Changes to Cookies, Ad Ids, and Regulations Take Aim at Tracking

IDENTITY 2020 Changes to Cookies, Ad IDs, and Regulations Take Aim at Tracking

Addressable advertising is the default in the digital display world—and it relies on being able to identify users in order to serve them the right message at the right time. This eMarketer Report explains three significant disruptions developing this year in how marketers identify and target users in digital environments and discusses tactical and strategic approaches for the future.

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eMarketer, Inc. www.emarketer.com 11 Times Square, Floor 14 [email protected] New York, NY 10036 IDENTITY 2020: CHANGES TO COOKIES, AD IDS, AND REGULATIONS TAKE AIM AT TRACKING

Addressable advertising is the default in the digital display world—and it relies on being able to identify users in order to serve them the right message at the right time. But the identifiers that marketers and their partners use to do this are coming under threat as platforms and regulators work to improve data privacy and protection practices for consumers.

What are the major disruptions this year to digital How Will the Change in Support for Third-Party advertisers’ identity practices? Audience Cookies Affect the Use of Data for Data Professionals in North America? At the beginning of the year, Chrome announced it was % of respondents, May 2020 killing the third-party tracking cookie. Halfway through the year, Apple announced it was essentially doing the same Increase spending/emphasis on use of ﬁrst-party data 60.4% to its Identifier for Advertisers (IDFA), a device-specific ad Increase interest in third-party identity resolution solutions ID. And that’s on top of the California Consumer Privacy 37.7% Act (CCPA) going into effect and requiring marketers to let Engage with third-party industry groups to build identity California residents opt out of having their data sold. resolution solutions 35.9% How are marketers and their partners responding to Increase efforts to build second-party data relationships identity challenges? 35.9% Increase focus on developing custom/in-house identity They’re going to have to do so both tactically and resolution solutions strategically. Many are looking to ways to “replace 35.9% the cookie”—which could be a doomed proposition Increase spending/emphasis on contextual advertising if consumers don’t want to consent to being tracked 34.0% and targeted by advertisers. More far-reaching changes Increase testing/investment in new solutions include moves toward other forms of measurement and 32.1% attribution, like panels. Source: Winterberry Group, "The State of Data 2020" in partnership with Interactive Advertising Bureau (IAB), July 22, 2020 How important is identity for advertisers today? 257477 www.eMarketer.com Very. US advertisers spent billions last year on data KEY STAT: The industry is definitely heading toward activation solutions and are investing across a range of a cookieless future, but fewer than one-third of data tools that all rely (at least in theory) on being able to tell professionals in North America were actively testing and who a user is across devices and platforms. Research investing in new solutions as of May, per Winterberry suggests many are spending more than 20% of their Group and the Interactive Advertising Bureau (IAB). marketing budgets on identity solutions. WHAT’S IN THIS REPORT? This report explains three CONTENTS significant disruptions developing this year in how marketers identify and target users in digital 2 Identity 2020: Changes to Cookies, Ad IDs, and Regulations environments and discusses tactical and strategic Take Aim at Tracking approaches for the future. 3 Marketers Make Big Efforts to Identify Audiences 6 Identity Crisis 2020 10 Identifying a Path Forward 16 Key Takeaways 17 eMarketer Interviews 18 Editorial and Production Contributors

IDENTITY 2020: CHANGES TO COOKIES, AD IDS, AND REGULATIONS TAKE AIM AT TRACKING Presented by ©2020 EMARKETER INC. ALL RIGHTS RESERVED 3 MARKETERS MAKE BIG EFFORTS ■■ About one-third (34.0%) said the decline of cookies and the change in availability of third-party data were among TO IDENTIFY AUDIENCES the obstacles and functional challenges that would occupy their attention and resources in 2020. About Over the past decade, marketers have widely adopted one in five (18.9%) also cited government and data addressable advertising to target audiences interested privacy regulations. in their messages. That means they need to be able ■■ More than two in five (42.0%) said identity to find—that is, identify—users of various devices, so resolution/cross-channel identification was a first-party they can make use of information about those users data use case that would occupy their time, attention, to send the right message to the right person at the and resources this year. Many of the other first-party right time. That identification process has long been data use cases marketers had in mind rely in turn on a challenge, as marketers and their partners have had cross-channel identification and tracking (at least, as normally practiced today). to contend with a growing set of connected devices that were never set up to share a universal identifier. Which First-Party Data Use Cases Do Data But industry developments in 2020 are set to make it Professionals in North America Expect Will Occupy even more difficult. Their Time, Attention, and Resources During 2020? % of respondents, May 2020

Predictive modeling/segmentation A Note on Terms 53.4% The identity of a user is all of the information about that Identity resolution/cross-channel identiﬁcation user, bundled together into a profile. 42.0% Identity is a distinct concept from identifiers—such as Cross-channel measurement and attribution cookies, hashed email addresses, website logins, device 38.6% IDs like the IDFA and similar identifiers in connected TV General audience analytics (CTV) apps, and so on. 36.4% Advanced TV audience buying Identity resolution is the process of connecting those 33.0% identifiers when they refer to the same person and putting Programmatic media buying for established formats together all the data associated with them. Identity 31.8% resolution is made possible by identity graphs. Optimization (e.g., yield, channel, site, placement) 29.5% In the research for Winterberry Group and the IAB’s Cross-channel retargeting “State of Data 2020” report, conducted in May, they 28.4% asked several questions about what issues would be top Source: Winterberry Group, "The State of Data 2020" in partnership with of mind for respondents this year: Interactive Advertising Bureau (IAB), July 22, 2020 257476 www.eMarketer.com ■■ About one-third (34.0%) of data professionals surveyed in North America said compliance with data regulation Marketers are spending significant amounts of money on would be taking up their attention this year, and three their identity problems. Research published in July 2020 in 10 (30.2%) said they would be working on the by Winterberry Group and IAB found that US marketers development of a custom identity resolution solution. spent $7.8 billion on audience data activation solutions last About a quarter (26.4%) were spending time on year. That was up from $7.2 billion in 2018 and $6.2 billion cross-device identity capabilities, and the same share in 2017. said they were looking at the development of an industry-standard ID resolution solution.

