Why an OpenID Is Critical to the Future of Addressable Digital Advertising

The industry has to put the consumer first

The future of addressable digital advertising is all about maintaining an open, clear and effective approach to consumer identity.

Adweek recently hosted a forum on the future of identity and privacy in the context of digital advertising, featuring The Trade Desk cofounders Jeff Green and Dave Pickles, IndexExchange CEO Andrew Casale and Magnite CTO Tom Kershaw.

The conversation was prompted by Google’s proposal to eliminate  third-party cookies by 2021 and The Trade Desk’s initiative to build on the IAB’s roadmap and create a new, better alternative to cookie technology.

Understanding the value exchange of the internet

What’s often misunderstood regarding the ongoing debate about such initiatives is how the internet pays for itself.

“There is a core value exchange of the internet,” said Green at the outset of the forum. “Users see relevant ads in return for free content … and without relevance, the effectiveness of ads will drop, CPMs will drop, publishers will struggle and it will be a huge hit to professions like journalism.”

Kershaw reiterated this point and outlined how important it is that this value exchange is understood by consumers experiencing free content on the open internet. “We’ve done a horrible job of explaining how the internet works to the consumer,” he said. “We need one system that explains everything, including connected television.”

Casale underscored what’s at stake for publishers in this debate. “When you remove the signal, we see a significant reduction in ad spend,” he said.

Without relevance, the effectiveness of ads will drop, CPMs will drop, publishers will struggle and it will be a huge hit to professions like journalism.

Jeff Green, The Trade Desk

As you read the news online or watch the latest binge-worthy series on your smart TV, you are likely paying for the content by watching advertising. The more relevant that advertising is to you, the more valuable it is to the advertiser and publisher, and the more it can be used to fund more great content.

This value exchange is no different from the way content has been monetized for decades. Whether it was soap companies marketing to 1950s housewives during hour-long daily television dramas or Pepsi sponsoring the Super Bowl halftime show, almost all consumer content has been funded by relevant advertising.

And nowhere is this value exchange more prominent than on the open internet, where data can be applied to make the relevance of advertising more precise. Indeed, it is estimated that the internet is funded by advertising to the tune of more than $35 per U.S. consumer, per month.

But therein lies the emerging, thorny issue of consumer data control and privacy.

The forum panelists all felt that not only does the advertising industry need to do a much better job of explaining the value exchange of the internet as users access free content, but that any new identity solution needs to put the consumer first, with greater consumer control.

Preserving consumer control

In proposing an upgrade to cookies that provides the consumer with more control while also preserving the value of relevant advertising for advertisers and publishers, Green outlined four key elements of Unified OpenID 2.0:

  • An OpenID that represents an upgrade to cookie technology, improves consumer controls, and incorporates a hashed and encrypted identifier
  • A single sign-on that is free and ubiquitous across the open internet
  • A new consent framework for publishers that explains the value exchange of the internet to users in a clear and uniform manner
  • Simple and granular consumer controls that meet the evolving requirements of consumers and regulators

“This has been designed from the consumer’s perspective,” said Pickles, highlighting the importance of consumer control. “This has to be an upgrade for them, and for everyone.”

The collaboration imperative

All the panelists focused on the need for the industry to collaborate on this new Open Source approach, even if they will compete on the services and value they’ll build based on this solution.

“There’s no way to scale the internet without collaboration,” said Kershaw. “It’s not important that we work together, it’s imperative.”

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

Speaking of the momentum behind this proposal, Green highlighted the universally positive feedback from advertisers and publishers, and Pickles focused on the speed with which The Trade Desk is collaborating with the industry to get the beta solution in the hands of industry participants. “We are working together to go as fast as we can and get a proof of concept in front of everyone as soon as possible,” he said.