Dhaval Kotecha

Unified Id 2.0

Google announced at the beginning of 2020 that it was going to join Firefox and Safari in blocking 3P cookies in Chrome by 2022. Firefox and Safari had taken a hard stance against cross-site tracking. Here’s a timeline on the privacy initiatives from Safari, Firefox and Chrome.

Image courtesy commissionfactory

To see why Chrome’s announcement was even more important, I’d like to present a stat of the browser market to provide a perspective. 

Google Chrome occupies a massive 63.38% browser market share, so it meant the Ad Tech companies who relied on the 3P cookies needed to move fast and come up with a scalable solution for open internet

Image courtesy statcounter

Let’s first understand what a 1P vs a 3P cookie looks like. 

Image courtesy marketsmithinc

It’s important to understand that the 3P cookies are what’s going away. This caused a lot of AdTech companies to start thinking about the solutions to replace the loss of the signal in the near future, because 3P cookies are typically the ones used for retargeting. 

Jeff Green, the founder of The Trade Desk (NASDAQ: TTD) talks about the future of the internet in his presentation – Identity 2020 – The Future of Addressable Digital Advertising where he lists down 4 pathways. The 4th future, which is towards creating an open free internet, is what led to the Unified Id.

Image courtesy The Trade Desk

So, what is Unified Id 2.0?

Unified Id 2.0 is an initiative by The Trade Desk. It is an open-source and interoperable ID based on hashed and encrypted email addresses that replaces cookies, and upgrades privacy and controls for consumers so that it preserves relevant advertising. The Unified Id 2.0 solution will create a co-op for the open internet so users don’t have to log in to every website they visit. Its end state would be an industry tool for a common currency in the form of identity.

Image courtesy The Trade Desk

How will the Unified Id 2.0 work?

When a person visits a webpage, they’ll be asked to provide their email address for the purpose of identification across the network of publishers that have adopted Unified ID 2.0. That email then creates an ID but isn’t passed along the bidstream. Instead, an encrypted ID is transmitted.

What will it need for Unified Id 2.0 to be successful?

Publisher adoption is key to driving the overall success of Unified ID 2.0, especially since they’re charged with explaining the value exchange of the open internet–swapping personal information for free content.
There is a core value exchange of the internet, which is that the users see relevant ads in return for free content. Without relevance, the effectiveness of ads will drop, CPM’s will drop, publishers will struggle, and it will be a huge hit to professions like journalism.

“We’ve done a horrible job of explaining how the internet works to the consumer” Tom Kershaw, CTO of Magnite said. “We need one system that explains everything, including connected television.”

What does it mean for SSP's and other DSP's?

The incentive for SSPs and publishers to adopt it would be that the ad requests – whether bid from The Trade Desk or another DSP – would yield higher CPMs for more relevant advertising. Over the past few months, there has been a lot of traction from the players in the ecosystem who have joined the Unified Id 2.0 Initiative. Leading SSP’s like Magnite, Index Exchange, PubMatic, OpenX, SpotX and major DMP’s like LiveRamp, Measurement players like Nielsen have all shown support. Publishers like Washington Post are now adopting the ID.

“There’s no way to scale the internet without collaboration. It’s not important that we work together, it’s imperative.” Magnite CTO Tom Kershaw, while talking about the value exchange of the internet (in context of Unified Id 2.0). 

Andrew Casale, Index Exchange CEO said, “Solving this problem is not where we should be looking for competitive advantage. This is the wrong problem to do that on…the stakes are too high“

This is one of the major developments happening in the programmatic advertisement space and a step towards an open, free, frictionless internet for everyone.

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