IDENTITY 2020: CHANGES TO COOKIES, AD IDS, AND REGULATIONS TAKE AIM AT TRACKING Presented by ©2020 EMARKETER INC. ALL RIGHTS RESERVED 4 US Audience Data Activation Solutions and These budgets are going to a variety of services and Third-Party Audience Data Spending, by Channel solutions. The Merkle research found that at least half of and Data Type, 2019 US respondents were planning to invest in each of five billions customer-identity-related areas in 2020, including data management platforms (DMPs), identity resolution and identity graphs, and databases or data lakes. Audience Channel data activation Third-party Terrestrial $6.1 solutions audience Digital $5.1 Investments Specific to Identifying Customers that $7.8 data Senior- and Executive-Level Marketers Worldwide Will Advanced TV $0.7 $11.9 Make, by Region, Nov 2019 Data type % of respondents in each group Demographic/firmographic/ $4.4 Asia- Europe, US Total psychographic/attitudinal Pacific Middle East Total spending= & Africa $19.7 billion Transactional $2.9 Advanced analytics—segmentation, 65% 64% 69% 66% Behavioral (excluding $2.8 modeling, customer analysis purchase/transactional) Location-based/environmental $1.8 Consumer data—better consumer 57% 68% 63% 63% understanding and basis for targeting Source: Winterberry Group, "The State of Data 2020" in partnership with and/or analytics Interactive Advertising Bureau (IAB), July 22, 2020 Data management platforms for digital 55% 60% 59% 58% 257474 www.eMarketer.com identity management and activation Customer data platforms for digital 57% 62% 43% 54% According to November 2019 research from performance identity management and activation agency Merkle, about half (49%) of US and UK marketers Identity resolution/graph—mastering 55% 50% 53% 53% persistent identity of customers and/ reported spending more than 20% of their budget on or consumer population and for identity solutions. matching and onboarding for targeting and analytics Database or data lake—a secure 49% 56% 51% 52% environment for data collection, Percentage of Their Company's Marketing Spending integration, management and analytics Allocated to Identity Solutions According to UK/US Marketers, Nov 2019 None of the above 0% 2% 2% 1% % of respondents Note: in the next year; numbers may not add up to 100% due to rounding Source: Merkle, "Hyper-Personalization and the Connected Customer Experience," Jan 15, 2020 0%-5% 6% 252494 www.eMarketer.com 6%-10% 7% It’s no surprise that marketers are devoting a lot of 11%-15% 11% attention and resources to identity when it underpins 16%-20% 26% much of what they do with digital advertising today. 21%-25% 29% Two-thirds of ad tech professionals worldwide surveyed >25% 20% in February 2019 by ID5—builders of a shared identity infrastructure for ad tech—said user identification was 3% Unsure/don't know “extremely important,” with another 22% saying it was Note: numbers may not add up to 100% due to rounding “very important.” Respondents were split on the biggest Source: Merkle, "Q1 2020 Customer Engagement Report," Feb 18, 2020 253220 www.eMarketer.com limitation of poor user ID, with similar shares pointing to difficulties with retargeting users, reconciling data from other sources, and accessing third-party data.

IDENTITY 2020: CHANGES TO COOKIES, AD IDS, AND REGULATIONS TAKE AIM AT TRACKING Presented by ©2020 EMARKETER INC. ALL RIGHTS RESERVED 5 Identity challenges are significant in cross-screen What Do US Companies Use to Help Identify Their video advertising. The lack of a universal cross-screen Customer Across Devices and Touchpoints? identifier is a factor in several of the problems US % of respondents, Oct 2019 agency and marketing professionals were concerned Email addresses about in November 2019, including managing audience 69% deduplication, managing ad frequency capping, and IP addresses executing cross-screen data-targeted buys, per research 51% firm Advertiser Perceptions. Login data from our site Leading Challenges to Cross-Screen Video Advertising 50% According to US Agency/Marketing Professionals, Phone number Nov 2019 48% % of respondents Social media ID or handle Lack of standard measurement 47% 57% Internal identifier (e.g., loyalty program, account number) Managing audience deduplication 46% 55% Device ID Managing ad frequency capping 44% 49% Cookies Managing creative executions, format standardization 43% 46% Postal address Inability to execute a cross-screen data-targeted buy 42% 43% Online transactional data Inability to plan media buys seamlessly 40% 40% Authentication credentials 35% Note: figures reflect the sum of respondents who listed each challenge among the top three Ad ID (e.g., GAID, IDFA) Source: Advertiser Perceptions, "Video Advertising Convergence 2H 2019," 33% Feb 27, 2020 Offline transactional data 253306 www.eMarketer.com 31% For more on the difficulties of executing and measuring Third-party persistent identifier video advertising across screens, read our May 2020 26% report, “TV and Digital Video Measurement 2020: Note: n=205 decision-makers who influence marketing and/or data Addressing Cross-Platform Challenges.” technology decisions Source: Forrester Consulting, "Is Your Identity Program Built on a House of Cards?" commissioned by Epsilon-Conversant, Oct 2, 2019 Marketers use a wide variety of identifiers and other 250318 www.eMarketer.com information to help figure out who their customers are across devices and touchpoints. The most widely Many marketers are also using identifiers that are being used piece of information among US companies is a disrupted, as outlined in this report. More than two customer’s email address, according to October 2019 in five respondents said they used cookies to identify Forrester Consulting research commissioned by customers. The Forrester/Epsilon-Conversant research Epsilon-Conversant (which provides a range of marketing didn’t ask about IDFA usage specifically, but it did find data solutions). Email addresses act as a popular identifier that 33% of US companies said they used ad IDs such for several reasons, including that they are widespread as the Google Advertising ID (GAID) and IDFA to identify and reliably refer to the same individual over long periods customers across devices and touchpoints. of time. Phone numbers, used by just under half of Additionally, according to July 2019 research from video respondents, have similar advantages (and with the rise ad platform LoopMe and Sapio Research, almost half of mobile telephony, are now likely to be unique individual (47%) of US and UK marketers were using cookies. identifiers, as opposed to being shared by a household).

IDENTITY 2020: CHANGES TO COOKIES, AD IDS, AND REGULATIONS TAKE AIM AT TRACKING Presented by ©2020 EMARKETER INC. ALL RIGHTS RESERVED 6 One of the key takeaways from the Forrester/Epsilon- IDENTITY CRISIS 2020 Conversant research is that companies today must use many different pieces of information to figure out user The ways in which advertisers and their partners identity. That’s because of fragmentation—one of the market factors more than one-third of US marketers in can identify and track users across devices have the Merkle survey said were holding them back from been changing for years. But 2020 has brought two managing customer identity in-house. Disparate identity major developments sending shockwaves through spaces and other market issues, like the prevalence of the digital advertising industry around the world: walled gardens, were the most commonly cited barrier to Chrome’s deprecation of support for third-party in-house identification. cookies and major changes to the IDFA set to take effect in iOS 14. Another major disruptor occurred Barriers to Managing Customer Identity In-House on July 1 this year, when the California Consumer According to Senior- and Executive-Level Marketers Worldwide, by Region, Nov 2019 Privacy Act (CCPA)—the first major US data privacy % of respondents in each group and protection regulation to tackle consent in digital Asia- Europe, US Total Paciﬁc Middle East advertising—began enforcement. & Africa Market factors (e.g., disparate 35% 30% 37% 34% identity spaces, walled garden media, customer relationship management) CHROME ANNOUNCES THE DEATH OF THE Technology platforms 16% 24% 18% 19% THIRD-PARTY TRACKING COOKIE Privacy and regulations 22% 20% 12% 18% Budgets 12% 10% 14% 12% In January 2020, the team that works on Google’s Education and skills 6% 8% 14% 9% Chrome browser announced that it would “phase out None of the above 8% 8% 6% 7% support for third-party cookies in Chrome” within the Note: numbers may not add up to 100% due to rounding Source: Merkle, "Hyper-Personalization and the Connected Customer next two years. Other browsers have already made this Experience," Jan 15, 2020 change, including Apple’s Safari, with Intelligent Tracking 252493 www.eMarketer.com Prevention (ITP), and Mozilla’s Firefox, with Enhanced Advertisers aren’t the only ones trying to identify users, Tracking Protection (ETP). either. This capability is important for publishers as well, in part to help them monetize their inventory more The cookie’s days had long been numbered; consumers effectively by allowing for targeted advertising, but also have been spending increasing amounts of time in for their own marketing and content development. cookieless environments for years. We estimate that mobile apps have accounted for a majority of smartphone Kerel Cooper, senior vice president of global marketing time since at least 2008, the earliest date in our forecast. at programmatic email advertising firm LiveIntent, As smartphone adoption increased and mobile began to explained that many of the company’s publisher clients account for a significant share of internet time, so too are mining insights from email newsletters—which are have apps. We estimate that this year, the average US sent to identified, consenting users. “They’re looking adult will spend almost 48% of their digital media time at how they can create more of a holistic approach that with mobile apps—more than a quarter of total media includes content, growing subscribers, and effective ad time. The rise of CTV has meant only more digital time placement,” he said. “They know that the end of the spent in cookieless environments. cookie is coming, and publishers need to figure out what their first-party data strategy looks like.”

