Is the industry in denial? Facing facts about an identity constrained future.

Earlier this year, Google announced another delay in third-party cookie deprecation on Chrome. This second postponement gives Google and the ad tech sector more time to prepare for a cookieless ecosystem – a move that confirms what many already felt: the industry wasn't ready.

Google’s decision, while welcome to some, shouldn’t slow the industry from moving away from third-party cookies. In 2023, the new California Privacy Rights Act (CPRA), along with other state privacy laws (VA, CO, CT, UT), will increase the privacy rights of consumers, which will have a significant impact on the advertising ecosystem.

Advertisers and publishers should continue adopting and testing identity solutions to maintain today's robust advertising ecosystem and future-proof their business. Identity solutions offer precise audience targeting and measurement for advertisers. And publishers benefit from increased audience monetization. More importantly, consumers still enjoy customized ad experiences tailored to their unique characteristics and needs.

Identity solutions are a valuable asset for this new chapter of the advertising world, enabling advertisers and publishers to become less reliant on third-party cookies. When an identity solution is well-implemented, it creates addressable audiences in the absence of cookies without sacrificing consumer privacy. An identity solution should always go hand-in-hand with privacy choice technologies allowing the users to easily opt out when and if they decide.

The phaseout of third-party cookies and the challenges of the cookieless environments is not a new topic. Yet, in the years since Safari and Firefox began blocking third-party cookies, progress has stalled. While identity solutions grew in number and adoption rose across publishers, complexity increased, causing marketers to slow their investment in identity solutions and alternative approaches. Many advertisers postponed these efforts during the previous Chrome delay, underestimating the importance of adjusting to this new reality. The result? Lost time, wasted resources, and, more critically, putting our most important relationships in peril as the industry wavers in our promises to consumers. This time around, the industry cannot wait.

The ID-less era

The truth is the industry is going through a broader transformation that also involves the elimination of digital IDs, not just cookies. As IDs become unavailable due to the depreciation of mobile ad IDs or the lack of registered/logged-in users, another type of inventory is emerging, the ID-less one. This is an outcome of privacy regulations or platform limitations that may restrict user identification and tracking. This inventory will remain non-addressable as it’s impossible to apply identity solutions. A characteristic example is the in-app inventory of iOS 14.5. Today 75% of iOS 14.5 users choose to opt out from tracking.

This means advertisers and publishers planning to only rely on ID solutions should re-evaluate their strategy.

It's estimated that by 2024 over 70% of ad opportunities will be without identity (aka not-addressable).* The available addressable inventory will diminish, becoming more expensive and restrictive. Advertisers and publishers who want to be successful in this new era of advertising should also embrace non-addressable digital environments and start seeking future-proof and innovative ways to reach and monetize these audiences today.

Solutions may include advanced contextual targeting and machine learning technologies based on panel audiences from known users. Panel audiences are a popular concept of the TV ecosystem that the ad tech industry is now widely adopting and modernizing to adjust to the new era of advertising.

Preparing for the road ahead

Google’s delay gives the industry more time to test, plan and integrate the cookieless solutions available today and prepare for an identity-constrained future. Our ever-evolving advertising ecosystem must invest in different, innovative tactics and solutions, allowing us to make more data-driven decisions and continue to develop sustainable, privacy-respecting solutions for consumers, advertisers and publishers.

Choosing the right partners ensures your business is ready to tackle tomorrow’s complicated landscape. Yahoo understands the challenges of our advertising and publishing partners and offers an integrated approach to identity. Yahoo ConnectID, our solution for an ID-based inventory, and Next-Gen Solutions for ID-less environments go beyond content at scale by leveraging our unique Yahoo data signals and machine learning.

Let's connect today to ensure you’re ready to thrive in tomorrow’s identity-constrained world.

* Yahoo, Internal data, 2021.