The Shift to IP Address Band-Aids In A Cookie-Less World

Understanding the Shift From Third-Party Cookies to IP Addresses

Third-party cookies have long been the linchpin of digital marketing, enabling targeted advertising and user tracking across multiple websites. However, their reign is soon to end with Google’s plan to phase them out by the end of 2024. This decision, aimed at enhancing users’ privacy, is pushing marketers to explore alternate avenues for targeted digital marketing. In the wake of this, IP addresses are emerging as a likely successor.

Why Third-Party Cookies Are Being Phased Out

The decision to eliminate third-party cookies stemmed from growing concerns about privacy and data security. As more users became wary of their personal data being tracked and shared across websites, tech giants like Google felt the need to act. Google first announced its intent to discontinue third-party cookies in 2022, but later extended the timeline to 2024 to give stakeholders more time to adjust.

The Rise of IP Address as a Cookie Alternative

IP addresses, as old as the internet itself, are set to fill the gap left by third-party cookies. While they are not as privacy-safe or accurate as cookies, their use hasn’t been as scrutinized. However, this could change with Google and Apple introducing protocols to limit their usage.

“Most of the clients are going to use IP addresses in the short term and MAIDS,” – Jonathan O’Brien, programmatic supervisor at Good Apple.

Despite the privacy concerns, IP addresses are likely to remain a mainstay in digital advertising due to their ease of use and minimal requirement for advertisers to alter their processes.

The Role of IP Address in Media Plans

IP addresses are already a significant part of media plans, particularly in streaming television where cookies are less prevalent. They also play a crucial role in cross-device targeting and measurement.

“Your addressability solution comes in a stack of various ingredients. There are different addressability options that include IP address in different weights.” – Don Marti, vice president of ecosystem innovation at Raptive.

Other addressability solutions, such as those offered by ID5 or LiveRamp, might also include signals like first-party data or hashed emails.

The Pros and Cons of IP Addresses as a Marketing Tool

While IP addresses seem to be a logical successor to cookies, they come with their own set of advantages and disadvantages. Understanding these can help marketers strategize effectively for the post-cookie era.

Benefits of Using IP Addresses

One of the main advantages of using IP addresses is their ease of use. Unlike other post-cookie alternatives that require substantial changes in the advertising process, IP addresses can easily fill the void left by cookies.

Another benefit lies in their ability to provide a broad level of targeting. While cookies allow for highly specific targeting, IP addresses provide a more general level of targeting, which may suffice in many cases.

Drawbacks of Relying on IP Addresses

Despite the advantages, there are some significant downsides to relying on IP addresses for digital marketing. One major concern is their lack of precision.

While IP addresses can fill the gap left by third-party cookies, they do not offer the same level of precision. They are often linked to several individuals, making them less precise.

“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.” – Keith Petri, CEO of Lockr

However, in a post-cookie landscape, buyers are seeking more precise alternatives. UID 2.0, based on first-party data, is seeing an increase in bid rate for streaming TV and online video.

Another concern is privacy. IP addresses are less transparent than cookies, making them potentially more invasive from a privacy standpoint. This has led tech companies like Google and Apple to introduce measures to limit their use.

Privacy Concerns Surrounding IP Addresses

IP addresses pose more significant privacy concerns compared to cookies. Users cannot reset their IP addresses, and their use is not transparent to consumers.

“You can’t reset your IP address. It’s not transparent to consumers, whereas cookies are.” – Andrew Eifler, chief product officer at TripleLift.

Both Google and Apple are taking steps to protect users from IP address tracking. Google’s IP Protection lets users opt in to prevent third parties from tracking their IP address. Meanwhile, Apple has systems to hide IP addresses in Safari and mail.

Understanding the Regulatory Environment

The shift away from third-party cookies and towards IP addresses is happening within a broader regulatory context. Legislators and regulators worldwide are increasing their focus on data privacy, leading to laws like the General Data Protection Regulation (GDPR) in the European Union and the California Consumer Privacy Act (CCPA) in the United States. These legislations impose stringent penalties on companies that violate users’ privacy, making it essential for marketers to understand their implications.

Exploring Alternative Marketing Strategies

In addition to IP addresses, several other solutions are emerging as potential alternatives to cookies. These include first and zero-party data, consent-based marketing, and new technologies like Federated Learning of Cohorts (FLoC). Understanding these alternatives and integrating them into their strategies can help marketers stay ahead in the post-cookie era.

Staying Ahead of the Curve

As IP addresses become more prominent in the marketing landscape, it’s crucial for marketers to stay ahead of the curve. This involves staying informed about ongoing developments, exploring innovative marketing strategies, and investing in new technologies and platforms. By staying proactive, marketers can turn the challenge of cookie deprecation into an opportunity for growth and innovation.

The Future of Advertising in a Cookie-less World

Reducing reliance on IP addresses will require a shift in the approach to measurement and attribution. Traditional methods such as mixed media modeling and incrementality testing will likely become more prevalent.

“Hour-by-hour attribution is not going to be a reasonable expectation in the wake of cookie deprecation. Patience is important.” – Artem Peplov, VP of Analytics at Rain the Growth Agency.

The transition to a cookie-less world is undoubtedly a significant shift for the marketing industry. However, with patience, innovation, and strategic adaptation, marketers can continue to effectively reach their audiences and achieve their goals.

References & Further Reading

• Marketers Shift to IP Address Band-Aids Amid Cookie Deprecation