The Pipes Are Getting Smarter

Apple, Google and regulators have effectively ended third party tracking by preventing the synchronization of IDs between domains and requiring users to opt-in before data is shared. Here’s some details on the changes and a potential solution.

Logged-out Browsing

The solution put forth by the industry; consumers logging into websites, never really made sense. How will retargeting work when the most valuable people are unknown to a brand? How about frequency caps or view-through attribution? Given Google’s announcement that they do not view hashed emails as a viable option, UID2’s future is looking bleak.

Safari has already implemented a login scheme which obfuscates logins to prevent cross-site tracking and will likely mimic any Chrome behavior to prevent tracking from hashed emails.

Platforms and browsers didn’t just eliminate 3p cookies, block cookies on redirects and strip link decoration to call it a day and shut down their anti-tracking practices. Instead expect an escalating war between browsers and trackers. Some of the more innovative approaches employed by trackers are detailed in Third-party cookies alternatives by Rafa? Rybnik.

Regulation & Mini-Walled Gardens

While there is a lot of nuance in regulation between Europe’s GDPR, California’s CCPA and what other governments are doing, the most important question is: will the default be opt-in or opt-out? Secondarily decisions around incentives (can content be blocked if people don’t opt-in) and daisy-chaining of opt-in to third parties are worth paying attention to. 

One outcome from regulation and anti-tracking tech could be the creation of mini-walled gardens, as Eric Seufert wrote about in his memo “The profound, unintended consequence of ATT: content fortresses”. But those fortresses have limited scale. What about cross-site and channel frequency capping, tracking and attribution?

The steps taken by regulators, Google and Apple create several new hurdles for the next generation of tracking companies. Because of regulation, they will need to have scaled relationships with consumers. Thanks to anti-tracking tech they will need to have first party access to data. 

The Dumb Pipes Get Smart

There is only one group of companies that fit this bill; cable and telco providers. While they have struggled with digital media and identity in the past, owners of "dumb pipes” check both of those boxes. 

T-Mobile recently launched a program that pays consumers for sharing data. Verizon has tested similar ideas, and announced their own ID graph last year, ConnectID. The value of identity data increases as it can be applied to target and measure more media, so as addressable OTT/CTV scales the value of identity will increase, compounded by deterministic data getting scarcer. 

Wireless and cable companies probably won’t enrich inventory destined for the open exchange. It’s more likely they create large ad networks (maybe calling them DSPs) using header bidding to quickly reach scale, and then building direct relationships with publishers as the value prop proves out. Eventually regulation around data portability might force the newly enlightened pipe owners to allow other monetization routes for a consumer’s data. 

If this happens, digital media buying will get simpler; big chunks of fraud will go away, frequency capping will improve, audiences will be deterministic and attribution gets much simpler. Consumers will have one neck to wring for privacy, one that they are a presumably customer of. With only one buyer for most users, publishers will need to figure out how to capture their fair share of value - but that’s probably better than losing spend altogether to other addressable media or holding out for UID2 traction.