Advertisers are spending too much money in vain on alternative audience identifiers

  • Advertisers spend significant parts of their budgets to show ads to a very small number of cookieless users identified by AltID.
  • Many SSPs do not monetize existing cookieless inventory (mainly Safari and Firefox users), further narrowing the volume of available cookieless inventory.
  • Despite the growing demand for AltID data, the effectiveness of such campaigns is currently limited.

Advertisers are actively seeking new ways to identify their audience, without using third-party cookies. New data from Adform DSP indicates that such advertisers are wasting a significant portion of their budget, targeting too much advertising at a very limited group of users.

Challenges with AltID

When advertisers test alternative identifiers (further #AltID), such as ID5, UID2, RampID, or any other (even in Russia!), they mainly do it in browsers where cookies have long been disabled—Mozilla Firefox (third-party cookies disabled in 2019) and Apple Safari (in 2020). Although there is enough traffic in such environments—according to StatCounter, last month Safari accounted for 33% of all browsers in the American user segment—SSPs prefer not to monetize #cookieless-traffic, as cookies are still accessible.

Accuracy of Data and Campaign Effectiveness

The industry calls for more active testing, especially in light of #Google's recent postponement of disabling third-party cookies in its Google #Chrome browser. However, sources at #AdWeek among AdTech specialists, believe it may be difficult for advertisers to obtain accurate data and run effective cookieless campaigns.

Losses from Excessive Targeting

According to John Piccone, Regional President of #Adform for North and South America, #SSPs can only identify a small segment of cookieless inventory, and advertisers spend huge amounts on excessive targeting of the same users, especially if they rely on just one AltID.

The exact amount of money an advertiser can waste depends on the specifics of their campaign. Hypothetically, if an advertiser spent $1 million to reach 50 million people with a CPM of $6 and an optimal frequency of seven impressions, they would spend $217,000, or more than 20% of their budget, on repeated impressions to the same people, Piccone said.

The data from Adform is hypothetical but based on real AltID metrics. AdForm DSP sells a product called ID Fusion, which consolidates AltID inventory, reducing potential losses, so keep in mind, Adform has a vested interest in this matter and it may influence the information they provide.

According to Adform's calculations, if the advertiser with the same campaign parameters reduces the frequency limit, they will waste even more money. For instance, with a frequency limit of six impressions per unique, the advertising campaign would waste $243,000, or more than 24% of the budget. And with a frequency limit of five, it would already be $269,000, or at least 26% of the budget. These figures relate only to campaigns in Open Exchange.

Assessing Cookieless Inventory

According to Matthieu Roche, CEO of ID5, over the last 18 months, when AltID gained wider distribution, advertisers have been able to understand how to assess cookieless inventory.

However, the implementation of AltID may take the form of a "chicken and egg" problem—if #DSPs do not make certain AltIDs available to advertisers, then publishers see no point in monetizing their site with such an identifier. And if SSPs do not use AltID to monetize publishers, then advertisers will not place their bids.

"That's the complexity of our business. We need to convince everyone to integrate at the same time," says Roche. "The process is slow and very important. I don't think anyone really doubts the need to replace targeting using cookie. It's just that coordination takes a lot of time."

Email

According to Andrew Eifler, Director of Product at #TripleLift SSP, in some cases, cookiless CPM can be higher than CPM for inventory with cookies.

But even if SSPs were now trying to monetize more cookieless inventory, rather than ignoring it, there would still be little of such inventory because some AltIDs rely on email, which rare users provide to publishers.

"Some advertisers' savvy marketers have already sold the story that you can now use AltID based on email," says Eifler. "But there is no reach and huge competition for a very small amount of inventory."

Conclusions for Publishers

The market for cookieless inventory is currently overheated and can yield decent profits. To leverage these opportunities, collaborate with AltIDs and participate in other audience identification initiatives.

Forecast

Google has postponed the discontinuation of third-party cookies, giving the market more time to adapt and further spread of AltID and new technologies.

Further reading: