The IP Address Is the Permanent Solution for Proof of Performance
In adtech, the market has a number of preconceptions about the IP address that are not necessarily accurate, so it is important to share a bit of additional context on the IP address.
As noted, digital advertising initiated a bit of a gold rush around trying to engineer an alternative to cookies just a few years ago. The assumption has been that cookies were a privacy risk. It is worth stating that the issue wasn't in the construction of the cookie – but rather that these third-party cookies spawned a sub-culture of sharing these anonymous IDs and that this sharing resulted in individuals being targeted without their permission.
A slightly more nuanced consequence of unauthorized sharing was that if the cookie was free to use, then the businesses that relied most heavily on programmatic targeting were, at a certain level, exposed to the misuse of what they consider to be their primary asset: their customer base. Sure, there is a privacy component, but in practical terms it is a share of wallet economic exposure for these identity providers, the mega-brands and what we now call the walled gardens.
So, as history has shown, the gold rush in the proprietary ID space ensued. Walled gardens kept their IDs and cookies to themselves. Key platforms like LiveRamp, The Trade Desk, and others created their own proprietary identifiers to defend and claim as their own asset. Identity in the open web hasn't transitioned yet but the alternative IDs have all the same foibles and performance characteristics of the cookie.
To no one's surprise these alternatives are also based on emails and devices and are still highly dependent on the integrations with publishers. Despite the constant marketing promotion of one-to-one or person-based targeting in our industry, the cookie and the proprietary alternatives still point to the publisher sites where the ID is resident on – unless – it includes all the household members and perhaps all the other people on those same sites. Scale and reach remain one of limiting factors of these proprietary IDs. The other catalytic event is CTV and audience-based television.
One of the disarming consequences of cookie deprecation and proprietary replacements is the lack of measurement. Measurement equals proof of performance and without that the brands are going to move cautiously.
Enter the IP address. The one valid challenge with using the IP is that by itself it is household-based targeting. The advertiser is literally targeting the modem in the home. In that sense, the IP address is not a cookie alternative at all. It is simply a proxy for the one public postal address of a home. It is worth considering that homes have deterministic attributes too – known people, home values, and lifestyles. Homes house people who buy products, go to gyms, go to college, and attend political events. They also have devices, which means that the signal from a device through the Wi-Fi is deterministically person-based. You didn't get there from a cookie on a shared browser, but rather through a postal address.
The other characteristics the IP offers is that it is ubiquitous. It is in every home (that has the internet). An IP also is not dependent on a publisher ID. This means that an IP-verified media bid can be served to anyone – anywhere. IP-verified targeting can be a utility for a more accurate proof of reach than one of the 300 cookies that link the back to an original onboarded record.
Sure, IP addresses do change. Depending on the provider, the IP changes 4 percent a week. If one knows the space, there are IP rotations, IPs in transit, IPs as proxies, and VPNs. That doesn't make them inaccurate. It simply means that the IP needs to be sourced correctly and the rules of IP delivery points must be always in practice. Sourcing IPs from the bidstream only provides partial coverage and can be riddled with fraud. Time of collection is an all-important element in IP mapping to destinations accurately.
Lastly, when correctly used, the IP address is not a cookie and should not attempt to be its replacement. An IP address should not be passed outside of a secure environment. An IP address should work in cooperation with postal, email, location, and device to establish a constellation of conformational signals. An IP address is a foundational asset in building more accurate targeting – a targeting system that leans into being a first-party customer communications vehicle rather than a soft ID match encumbered by platform algorithms and audience extensions.
Adtech has a responsibility to itself to validate both reach and proof of performance. The IP address is the only asset that can cover both adequately.
The views and opinions expressed are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.
Ray Kingman is CEO of Semcasting.