May 2 | 11 AM ET: Use Case Webinar with Permutive
Special Guest: Joe Root, CEO and Founder of Permutive
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Identity: Use Case Webinar Series with Permutive
This is our third use case webinar in our identity series. The first was with Travis Clinger from Liveramp on February 14 and the second was with Mathieu Roche from ID5. They both gave us master classes on how to get the audience-targeting job done without third-party cookies.
We’ll get another master class perspective from Joe Root, CEO and founder of Permutive, on May 2 at 11 AM ET.
Identity Perspective
In our two previous webinar sessions, we showed a fundamental diagram about “utility” curves (aka “indifference” curves).
An indifference curve is a graph used in #economics that represents how two different goods in varying proportions give a buyer equal satisfaction (e.g. utility). In other words, a buyer is indifferent at every trade-off point on a utility curve.
“Utility” is a term used to determine the worth or value of a good or service. More utility, more value.
More specifically, utility is the total satisfaction or benefit derived from buying a good or service (like audience data). Buyers make choices to maximize their utility. When it comes to audience data, we can narrow down the trade-off between two different goods — data scale (or reach) and data accuracy.
Curve #1 represents third-party cookies. This kind of audience targeting data has a high reach but suffers from poor accuracy. In 2019, Nico Neumann showed that there is about a 50/50 chance of gender accuracy with third-party cookies (e.g. classic old-school BlueKai audience segment). For example, if we’re looking to target females with third-party cookies, half would end up male. If you layer on age, you get another 50/50 chance so overall accuracy drops to just 25%.
In the end, whichever way buyers decide to trade off scale and accuracy using third-party cookies they end up with low a payoff (e.g. utility). If you pay a $1 CPM for this kind of low-quality audience data on a $5 media CPM, and 75% of the $1 is wasted, you get a sub-optimal payoff.
Enter New Identity Alternatives
Curve #2 replaces third-party cookies with new alternatives giving buyers more utility. Buyers could get the same accuracy on Curve #1, but with much less scale so they opt for Curve #2 and gain more utility. Yes, buyers lose some scale in exchange for more accuracy, but they gain more utility (value).
This is the state of play today with several new identity alternatives for buyers to test and consider. Curve #3 represents the future state of play as the best of these alternatives win over buyers with satisfactory scale (reach) and improved accuracy tied to 1st party identity approaches.
Identity Perspective With A Twist
We’ll spice things up a bit in our use case webinar with Joe. Think about this line of thinking from The Trade Desk’s Q4 earnings transcript.
Fewer cookies doesn't really matter a ton for us. It doesn't stop our work because we've been busy with other open Internet pioneers building something much better. Where there is real risk is on the publisher's side of the ad ecosystem, especially browser-based publishers. Others have reported that declines in publisher CPMs in Chrome where cookies have been deprecated are around 30%.
That's potentially devastating for publishers, of course. Not so much for advertisers who continue to have millions of choices a second on where to spend their ad dollars. But this threat to publishers comes as there are daily reports of journalism outlets laying off major swaths of their newsrooms amid a really tight business climate. While there may be many reasons for the struggles that journalism outlets are having, one of the dirty secrets of the industry is that authentication rates there are surprisingly low.
That means that they don't have any sense of who is visiting their destinations, and they've been reliant on cookies until now to create relevance for advertisers. Without either cookies or publisher authentication, advertisers won't value those ad impressions nearly as much. This is a wake-up call for publishers. And the math is obvious.
In other words, buyers want more utility and they will seek and use out those alternatives that provide it.
However, it appears that The Trade Desk is positioning the loss of IDs as a publisher-only problem. Yes, ID signal loss is certainly something open web publishers must overcome to survive, but the other reality is that without high-utility identity signals the business models of DSPs like TTD and SSPs like PUBM and MGNI break completely.
When it comes to programmatic auctions, you always have to trace back to what Quo Vadis calls the quintessential question: Do I know this User ID? Yes or No?
Notably, the price of any good or service is worth nothing more than the information that a buyer gets access to to price the good or service. The sooner publishers recognize this fact, own it, and distribute this privileged asset in the bid stream with total control the better off they will be.
Queue the music…“Shoplifters of the World Unite” by The Smiths in their epic album Louder than Bombs. Johnny Marr’s guitar short riff at minute 1’ 25'' is a masterpiece. Swap the word “shoplifters” for “publishers” and publishers have a new anthem. Then again, adtech players are looking for the same anthem.
Learn to love me, assemble the ways Now, today, tomorrow and always My only weakness is a list of crime My only weakness is, well, never mind, never mind, oh Shoplifters of the world Unite and take over Shoplifters of the world Hand it over, hand it over, hand it over
Ask Us Anything (About Programmatic)
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Disclaimer: This post, and any other post from Quo Vadis, should not be considered investment advice. This content is for informational purposes only. You should not construe this information, or any other material from Quo Vadis, as investment, financial, or any other form of advice.