IDENTITY 2020: CHANGES TO COOKIES, AD IDS, AND REGULATIONS TAKE AIM AT TRACKING Presented by ©2020 EMARKETER INC. ALL RIGHTS RESERVED 7 But it’s been clear to any website visitor bombarded with cookie opt-in requests since the EU’s consumer CCPA IS ENFORCEABLE, AND CPRA IS UP data protection regulatory framework—the General Data FOR REFERENDUM Protection Regulation (GDPR)—took effect in May 2018, that advertisers, publishers, and their partners have In July 2020, CCPA became enforceable, with some remained partially reliant on cookies to track users across clarifications to the final language of the regulation the web, serve them targeted advertising, and attribute released in August. The law placed new requirements the results of that advertising. on companies to allow consumers to opt out of sharing their information, including a requirement to respect a Even after ITP made it impossible to track Safari users’ global opt-out mechanism—like a browser-based “do not web browsing via third-party cookies, advertisers didn’t do track” setting. much to find an alternative; reports of dramatically falling prices for Safari impressions have been widespread. In a March 2020 poll by Forrester Consulting for We estimate 45.6% of smartphone users in the US promotions eligibility verification provider SheerID, about are iPhone users, though they may use browsers other a third of US business-to-consumer (B2C) marketers than Safari. reported being “fully compliant” with privacy regulations including the CCPA and the EU’s GDPR. The bulk were “Earlier in the year, I had reached out to our sales team still working on the privacy compliance—and of course, and asked them to go back to the buy side and ask, ‘What as of March, no one knew what the final CCPA rules are you seeing? Are you concerned about this?’” said would be. Premesh Purayil, chief technology officer at programmatic yield partner Freestar. “We saw a huge drop in How Prepared Are US B2C Marketers to Meet the performance on iOS in the past year. The somewhat Requirements of Privacy Regulations? surprising response, fairly unanimously, was that [those % of respondents, March 2020 on the buy side] weren’t too worried, because from their Fully compliant 31% point of view, their KPIs [key performance indicators] Currently rolling out privacy plan 31% were still hitting. It’s almost like they’re waiting for this problem to potentially hit their doorstep or just get figured Developed, but not rolled out 34% out for them.” 1% Not at all prepared 2% Don't know Chrome’s announcement may have made the problem Note: n=210; includes CCPA and GDPR; numbers do not add up to 100% impossible to ignore. At the very least, it created a new due to rounding sense of urgency, especially within the programmatic Source: Forrester Consulting, "Put Identity Marketing In the Center of Your Personalization Initiatives" commissioned by SheerID, May 28, 2020 advertising ecosystem. Soon after, IAB announced its 255818 www.eMarketer.com Project Rearc initiative to develop technical standards for There are many differences between CCPA and GDPR, collecting and using whatever identifier ends up being but we can look to Europe for some indicators of the tapped for addressable advertising in the absence of third- effects of this type of data privacy and protection party tracking cookies. regulation. According to May 2019 research by privacy Other organizations are working on developing what compliance software firm TrustArc and Ipsos MORI, 25% those identifiers might be and implementing them—more of UK internet users surveyed reported having opted out discussion of potential solutions is in the next section. of a request to install cookies under GDPR. Almost half of those polled said they had exercised their rights under the regulation in some form or fashion.

IDENTITY 2020: CHANGES TO COOKIES, AD IDS, AND REGULATIONS TAKE AIM AT TRACKING Presented by ©2020 EMARKETER INC. ALL RIGHTS RESERVED 8 In our July 2019 report, “Digital Marketing in Today’s What’s the problem with RTB and personal data Privacy-Conscious World: What Companies Need to Know protection? Listen in to this August 2020 episode of our About GDPR, CCPA and Other Industry Changes in the podcast “The Ad Platform,” where Johnny Ryan discusses Next 12 Months,” we outlined several significant changes GDPR and the principles of data protection regulation. in digital advertising practices due to GDPR, including: Ryan recently left the ad tech world for two nonprofits and is focusing his attention on the regulators he says have failed to enforce the law and protect consumers. ■■ Companies were placing greater emphasis on their data infrastructure. This November, voters in California will decide whether to pass Proposition 24, the California Privacy Rights ■■ Customer databases and prospecting data sets were smaller. Act (CPRA), which would build on the CCPA by adding restrictions on data use and consumer data rights, as ■■ The publisher landscape shrank—and the price of well as creating a California Privacy Protection Agency to impressions (with consented data) went up. enforce the law rather than the state attorney general.

