPs, SSPs, etc.) and processes (RTB) over the past two decades, there is one challenge that has never been fully solved: identity.

The identity problem in AdTech can be summed up in the following three points:

1. Every player in the online advertising industry relies on accurate user identification – publishers need it to earn ad revenue, advertisers and agencies need it to run targeted and relevant ad campaigns, and AdTech vendors need it to sell their tech to publishers and advertisers/agencies.

2. There’s no persistent ID on web browsers, making identification hard to achieve. In order to provide some sort of identity match between DSPs, SSPs/ad exchanges, and DMPs, companies use cookie syncing to match each other’s cookies, but there are a number of technical limitations with this process (explained below).

3. The walled gardens (Google, Facebook, and increasingly Amazon) sit on a treasure trove of deterministic data, which allows them to identify users across the web and devices. This is a major selling point for advertisers and publishers, and it is hard for independent AdTech vendors to compete with.

Let’s now take a closer look at these points.

1. The Importance of Identifying Users Across Websites and Devices

The ability to identify a person browsing the internet is a critical part of the whole online-advertising system for the following reasons:

1. Monetization for publishers: The more a publisher knows about a visitor, the more ad revenue it will receive from advertisers, as we explain in the next point.

2. Revenue for advertisers: Advertisers want to reach a specific audience, and if a member of that audience accesses a publisher’s site, they willl be willing to submit a high bid in hopes their ad will be shown to them.

3. Relevance for users: Although most people are uneasy with ads that follow them around the web, many users will click on or interact with ads if they are relevant to them; for example, an ad for a upcoming Metallica concert at CenturyLink Field would be of great interest to a heavy-metal fan living in Seattle.

4. Attribution: One of the most overlooked areas of this whole identity problem is attribution. It’s estimated that global digital ad spend in 2019 will reach $316 billion, and without an accurate way to identify users as they move across the internet and devices, it will be hard to track performance and know where to assign budgets.

Bottom line: The online advertising industry heavily relies on identification.

2. The Problem With Cookies on Web Browsers

Despite the rise of mobile advertising (especially in-app), display advertising on web browsers is still a popular channel for advertisers.

However, it’s hard to accurately identify users across web browsers due to the limitation of cookies; a cookie created by one domain (e.g. an SSP) can’t be read by a different domain (e.g. a DSP).

This means that there’s no common ID for a given user shared across all these different platforms and websites, leading to missed opportunities for both advertisers and publishers.

The way to solve this has been via a process known as cookie syncing.

Cookie syncing involves syncing or matching the cookies between different AdTech platforms to identify a given user.

Here’s an overview of how the cookie-syncing process looks between a DSP and DMP:

How cookie syncing works between two different AdTech platforms, for example, between a DSP and a DMP

To learn more about the technical side of cookie syncing, read our previous blog post that explains what it is and how it works, as well as our post on the Amazon Web Services (AWS) technical blog where we explain how to use Lambda@Edge for cookie syncing.

While this process may seem to work well in theory, the reality is that it’s a very time-consuming task which greatly increases page-load time, leading to a poor user experience and missed opportunities for publishers and advertisers.

Also, cookie-match rates between different AdTech platforms are inconsistent. Typically, 40–60% sync is considered good, but the more syncing that goes on between platforms, the lower this percentage gets.

This discrepancy can, among other things, be the result of cookie churn – i.e. cookies lost due to certain user behaviors (such as deleting cookies, blocking third-party tags, or using incognito/private mode) or blocking mechanisms such as Intelligent Tracking Prevention (ITP).

What about mobile in-app advertising?

When ad requests are sent from native apps on smartphones and tablets, the device ID is passed in the bid request. Unlike web cookies, mobile device IDs aren’t deleted nearly as frequently, meaning they’re more reliable to act as a persistent ID.

The bottom line: Cookie syncing is not an accurate method for user identification across the web browser environment.

3. The Walled Gardens

Behind the display ads of the Internet, a war is waging between the walled gardens of the online advertising world (Google, Facebook, and the like) and hundreds of independent AdTech vendors for the lion’s share of advertising budgets.

At the moment, the walled gardens are a nose in front, with just over half of an advertiser’s digital ad budget going to Google and Facebook, and with the rise of Amazon, the number of walled gardens and their share of ad spend will only increase.

But what does this have to do with identity?

Simply put, if a company is able to accurately identify users across different websites, browsers, and devices, the more targeted the ads can be, and when it comes to Google and Facebook, whose closed-off systems collect huge amounts of detailed user data, their ability to offer advertisers easy access to their target audiences is somewhat unmatched to independent AdTech.

The bottom line: Independent AdTech companies need to solve the identity issue to be able to compete with the walled gardens and give advertisers and publishers a strong reason to partner with them.

What ID Solutions Are Available in AdTech?

As we’ve just seen, the identity issue in AdTech is made up of two parts:

  1. Cross-device identification – identifying users as they move from one device to another.
  2. Identifying users on web browsers – the current cookie-syncing solution, which is not ideal.

The solution to the first part is still many years away for independent AdTech, but the solution to the second part is a lot closer.

Over the past few years, we’ve seen a number of ID solutions emerge.

Below is an overview of the four main ID solutions:

AdTech’s Identity Solutions and their partners

The Trade Desk is offering AdTech and data companies free access to their Unified ID solution (TTID), which is hosted under the adsrvr.org domain.

The IAB Tech Lab & DigiTrust ID is a non-profit, neutral ID solution that is only accessible to registered members.

Advertising ID Consortium is powered by the LiveRamp ID and hosted under the AppNexus domain, even though AppNexus withdrew from the consortium when they were acquired by AT&T in August 2018.

ID5 is a company that allows publishers, data companies, and AdTech vendors to outsource their cookie syncing processes with their partners and use ID5’s cookie-matching table.

These solutions are not designed to compete against one another — the goal behind forming multiple ID solutions is to solve the ID challenges collectively as an industry and to offer AdTech vendors, data platforms, and advertisers a choice when it comes to selecting an ID provider.

How Do the ID Solutions Work?

While the above ID solutions will differ in some aspects, the overall process will be similar.

The diagram below illustrates how the various ID solutions work. We’ve used the example of a DMP receiving IDs of its DSP partners from the ID solution then using those IDs to communicate with them:

How the AdTech ID solutions work

Step-by-step explanation:

1. The browser sends an ad request to a DMP with the cookie ID of the user.

2. The DMP sends the cookie ID to the ID solution and aims to match it with existing IDs.

3. In this case, the cookie ID matches two IDs belonging to DSPs that the DMP has a partnership with.

4&5. The DMP sends the IDs from the ID solution to its DSP partners. The DSPs use the IDs from the DMP to identify which audience the user belongs to and then bid accordingly.

What Does the Future Hold for ID Solutions in AdTech?

As with every new initiative in AdTech, adoption of one or more of these ID solutions will be key to driving the success of online advertising for everyone.

It’s likely that we’ll see a lot of talk about these ID solutions in 2019 and beyond, but the next step for AdTech should be to come up with a way of identifying users across devices that doesn’t rely on cookies – but there are a number of technical hurdles that need to be jumped over in order for this to work.

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