2019 will be the year the ad tech ecosystem solves its identity crisis

The advertising technology ecosystem can be incredibly complex, but I predict that in 2019 we will (finally) make it easier to put audience data to work, at scale.

Let me take you back in time to explain why this is such a big deal.

Before the dollar was established as the currency of the United States, the monetary situation in America was a mess. British pounds were commonplace. So were Spanish dollars. And each colony in the Revolutionary era had its own thing going – New York pounds were not to be confused with Pennsylvania pounds, nor South Carolina shillings for Massachusetts shillings.

This sort of friction in a marketplace makes it harder to transact. And, centuries later, the digital advertising industry is facing a similar challenge in the form of inconsistency across cookie IDs.

If you’re a giant, consumer-facing walled garden, life is good. You get to assign an anonymized ID to every consumer whenever they visit your search engine or social network. But if you’re a tech company that doesn’t operate a dominant consumer site, you end up in a situation similar to the currency mess described above.

When a consumer goes to a publisher’s site for the first time, it kicks off an incredibly inefficient process – one akin to trying to spend Pennsylvania pounds in South Carolina in 1791. Sell-side players assign an ID, buy-side players assign an ID, data companies assign an ID, etc. And later on, we all try to link those IDs together, storing “match tables,” so we all know what equals what. Exciting right?

One important point is that no actual data is exchanged in this process. The IDs that we pass and link together are completely random numbers, meaningless in a vacuum.  All companies involved in the chain engage simply to exchange currencies – “I got ID123 on this user, what did you get? ID456? Great.” The seller doesn’t tell the DSP that the user is a soccer fan who streams a lot of games online. The DSP doesn’t tell anyone that the user is shopping for a new car. Both of those data points remain proprietary to their respective owners.

But as the ad tech industry has expanded, there are too many currencies and too many links that need to take place. This leads to inefficiency. And while there is a hard cost to link all of these currencies together in the form of processing costs and server capacity, the real “cost” paid by marketers and publishers arrives in the form of lower match rates.

Why does that matter? A simple example: a marketer wants to reengage 1 million website visitors via digital ads.  Today, the marketer ‘matches’ those users with their DMP, the DMP matches those users with the DSP(s), and the DSP matches those users with the SSP(s). If everyone in the chain has 80 percent match rates (meaning they transact on the same identifier 80 percent of the time – far above the industry average), 1 million potential customers become roughly 500,000 actionable IDs.

In other words, the inefficiency in the system cuts the marketer’s addressable audience in half, and that’s on a good day. So, in a world where publishers have to exchange cookie IDs with hundreds of companies and match rates tend to be far lower than 80 percent, this is a major problem. A ton of time, energy and money is spent to collect audience data and put it to work, and half of that work is wasted.

The good news is that this is possibly the most solvable and impactful problem in the ad tech ecosystem today. The only catch is…we all just have to work together on it.

A unified ID solution in 2019

Here is a modest proposal for our industry: Let’s create a common currency for anonymous cookie IDs. The combined scale of the entire internet far exceeds that of any single company, even a giant walled garden. But it only works if the largest industry players come together and partner on the solution. And it shouldn’t be a single currency to rule them all. Rather, the industry should rally around a few common IDs that remain interoperable with each other.

And that’s precisely our pledge with our unified ID solution: to offer any industry players who want access – competitors included – to our cookie footprint…for free. The fact is that the walled gardens currently have an advantage over the rest of the digital advertising ecosystem. But that advantage is surmountable. And a scaled universal identifier, free and available to all industry players outside the walled gardens, is a game changer.