Buyers Are Wasting Money on Alt IDs While Cookies Still Persist

Brands proactively testing alternative ways to find audiences, without using third-party cookies, are also wasting a chunk of that budget on sending too many ads to a narrow slice of publisher inventory, new data from the demand-side platform (DSP) Adform reveals. When buyers test alternative identifiers, like ID5, UID2, RampID, or a whole host of others, it's mostly in environments where cookies do not exist, like Firefox and Apple's Safari and iOS. While traffic in these environments is plentiful—Safari had a 33% market share of all browsers among U.S. users last month, according to StatCounter—supply-side platforms (SSPs) choose not to monetize the vast majority of cookieless traffic when cookies are still available. “[SSP] algorithms are ... set up so that if the third-party cookie is there, [they] use that,” said a source familiar with the matter, speaking on condition of anonymity. “Which I can’t fault them for. That’s the thing that their decision algorithm has been trained on for the last decade.” Google Delays Cookie Deprecation for the Third Time That lower addressable audience leads to over-targeting and wastage. Despite the industry calls for more testing, which will continue as Google has pushed back the deadline for cookie deprecation again, in a system still oriented toward cookies, it can be hard for brands to get accurate data and run effective cookieless campaigns, four ad-tech sources said. Wastage from over-targeting the same users Because SSPs only make a narrow slice of cookieless inventory available, brands waste money over-targeting the same users with ads, particularly if they rely on only one alt ID, said John Piccone, regional president of the Americas at Adform. The exact amount of money a brand might waste depends on the specifics of its campaign. Hypothetically, if an advertiser spent $1 million to reach 50 million people with a $6 CPM and optimal frequency of seven, they would waste $217,000, more than 20% of their budget, on excessive frequency, Piccone said. Adform's figures are hypothetical but based on real rates of alt ID inventory. The DSP sells a product called ID Fusion that adds the inventory of multiple IDs together, reducing this potential waste, so it has some skin in the game. More than 90% of Adform's clients use ID Fusion. If a brand with the same campaign parameters lowered its frequency cap, it would waste more money, according to Adform's calculations. For example, with a frequency cap of six, that campaign would waste $243,000, or more than 24% of the budget. And with a frequency cap of five, that campaign would waste $269,000 or at least 26% of their budget. These figures only apply to open exchange campaigns. Trying to value cookieless inventory Over the last 18 months, greater adoption of alt IDs is helping buyers understand how to value cookieless traffic, said Mathieu Roche, CEO of ID5. Still, the adoption process can take the form of a chicken-and-egg problem—if DSPs don’t make particular alternative IDs available for buyers, the sell side will see little value in monetizing a site with that ID. And if SSPs don’t use the alternative IDs to monetize supply, there will be nothing for buyers to bid on. “That’s the difficulty of our business. We need to convince everyone to integrate at the same time,” Roche said. “It’s slow because it’s super critical. I don’t think that anybody doubts [the] reality,” of needing a cookie replacement solution. “It’s just an alignment of interest.” Email authentication limits inventory In some cases, CPMs can be higher in cookieless environments than with cookies, said Andrew Eifler, chief product officer at SSP TripleLift. But even if SSPs monetized more cookieless inventory, supply would still be minimal because some alternative IDs rely on emails, which few users give to publishers. “There have been some buyers that have been sold on a story that you can use email-based IDs to run your marketing campaign,” Eifler said. “There is not enough reach in terms of audience because there’s too much demand crammed into not enough supply.”