■■ Marketers (and publishers) got smarter and choosier A poll conducted in late July 2020 by Goodwin Simon about audience targeting. Strategic Research found that 81% of likely voters in the state supported the proposition. The survey then ■■ The customer experience mostly didn’t improve. presented respondents with language from the official Our November 2019 update, “UK Programmatic Digital voter ballot guide that included arguments against the Display Ad Spending: Growth Underpinned by Social CPRA, and 72% still said they would vote to pass it. Spend and Programmatic Direct,” noted that GDPR hadn’t been much of a growth inhibitor in terms of programmatic The CPRA puts a spotlight not just on “selling” consumer display ad spending, once the initial disruption was data, which is what the language of the CCPA refers to, past—though it had helped steer more euros to private but also on “sharing” it. Marketers must be ready for marketplaces (PMPs) and programmatic direct deals. more and more stringent regulation of these activities in the US as well as elsewhere in the world. But, as that report also noted, by late last year it was clear that European regulators, including the Information Commissioner’s Office (ICO) in the UK, had their sights THE IDFA GOES (MOSTLY) AWAY on real-time bidding (RTB). The ICO published a blog post in December that said, “Some of what is happening now In June 2020, Apple announced at its Worldwide appears to be unlawful, based upon the evidence we Developer Conference (WWDC) that the iOS 14 update, have seen to date.” coming in September, would involve major changes to how IDFA works. (In early September, Apple announced Major sticking points include the fact that bid requests a reprieve until “early next year” before the IDFA- and are broadcast far and wide, without controls on who can privacy-related changes will go into effect.) access and then process the information in those bid requests, which include personal data. Websites can’t The identifier would become opt-in on a per-app basis, ask consumers to consent to uncontrolled data leakage. meaning users would have to consent to share their IDFA We predicted in our January 2020 report, “UK Key Digital with each app they use, through a pop-up that will display Trends 2020: Privacy, Brexit and Video Take Center Stage,” when the app opens. The operating system will also that enforcement against the advertising industry, and dictate the nature of the pop-up and the language it can specifically ad tech, would begin this year. That hasn’t use. Blog responses from the mobile app community fell materialized yet—perhaps a pandemic got in the way— on a spectrum from “Apple killed the IDFA” to “IDFA is not but we don’t think this problem is going to just disappear. dead yet, but it’s definitely on life support.”

IDENTITY 2020: CHANGES TO COOKIES, AD IDS, AND REGULATIONS TAKE AIM AT TRACKING Presented by ©2020 EMARKETER INC. ALL RIGHTS RESERVED 9 According to July 2020 polling among US agencies and And there’s uncertainty about how many users will brand marketers for Pivotal Research Group’s investor choose to opt in to IDFA tracking—but most of the update, there was widespread uncertainty among the experts interviewed for this report believe the opted-in advertiser community at the time as to how these share of users will be low, around 20% or less. For the changes would affect major digital ad sellers. At least rest, there will be workarounds (more on that later) and half of respondents said they were unsure how the iOS the SKAdNetwork. 14 update would affect the businesses of Snapchat, Twitter, and The Trade Desk, while 45% said the same The SKAdNetwork is not set up to be a replacement for about Facebook. current attribution practices, however. It doesn’t allow for sophisticated reporting of multiple post-app-install events, and it’s not based on user-level tracking and reporting. Do US Agencies and Brand Marketers Perceive that Select Advertising Platforms Will Be Negatively Impacted by IDFA Changes*? “There are still many open questions about how % of respondents, July 2020 SKAdNetwork will work and how the changes will affect YesNo Not sure app developers and the mobile ecosystem,” said Brian Facebook 30% 25% 45% Quinn, US president and general manager at mobile Snapchat 9% 36% 55% analytics and attribution provider AppsFlyer. “At its core, Twitter 19% 30% 52% the SKAdNetwork presents new functional challenges The Trade Desk - 50% 50% for the advertiser, including no real return on investment/ Note: numbers may not add up to 100% due to rounding; *Apple's IDFA (Identiﬁer for Advertisers) tool will require opt-in consent on a per-app lifetime value, a lack of granularity (campaign-level only, basis beginning in iOS 14, which will launch in Sep 2020 limited to 100 campaigns), postback delay (at least Source: Pivotal Research Group, "Views on Q2 EPS/Q3 Outlook, and Deep Dives Into Key Areas of Investor Debate," Aug 12, 2020 24 hours), data ownership and reporting is done by 258220 www.eMarketer.com networks, data manipulation (which leads to ad fraud Across all four ad sellers, direct-response-focused risk), and no reengagement attribution support. Additional advertisers were dramatically more likely to be unsure structural changes are also present, i.e., postbacks are of the effects of the changes than branding-focused sent only to the attributed ad network; therefore the advertisers. For example, 67% of direct-response advertisers, or anyone processing data on their behalf, are advertisers weren’t sure how the changes would affect blind to it.” Facebook, compared with just 27% of respondents focused on branding. Direct-response advertisers are In late August 2020, a Facebook announcement may more likely to be reliant on advanced attribution use cases have brought more clarity to the question of how its that rely on an IDFA or similar identifier. Many have likely business would be affected. The company explained in spent the past two months educating themselves more a blog post that it would not be asking for the IDFA in its on this issue—and so have their ad tech partners—so it’s own apps and warned that it expected the change could possible these numbers would be different if the survey “severely impact” the ability of publishers participating were fielded today. in the Facebook Audience Network (FAN) to monetize their inventory. Earlier this year, Facebook sunset FAN Part of the uncertainty relates to a lack of understanding for the mobile web, which the industry understood to of Apple’s new app tracking policy. Some of the language be a response to the ongoing deprecation of third-party currently available in Apple’s marketing materials suggests tracking cookies. The August blog post telegraphed that that developers must get opt-in consent for not only the the same fate may await FAN generally on iOS devices. IDFA, but also any type of user tracking across apps. Facebook reported that it tested mobile app install ads There’s also a lack of understanding of the SKAdNetwork, without “personalized ranking” and found they can lead the Apple-run application program interface (API) intended to a more than 50% decrease in publisher revenues. Those to help advertisers measure the success of app install ads were served to users based on targeting criteria like campaigns. SKAdNetwork has existed since 2018 but demographics—so that result still involved identifying users and targeting them. In other words, no ability to has gotten dramatically more attention now that it “could target ads based on user identity could lead to even worse become the de facto way to attribute mobile app installs results for publishers. on Apple devices,” as AdExchanger’s Allison Schiff explained in July. iOS already has an option to Limit Ad Tracking (LAT) in apps, and inventory with LAT turned on is much cheaper, according to our sources.

IDENTITY 2020: CHANGES TO COOKIES, AD IDS, AND REGULATIONS TAKE AIM AT TRACKING Presented by ©2020 EMARKETER INC. ALL RIGHTS RESERVED 10 The advertisers surveyed by Pivotal Research Group According to the May 2020 research from Winterberry were split on whether Apple would eventually do away Group and the IAB, 60.4% of data professionals surveyed with the IDFA altogether—which some in the industry in North America said they had increased their emphasis thought may happen this year. Direct-response-focused on first-party data because of the change in support advertisers were only slightly more likely to think this than for third-party cookies. The changes were also driving brand advertisers. respondents to look more toward a variety of other solutions, including third-party ID resolution solutions, custom ID resolution solutions, other types of data US Agencies and Brand Marketers Who Believe that Apple Will Eventually Eliminate the IDFA*, July 2020 relationships, and also contextual targeting. % of respondents

Branding How Will the Change in Support for Third-Party 48% 52% Audience Cookies Affect the Use of Data for Data Direct response Professionals in North America? 52% 48% % of respondents, May 2020

Total Increase spending/emphasis on use of ﬁrst-party data 50% 50% 60.4% Increase interest in third-party identity resolution solutions Yes No 37.7% Note: *Identiﬁer for Advertisers tool on iOS that allows advertisers to track Engage with third-party industry groups to build identity and identify a device resolution solutions Source: Pivotal Research Group, "Views on Q2 EPS/Q3 Outlook, and Deep Dives Into Key Areas of Investor Debate," Aug 12, 2020 35.9% 258221 www.eMarketer.com Increase efforts to build second-party data relationships 35.9% But given the expected low opt-in rates for the IDFA Increase focus on developing custom/in-house identity going forward, perhaps the better question at this point is resolution solutions whether (or when) Google will follow suit. Several experts 35.9% interviewed for this report pointed out that Google is a Increase spending/emphasis on contextual advertising “follower” in this arena, with Chrome announcing the 34.0% deprecation of third-party cookies within a couple years of Increase testing/investment in new solutions other browsers making the same move. The GAID’s days 32.1% may be numbered—but Google is likely to provide a more Source: Winterberry Group, "The State of Data 2020" in partnership with advertiser-centric solution than the SKAdNetwork if so. Interactive Advertising Bureau (IAB), July 22, 2020 257477 www.eMarketer.com In March 2020, Advertiser Perceptions research conducted for Foursquare found that most US marketers IDENTIFYING A PATH FORWARD polled had increased transparency around data use and created new internal standards for its collection and One of the biggest effects of the slow demise of use as a result of privacy regulations. Many had gone the cookie has been an increase in the reliance on further, including by limiting the information they collect, first-party data. Other factors have driven this trend as reducing the amount of consumer tracking they engage well, including the rise of data privacy and protection in, and even reducing the amount of audience targeting regulation, the recognition that third-party data is they’re doing. often not that accurate or up to date, and the desire to be more reliant on owned assets.

IDENTITY 2020: CHANGES TO COOKIES, AD IDS, AND REGULATIONS TAKE AIM AT TRACKING Presented by ©2020 EMARKETER INC. ALL RIGHTS RESERVED 11 Ways in Which Privacy Regulations Have Impacted “But the bigger picture is there is a sea change that Their Company's Data Strategy According to US is going on right now,” Smolin said. “A lot of people, Marketers, March 2020 like us in the industry, love to focus on framing things % of respondents as technology problems. ‘The cookie is going away— Increased transparency around data use therefore the obvious question is, how do you replace 57% the cookie?’ But the really important question is, ‘Why is Created new internal standards for data collection and use the cookie going away?’” The reason for that goes back 54% to consumers and their ongoing discomfort with digital Considered new advertising channels and/or platforms advertising and tracking practices. 41% Limited information collected or included in customer proﬁles 39% “You have two groups of digital marketers,” said Maor Sadra, CEO and co-founder of incrementality testing Reduced the amount of consumer tracking 39% platform Incrmntal. “There are the ones who are really Changed or reduced audience targeting trying to figure out how we can continue doing what we 32% have been doing, and then the ones who were like, ‘Oh, Ask consumers for less data cool. There’s a new opportunity. We just need to learn 31% how to adapt to that, and that’s it.’ Eventually, the second Lowered social media advertising spend group will win because the first group is going to run out 29% of options. If anyone has been counting on fingerprinting Appointed chief data ofﬁcer to be a solution, fingerprinting will get deprecated.” 27%

Note: n=150 Sergio Serra, senior product manager for the supply-side Source: Foursquare, "Location Data in a Marketing Lifecycle" conducted by platform at InMobi agreed that fingerprinting, or other Advertiser Perceptions, June 23, 2020 256557 www.eMarketer.com ways of using some kind of proxy for the IDFA, would not be an ultimate solution. Serra discussed the critical Marketers and their partners are responding to advertiser use case of frequency capping, which will these privacy- and regulatory-related changes in two become impossible for most users in most environments dimensions: tactically and strategically. Neither can under new iOS rules. be ignored. “A use case we will no longer be able to definitively “From a tactical perspective, it’s imperative for all solve is avoiding presenting the same ad multiple times advertisers and their partners to understand that to the user,” he said. “If you don’t rely on a consistent how they do things today is dependent upon a set ID—then 5 minutes down the line, you present me with of measurement standards,” said Philip Smolin, chief another request from the same app—well, I don’t have strategy and revenue officer at demand-side platform any definitive way to tell whether this is the same user or (DSP) Amobee. “Those measurement standards are not. And I might end up presenting you with the same ad, changing. So therefore, by definition, how you’re which is a lose-lose situation. Now, I would admit there doing things today is going to have to change. On the are other proxies, but when someone refers to other assumption that what you should do is keep doing the means to target a user, that again is going against the same things you’re doing today, you have to begin leaning Apple philosophy, because what Apple is saying is that in toward trying alternative methodologies.” you should not target a user anymore.” For example, marketers who don’t know the level at which their current programmatic advertising practices are dependent on probabilistic graphing based on cookies GETTING TO A UNIVERSAL IDENTIFIER should get ready to rely more on deterministic IDs other The idea of a universal advertising ID is essentially than cookies. mythical at this point. Cookies, though they hadn’t been designed for the purpose, were almost a universal ID until smartphones broke web browsers’ near-monopoly on consumer time with digital media, and the industry still hasn’t worked out a substitute. The deprecation of third-party cookies may mean now is finally the time.

IDENTITY 2020: CHANGES TO COOKIES, AD IDS, AND REGULATIONS TAKE AIM AT TRACKING Presented by ©2020 EMARKETER INC. ALL RIGHTS RESERVED 12 Potential candidates include the Unified ID 2.0 (UID 2.0), a One example is Google’s Ads Data Hub, known as collaborative identity effort announced by The Trade Desk a “data clean room.” Clean rooms like this allow with collaboration from major independent ad tech players advertisers to upload their own first-party data, which is including Magnite and Index Exchange. Identity resolution then processed along with Google’s information in the firms with their own identity graphs are also working cloud, where the advertiser has access to privacy-first to build these out to incorporate as much of the digital aggregated reporting. ecosystem as possible without relying on cookies—for example, LiveRamp’s Authenticated Traffic Solution (ATS) Google also has a “Privacy Sandbox”—a project that expands the capabilities of the company’s IdentityLink ID aims to replace the functionality cookies have served, like resolution service. Neustar’s Fabrick is a “unified identity allowing for frequency capping and retargeting, but in a ecosystem” that offers cross-platform measurement privacy-centric way. without depending on third-party cookies or IDs. One element, Federated Learning of Cohorts (FLoC), There’s a lot of skepticism about whether solutions like would create a cohort-based system of advertising this will take off—mostly because of the amount of to “flocks” of users based on interests—with all the cooperation and buy-in involved. The ad tech companies data remaining in the browser, where the processing working on UID 2.0, a single sign-on solution, have been happens. Google’s privacy framework, TURTLEDOVE open about these challenges. They say it’s one reason (Two Uncorrelated Requests, Then Locally Executed why it’s so important to have an open-source solution Decision on Victory) is another proposal to the Worldwide that’s designed to be interoperable with others, so that Web Consortium (W3C), which has a working group publishers, advertisers, and their partners can all select trying to figure out the cookieless future for advertisers. the setups and stacks that work best for them while still Programmatic technology provider Criteo has also being able to facilitate transactions across digital media introduced a framework proposal, SPARROW (Secure at scale. Private Advertising Remotely Run on Webserver). But AdExchanger reporting from July suggests progress at They’re also open about the fact that many in the the W3C has been slow. ecosystem have not always found a way to cooperate in the past. Numerous experts we spoke with in researching Publishers with the technological wherewithal—and for this report had a “this time is different” mindset and user base—have also come out with new options to a willingness to admit and recognize some failings of the continue using targeted ads in a more consumer- and past. That’s not a guarantee of success, but it’s better privacy-friendly way. The New York Times, notably, has than the alternative. taken a page from Facebook’s book by gathering first-party data about its logged-in user base that it has processed into audience segments based on things like demographics and interest groups. Advertising clients PRIVACY SANDBOXES, PUBLISHER can target their campaigns based on this proprietary FIRST-PARTY DATA, CLEAN ROOMS, first-party data. But as Times senior vice president of ad innovation Allison Murphy told Axios in May, “This can AND MORE only work because we have 6 million subscribers and There are alternatives to simply replacing cookies or millions more registered users that we can identify and IDFAs with a different universal ID, including various because we have a breadth of content.” methods or proposed methods of allowing advertisers to execute data-driven advertising without getting access to personal information about users.

