Seller-Defined Audiences Face Trust Issues on the Open Web

Since its limited release in February, a handful of publishers, supply-side platforms and data-management platforms have been experimenting with seller-defined audiences (SDA), a communications protocol developed by the IAB Tech Lab that aims to put audience segmentation into the hands of publishers. Currently, three publishers representing several thousand websites are actively passing bid requests following SDA specifications to exchanges including Magnite, Pubmatic and IndexExchange. Several DMPs, including 1plusx and Permutive, plan to go live with the protocol soon, and a few dozen other publishers are actively exploring the technology, according to senior vice president of research at CafeMedia Patrick McCann. But SDA differs in a number of key ways from the many identity and attribution solutions currently vying to replace the third-party cookie, making direct comparisons difficult. And despite several months of preliminary testing, early adopters still have little data to work with. Buyers have been reluctant to invest more than a few thousand dollars from their exploratory budgets on the protocol, so publishers experimenting with the technology have yet to see an appreciable revenue lift, according to Mediavine co-founder and chief executive Eric Hochberger. Until third-party cookies disappear, few marketers are interested in experimenting substantially with the tech, said John Rosendahl, the director of exchange products at the SSP Sovrn. "It's a new process that will take time to adopt and build trust as it shifts buying from private to open marketplaces," Hochberger said. Yahoo and Amobee DSPs Remove Google Open Bidding as a Source of Supply Nonetheless, conversations with ad operators across the industry suggest that SDA, while nascent, offers a new vision for programmatic advertising, one that champions the open web, protects personal data and empowers publishers. Ultimately, the protocol aims to help publishers earn more revenue from the inventory they sell on the open exchange once third-party cookies deprecate. The tech is not without its limitations, including trust issues, fundamental privacy concerns and a lack of widespread adoption, but advocates maintain that these hurdles will be overcome in time. As the media ecosystem readies itself to operate in a world of deprecated data, SDA has become a leading contender on the strength of its technology and provenance alone. But if the protocol hopes to play a vital role in the post-cookie landscape, its architects will need to spur demand by selling the industry on its blueprint for the future. “When you remove the third-party cookie from the equation and look at other forms of addressability, such as email-based, probabilistic or finger-printing, this is different,” said Matt Barash, senior vice president of the Americas at Index Exchange. “I would compare it to what buyers and sellers have been conditioned to expect when solving for consumer privacy while making transactions: a standard.” Democratizing advertising on the open web As a product of trade body the IAB Tech Lab, SDA naturally differs from its competitors, most of which were introduced by private companies. Rather than act as an identifier, SDA functions as a communications protocol, which lets publishers define and communicate what audience segment a website visitor belongs to based on a universal taxonomy, then include that information in a bid request. Currently, to include this kind of additional information in a bid request, publishers must create specific deal IDs with buyers. The extra data makes these bids more valuable, leading to more lucrative yields, but to prevent leaks publishers only share it in private marketplace deals with trusted partners. These private marketplaces work well for the premium publishers that can command them, but they are inaccessible to the long tail of publishers. And while smaller operations might lack the resources to strike direct deals, their traffic makes up the vast majority of activity on the internet, according to Rosendahl. By making it such that any publisher following SDA protocol can safely communicate cohort information to any buyer seeking to reach that audience, the technology aims to close the CPM gap between the open web and private marketplace, McCann said. In doing so, SDA also lets marketers tap into far greater reach, as the bespoke nature of private marketplaces made them impossible to replicate at scale. Publishers define audiences, making marketers wary of their quality As part of its technical framework, SDA offers publishers more than 1,600 audience segments into which they can sort their website visitors, including groups like vegans or auto enthusiasts. But publishers themselves get to establish the criteria they use for determining which audience segment someone belongs to, as a food website and a sports publisher might have different thresholds for determining whether a visitor is vegan, for example. To provide transparency for marketers, publishers must chronicle these criteria in a document called the Data Transparency Standard. As a result, SDA doubles as a kind of glossary, letting publishers use their own methodology to sort website visitors into predetermined taxonomies, then letting marketers decode how a publisher makes those determinations. The more consensus that publishers can arrive on in choosing these criteria––a process they are at work on currently––the easier it will be for marketers to transact at scale. But despite the fact that marketers have an answer key to reference, they will not want to double-check publishers’ audience criteria every transaction. The set-up creates a dynamic in which marketers must trust that publishers are making these determinations both sensibly and accurately, a potential point of concern for buyers, according to Rosendahl. While early adopters have not seen any fraud yet, the risk will balloon when publishers from across the web begin using the technology. “How much do buyers trust publisher-provided information?” Rosendahl said. “A small subset of publishers will put whatever information in their bid requests that make them the most valuable. Third-party cookies used to verify that, but right now that issue is an open question.” How CafeMedia Grew Its Programmatic Ad Revenue by Adding Supply Partners Privacy compliance is baked into SDA, but imperfect Under SDA protocol, publishers must follow specific standards created to protect users’ data, such as scrubbing all personally identifiable information from bid requests. Proponents have hailed this approach as a positive step in privacy compliance, as it lets marketers bid on specific characteristics without targeting individuals. It also makes fingerprinting based on deal IDs, a problem that plagues the industry now, virtually impossible, said an industry source who asked not to be named in order to discuss sensitive commercial practices. But even though SDA communicates audience data without including personal information, it still moves through pipes that pass along information like IP addresses, HTTP headers and operating systems, said Mark Stoter, the chief executive and founder of Glimpse Protocol. This leaves the system susceptible to new forms of fraud. “There is a danger that you have replaced one bit of the system with something that is private, but sent it through the same dirty pipes, allowing the rest of the system to function as it has,” Stoter said. “You have to change the OpenRTB infrastructure.” Because sharing any personal information in the bid stream opens that data up to predation, publishers like The New York Times and The Financial Times, which have rejected overtures to participate in other highly privacy-centric systems, are likely to remain on the sidelines. And although SDA aims to democratize publisher opportunity, enabling even the smallest publishers to monetize their inventory, premium publishers will still hold outsize sway in determining the future of digital identity. Prebid, of Header Bidding Fame, Sees Its Ranks Swell as Publishers Seek Shop Talk

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Seller-Defined Audiences Face Trust Issues in Taming the Open Web

In early testing, the ambitious protocol is beginning to take shape

Mark Stenberg

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Mark Stenberg