Marketers Shift to IP Address Band-Aids Amid Cookie Deprecation

A bevy of alternative identifiers has flooded the market in recent years, promising to usher the advertising industry into a new paradigm once Google Chrome deprecates third-party cookies at the end of 2024. But the immediate favorite solution among marketers is a data signal that’s very old and decisively not symbolic of a new privacy-conscious era: the IP address. “Most of the clients are going to use IP addresses in the short term and MAIDS,” or mobile identifiers on Android, said Jonathan O’Brien, programmatic supervisor at digital agency Good Apple. “But [clients will] also do tests on [solutions like] LiveRamp and UID2 because those solutions will have a bit more longevity.” An IP address is a number that devices—from TVs and laptops to cell towers—use to communicate with each other. IP addresses, as old as the internet itself, are not privacy-safe, since they can be used for fingerprinting individuals. They’re not as accurate as cookies, so they haven't been used quite as much or received as much regulatory scrutiny as cookies, although both Google and Apple have introduced protocols to limit their use. Marketers Eye Transaction Data in a World Without Cookies Still, IP addresses will continue to be a mainstay of digital advertising because they can easily fill the role of third-party cookies without requiring significant work on the part of advertisers to change their processes. In mobile environments, the IP address is already a primary identifier after Apple ushered in the cellular cookie apocalypse with the deprecation of IDFA (identifier for advertisers) in 2021, said application development consultant Thomas Petit. Google said it will deprecate mobile identifiers on Android, although it hasn’t said exactly when. Buyers’ continued dependence on high-reach, deterministic IDs shows the power of inertia in programmatic advertising. While several sources described the IP address as a Band-Aid solution, a permanent fix for cookie deprecation remains elusive. IP addresses on the media plan Good Apple's clients currently use IP addresses for targeting on streaming television, where cookies are not as widespread, and to conduct cross-device targeting and measurement, said O’Brien. Another common way IP addresses end up in media plans is through various addressability solutions that include them as one of many signals. “Your addressability solution comes in a stack of various ingredients,” said Don Marti, vice president of ecosystem innovation at publisher network Raptive. “There are different addressability options that include IP address in different weights.” These addressability solutions, from vendors like ID5 or LiveRamp, might also include signals like first-party data or hashed emails. IP addresses are already used to plug gaps when demand-side platforms can’t hit reach goals for a campaign with cookies alone, said Keith Petri, CEO of publisher identity management platform Lockr. Lack of precision Once cookies fully deprecate, ad-tech systems already using IP addresses will likely target them with greater frequency as they search for signals to meet advertisers’ goals. But advertisers shouldn’t expect performance at the level of third-party cookies. IP addresses are more likely to be linked to several individuals than a cookie, meaning that they aren’t as precise, and they are also useless if a user is using a virtual private network, said Andrew Eifler, chief product officer at supply-side platform TripleLift. In connected TV, where the IP address is the main target option, buyers are flocking to more precise alternatives. In the third quarter of 2023, SSP Index Exchange saw the bid rate for UID 2.0-enriched traffic increase on average by over 800% from the prior quarter for streaming TV and online video, according to a spokesperson. UID 2.0 is based on first-party data. Privacy concerns In many ways, IP addresses are less privacy-safe than cookies. “You can’t reset your IP address,” Eifler said. “It’s not transparent to consumers, whereas cookies are.” Late last year, Google experimented with IP Protection, which lets users opt in to prevent third parties from tracking their IP address. Apple has systems to hide IP addresses in Safari and mail, although there are still loopholes to target by IP address on iPhones, Petit said. If brands accentuate their use of IP addresses in a post-cookie landscape, this crackdown will surely increase, Marti said. Reducing reliance on IP addresses will come not from finding a perfect replacement, but from investing in measurement and attribution that rely less on tying the viewer of an ad perfectly to a conversion. For instance, methods such as mixed media modeling and incrementality testing, said Artem Peplov, vp of analytics at Rain the Growth Agency. “Hour-by-hour attribution” is not going to be a reasonable expectation in the wake of cookie deprecation, he said. “Patience is important.”

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Marketers Shift to IP Address Band-Aids Amid Cookie Deprecation

Many marketers plan to rely on an old fingerprinting tactic in the immediate wake of cookies' demise

Catherine Perloff

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Catherine Perloff