IDENTITY 2020: CHANGES TO COOKIES, AD IDS, AND REGULATIONS TAKE AIM AT TRACKING Presented by ©2020 EMARKETER INC. ALL RIGHTS RESERVED 13 If Attribution Breaks, Does Attribution “First, we are optimistic that when the value exchange Fraud Disappear? of the internet is transparent and consistently If the most dire expectations prove right and the demise of communicated that we will not see notably higher opt-out the IDFA does lead to a dramatic reduction in performance rates,” said Dave Pickles, co-founder and chief technology advertising in iOS, there could be a small silver lining. officer at The Trade Desk. “It’s also important to As advertisers have relied more on cost-per-action ads, remember that full ID coverage will not be necessary to where they pay only after attribution post-install actions fuel successful attribution and targeting. Advertisers will (sometimes in very sophisticated setups), attribution fraud need only enough scale to create statistical significance has also gone up. for models fueled by deterministic data.” But making attribution more difficult won’t make fraudsters give up on trying to claim it, according to Steven Ahlberg, But others caution that large shares of consumers will not head of product at cybersecurity firm White Ops. consent to such data sharing. Several experts warned that “The bad guys that we fight each day on the advertising it’s time to move away from the idea of user-level tracking and marketing fraud fronts are notoriously resilient,” and toward sampling-based measurement approaches, Ahlberg said. “We don’t anticipate there being a decrease like panels. in advertising fraud because of Apple’s decision to remove IDFA. In fact, removing IDFA further removes a critical “We’re increasingly in a world where user-level attribution layer of transparency for advertisers and could potentially can’t be relied upon to give one comprehensive read lead to the increase in application fraud—specifically on performance,” said John Goulding, head of strategy attribution fraud.” for the US at programmatic partner MiQ. “Instead we’ll Fortunately, Ahlberg also said the absence of the IDFA have a patchwork of attribution sources. On the one won’t make it harder for White Ops to detect fraud, either. hand, there are solutions like SKAdNetwork and any APIs made available in the Chrome Privacy Sandbox that will provide scaled attribution, but with major limitations and A NEW (OLD) PARADIGM: LEAVING obfuscation methods. On the other hand are deterministic IDs and any opted-in IDFAs that will provide rich data for USER-LEVEL TRACKING BEHIND optimization and the ability to develop custom attribution Not all identity solutions rely on consent. In most US within data clean rooms, but at incomplete scale. The trick jurisdictions today, consumers aren’t required to consent is going to be how to reconcile these different data panels to the use of third-party tracking cookies, for example. to model accurate performance across 100% of activity Many of the various workarounds and alternatives that whilst retaining the ability to optimize and customize have been built over the years, such as fingerprinting, are measurement toward the specific goals of a given brand.” conducted without getting opt-in consent or providing a meaningful opt-out ability. But marketers know it’s only There’s no question that this will be difficult, but most a matter of time before these workarounds become experts interviewed for this report agreed that the obsolete, whether that’s through regulatory means or opportunity is there for genuinely better attribution than because of moves by the likes of Apple and Mozilla. the user-level tracking in place today.

Many in the industry are positioning this challenge as “In the future, and as IDs become scarcer, we can expect an opportunity to (finally) educate consumers about new attribution models to emerge where algorithms the importance of targeted advertising to their internet will allow extrapolation of accurate measurements on experiences, genuinely convince them to consent to a portion of the audience to the entire ad reach,” said sharing their information for that purpose, and enjoy a Romain Job, chief strategy officer at Smart AdServer. result where willing consumers volunteer accurate data in “You can think of the panels already in use in other order to receive useful and relevant marketing messages. traditional media, but with a larger scale, more accurate measurement, non-ID-related data points, and a strong layer of data science to cook all of this together.”

IDENTITY 2020: CHANGES TO COOKIES, AD IDS, AND REGULATIONS TAKE AIM AT TRACKING Presented by ©2020 EMARKETER INC. ALL RIGHTS RESERVED 14 Anne Hunter, head of product marketing at consumer Job reported that Smart AdServer measured clickthrough insights platform DISQO, noted that many of those trying performance three times higher than average for to simply replace the cookie are “ignoring consumers automotive ads delivered on pages with matching wishes not to be tracked by companies they have never semantic context. The company found similar results in heard of. When building a single-source panel, you must all languages, and similar correlations for other types of start with the consumer in mind and get their permission ads and contexts, including travel. He did note that they to provide insights. With that baseline of transparency and were not able to analyze post-click performance as part of trust, the problems of traditional measurement go away. this research. You can understand consumer behaviors and marketing impact at a granular level—with high accuracy—because And it’s important to note that contextual targeting isn’t you can see the entire digital footprint of an audience a panacea for privacy problems. “The page is a proxy for member, confidentially.” the user, and as such, it needs to be used responsibly and compliantly just like user-level targeting,” Skou said. “For example, if the topic of a page was deemed sensitive by some future industry self-regulatory frameworks or CONTEXTUAL TARGETING legislation, then we must take that into account before Panels may help with measurement after the fact, but serving an ad.” advertisers will still look to target their messages as they’re being delivered. Contextual targeting—common in the days before programmatic display advertising THE PROBLEM OF CONSENT REMAINS scaled a decade ago—has gotten renewed attention in the wake of the GDPR. Publishers and other advertising Many of the options discussed in the previous sections partners are continuing to work on these offerings, which still rely on getting consumer consent for marketers— have gotten more sophisticated thanks to advancements and their partners—to use their data for targeting, in computing. measurement, and attribution. The ad tech ecosystem sees consumer education as the key to getting that “Contextual targeting can be as effective as user-level consent, especially education about the idea that targeted targeting if deployed intelligently, i.e., finding the contexts advertising is what pays for internet content, and that that are a good proxy for not only the desired users, but without consumers agreeing to exchange their data for also for the right state of mind for the desired users,” it, the open web won’t be viable and only the walled said Kasper Skou, CEO and co-founder of semantic gardens will be left. custom audience firm Semasio. “This is, of course, not an easy task and quite dependent on the individual This is not a new point of view. campaign goal.” In June 2008, former eMarketer principal analyst David “All these privacy protection measures are threatening Hallerman published a report on behavioral targeting that the targeting and optimization strategies adopted by said, “As people make the internet an increasing part marketers and platforms these past 10 years,” Job said. of their daily lives, privacy issues will become more of “User IDs fuel most programmatic advertising spend a battleground.” But he believed the problems could be today and as they disappear, algorithms will need to resolved through “a clear process of informed consent,” rely on other data points to drive and optimize spend. pointing out that marketers had already learned to do this Context has proven to be a relevant data point to drive with email. advertising performance in the past, and we expect it to become more and more strategic to display advertising spend decisions, especially because contextual solutions in 2020 and beyond will benefit from robust technological innovation like AI and machine learning.”

IDENTITY 2020: CHANGES TO COOKIES, AD IDS, AND REGULATIONS TAKE AIM AT TRACKING Presented by ©2020 EMARKETER INC. ALL RIGHTS RESERVED 15 But a little over a year later, we noted research from the Still convinced education is the answer? The following Annenberg School for Communication, University of are highlights of recent research on consumer attitudes California Berkeley School of Law, and the Annenberg toward data-sharing and targeted advertising: Public Policy Center that found two-thirds of US internet users did not want to see ads tailored to their interests— ■■ Almost half (43%) of US adults surveyed in February and that their opposition increased when they learned by Econsultancy and Cheetah Digital said they were how such ads were delivered. Almost two-thirds (63%) limiting the brands they gave data to. Another 41% thought advertisers should be legally required to delete said they deleted cookies regularly, and 30% reported information about consumer internet activity immediately. blocking ads.

In 2010, covering other consumer research expressing ■■ About four in 10 US and UK adults surveyed in February discomfort with ad targeting practices, we wrote, 2020 by Adobe said cookies, along with pop-up ads and “Education without effective empowerment with regard alerts, were the most frustrating part of engaging with a to their own data may not be enough for consumers brand’s content. to get comfortable with targeting.” The same year, we ■■ Almost two-thirds (63%) of US adults surveyed in June warned, “If consumers are not given effective controls 2019 by the Pew Research Center correctly understood over how and what is tracked about them, they may that cookies allow websites to track user visits and site believe their only resort is government intervention.” activity. That made cookies among the best-understood digital topics Pew was researching, second only to There has not been a clear process of informed consent, phishing scams. or radical transparency. There hasn’t been a capability for consumers to manage their preferences conveniently. ■■ And Performics and Northwestern University’s Intent There hasn’t been even the smallest effort to explain Lab found in March 2020 that more than seven in 10 to the public how RTB works and what it means about US adults wanted to see regulatory reforms of how who processes their data. But there has been a massive companies treat their data. increase in spending on targeted digital advertising. And there has been regulation. Attitudes Toward Government Control of Select Company Practices According to US Adults, Research conducted in the UK in February 2019 by the ICO, March 2020 % of respondents Ofcom, and Harris Interactive found that consumer support for viewing digital advertising in exchange for free content Would like to see the government reform how companies treat my data dropped from around two-thirds (63%) to around one-third 71% 16% 13% (36%) when survey participants were given some basic Would like to see the government reform monopolistic practices information about how personal data is used in RTB. of companies See our August 2019 report, “Consumer Attitudes on 68% 20% 12% Marketing 2019: Privacy Concerns Mount, and Ad Blocking Would like to see the government increase regulation of companies online Isn’t Going Away” for more on the ICO/Ofcom/Harris 61% 21% 18% Interactive survey. Agree Neutral Disagree

In 2010, we cautioned: “The fact that over time, as Note: n=1,500 ages 18-70 behavioral targeting has featured prominently in the news, Source: Performics and Northwestern University's Intent Lab, "Digital Satisfaction Index: Brand Trust Spotlight," Aug 20, 2020 Americans continue to regard it as invasive, creepy, or 258130 www.eMarketer.com otherwise undesirable further suggests that educational efforts may not be enough.”

IDENTITY 2020: CHANGES TO COOKIES, AD IDS, AND REGULATIONS TAKE AIM AT TRACKING Presented by ©2020 EMARKETER INC. ALL RIGHTS RESERVED 16 And to the extent that users are willing to share their KEY TAKEAWAYS data, it’s with the expectation of meaningful choice and control—which is often still not present. About three- ■■ Commonly used identifiers are going away, and quarters of US adults surveyed in November 2019 by marketers must respond both tactically and geofencing firm Herow said they would be more likely strategically. Advertisers and their partners must figure to share their location data if they were given a clear and out how they are relying on current infrastructure and easy way to control if and how it was used. Seven in 10 prepare to patch what they’re doing as necessary. But said they would be more likely to share if apps explained workarounds won’t be a long-term solution. clearly why they were asking for location and what the value for the user would be. ■■ Regulation is here, and it’s going to get only more stringent. The CCPA already requires marketers to respect global opt-out mechanisms including browser- App Attributes that Make US Adults More Inclined to Share Location Data, Nov 2019 based “do not track.” The CPRA, which seems likely % of respondents to pass, will go further and isn’t likely to be the last US

Provides a clear and easy way to control if and how user data is data privacy and protection law to get on the books. used 74% ■■ Privacy-forward platforms are working to make Explains clearly why it is asking for location and what is the user-level tracking and attribution impossible. value for the user Platforms like Apple’s iOS have the power to truly 70% require permission for marketers to use data—and Provides a method to select when and for how long the location is accessible by the app most experts don’t think users are particularly likely to 65% give it. That means marketers will have to go beyond Has an established brand user-level tracking to understand the effectiveness of 59% their digital ads. Is a brand that users are attached to 59% ■■ Now is the time to prepare. No solution is perfect yet, Complies with a major privacy regulation such as GDPR in Europe but all will take time to develop, and the clock is ticking. or CCPA in the US 53%

Note: read as 59% of respondents would be more inclined to share their location if the app has an established brand Source: Herow, "Mobile Location in the Age of Privacy," Jan 28, 2020 252996 www.eMarketer.com “Marketers, agencies, and media companies are going to have to make a choice, and it’s a simple one,” Hunter of DISQO said. “They can either use various technical workarounds to replicate the cookie, or they can do what consumers actually want: get permission before collecting data.”

IDENTITY 2020: CHANGES TO COOKIES, AD IDS, AND REGULATIONS TAKE AIM AT TRACKING Presented by ©2020 EMARKETER INC. ALL RIGHTS RESERVED 17 EMARKETER INTERVIEWS eMarketer was founded on the idea that multiple sources and a variety of perspectives will lead to better analysis. Our interview outreach strategy for our reports is to target specific companies and roles within those companies in order to get a cross-section of businesses across sectors, size and legacy. We also look to interview sources from diverse backgrounds in order to reflect a mix of experiences and perspectives that help strengthen our analysis. The people we interview for our reports are asked because their expertise helps to clarify, illustrate or elaborate upon the data and assertions in a report. If you would like to be considered for an interview for one of our reports, please fill out this form.

Steven Ahlberg Dave Pickles Head of Product Co-Founder and Chief Technology Officer White Ops The Trade Desk Interviewed August 21, 2020 Interviewed August 25, 2020

Mark Ballard Alasdair Pressney Vice President, Research Senior Product Manager Merkle AdColony Interviewed August 13, 2020 Interviewed August 25, 2020

Kerel Cooper Premesh Purayil Senior Vice President, Global Marketing Chief Technology Officer LiveIntent Freestar Interviewed August 28, 2020 Interviewed August 25, 2020

John Goulding Brian Quinn Head of Strategy, US US President and General Manager MiQ AppsFlyer Interviewed August 27, 2020 Interviewed August 27, 2020

James Heller Maor Sadra Co-Founder and CEO Co-Founder and CEO Wrapify Incrmntal Interviewed August 27, 2020 Interviewed August 17, 2020

Anne Hunter Sergio Serra Head of Product Marketing Senior Product Manager, SSP DISQO InMobi Interviewed August 27, 2020 Interviewed August 27, 2020

Romain Job Abhay Singhal Chief Strategy Officer Co-Founder and CEO, Marketing Cloud Smart AdServer InMobi Interviewed August 26, 2020 Interviewed August 27, 2020

Michael Nevins Kasper Skou CMO Co-Founder and CEO Smart AdServer Semasio Interviewed August 26, 2020 Interviewed August 27, 2020

IDENTITY 2020: CHANGES TO COOKIES, AD IDS, AND REGULATIONS TAKE AIM AT TRACKING Presented by ©2020 EMARKETER INC. ALL RIGHTS RESERVED 18 Philip Smolin Chief Strategy and Revenue Officer Amobee Interviewed August 27, 2020

Antonio Tomarchio Founder and CEO Cuebiq Interviewed August 27, 2020

Todd Wooten Founder VRTCAL Interviewed August 26, 2020

EDITORIAL AND PRODUCTION CONTRIBUTORS

Anam Baig Senior Editor Rahul Chadha Senior Editor Joanne DiCamillo Senior Production Artist Donte Gibson Chart Editor Katie Hamblin Chart Editorial Manager Dana Hill Director of Production Erika Huber Copy Editor Ann Marie Kerwin Executive Editor, Content Strategy Penelope Lin Copy Editor Stephanie Meyer Senior Production Artist Heather Price Deputy Editor Magenta Ranero Senior Chart Editor Amanda Silvestri Senior Copy Editor

This article was contributed and sponsored by Verizon Media.

It’s no secret that consumers are concerned to keep the benefits of identity a reality without about their data privacy. Today, there’s lack compromising consumer privacy. Verizon Media of transparency around the data exchange shares three ways to look at an end-to-end sustainable that fuels the digital economy. Consumers identity solution. have been left in the dark, sounding the 1. Next-gen audience solutions. Next-generation alarm for change, and forcing governments audience solutions will enable marketers to target and industries to take action. based on interests, demographics, and contextual signals to deliver and maintain ad relevance— Desire for personalization outweighs data concerns all without depending on any identity, third- party cookies, etc. Verizon Media’s aggregated The new consumer perspective around data usage measurement solutions leverage cohort-level must be balanced against the benefits of personalized data to access insights, evaluate impact, and brand experiences. Even as major players in drive performance. government and tech move to curtail tracking and expand users’ control, consumer data tells a different 2. Open partnerships. New solutions will require deep and somewhat more complicated story. collaboration between industry partners to develop privacy-friendly solutions for adoption at-scale to In a 2019 MAGNA IPG Media Lab and Verizon Media ensure publishers are able to monetize, marketers study, 88% of respondents said they find personalized are able to deliver relevant ad experiences, and ads useful, relevant, or interesting. Eighty-six percent consumers are able to exercise meaningful choice. said they see how the use of their data benefits their online shopping experience, stating that websites are 3. Unified ID. We don’t rely on third-party tracking more enjoyable and easier to navigate when they offer mechanisms, cross-site tracking, fingerprinting, personalized experiences. A majority of consumers or other invasive and non-sustainable approaches. are willing to voluntarily offer some forms of personal Instead, Verizon Media’s Unified ID is powered information in exchange for tangible benefits such as by Verizon Media’s proprietary identity graph. discounts or recommendations. This solution empowers advertisers to draw on hundreds of millions of logged-in, opted-in users Crucial to this equation? Consumer trust. Consumers from across Verizon Media’s global portfolio of won’t share data at the cost of personalization if they owned and operated media properties, as well as don’t trust the partner. Conversely, if they trust the the industry’s only independent ad platform with partner, they’ll be open to sharing even if they can’t a full-stack DSP and SSP to protect data integrity explicitly state what personalization feature they’re across demand and supply. Because our users are getting in return. logged in, all signals aggregated by Verizon Media’s Where do we go from here? Unified ID are entirely consent-based, enabling The dissolution of third-party cookies and other marketers to create cross-screen campaigns that tracking mechanisms is forcing organizations to build reach the right consumers at the right time and in or find alternative identity solutions to connect with the right context. audiences. According to research from Winterberry Giving consumers the personalized experiences they Group and the Interactive Advertising Bureau, 60% of want while respecting their data privacy is a delicate North American data professionals expect to increase dance. Our solution walks the line by offering our their spending and emphasis on the use of first-party brand partners an opted-in audience to safely target, data, as well as ramp up efforts around third-party build, and optimize campaigns. In a shifting identity identity resolution solutions (38%) and contextual world, future-proof your strategies and reach your advertising (34%). Marketers must take an integrated audience with transparency through Verizon Media’s approach to tackle a future without cookies—and identity solutions.

IDENTITY 2020: CHANGES TO COOKIES, AD IDS, AND REGULATIONS TAKE AIM AT TRACKING Presented by ©2020 EMARKETER INC. ALL RIGHTS RESERVED 20 the cookie. beyond Identity visit verizonmedia.com/advertising To learnmore, consumer experiences. and future-proofyourbusinesstopowerbetter The cookielessworldiscoming.Staytrulyconnected relationships atitscore. cross screendatasignalswithdirectconsumer identity atscale,builtfrom2billionconsent-based, million globaluserspermonth.Weoﬀermarketers largest digitalmediacompany,weengage900+ with theconsumer.Andweshouldknow-as2nd We believeconnectionsandidentitybeginend sustainable identitysolutions. Introducing VerizonMedia’s

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