Adapex, Inc. releases research on alternative identity solutions and their impact on digital ad targeting and revenue opportunities for publishers.
Abstract
Adapex, Inc., the adtech company of Datrix, set out to understand the impact of alternative identity solutions on bid opportunities and CPMs for publishers.
Context
In a rapidly changing digital advertising environment, marked by the deprecation of the third party cookie and heightened privacy legislation, publishers are looking for alternatives to third party cookie tracking that allows them to fortify advertising revenue.
The ad-supported nature of most publisher content makes it crucial that publishers come up with effective targeting solutions in order to survive. Moreover, the ability for the industry to come up with solutions that balance privacy with effective ad targeting has salient implications on society, since important journalism is funded by our current ad-supported model.
Research
From October ‘22 to May ‘23, Adapex A/B tested 6 different identity solutions across the 1000+ publishing sites in their network to assess CPM lift. The company oversees approximately 4 billion bids per month across the publishers in their network, providing a sizable data set for understanding identity solution impacts.
The goal of the research was two-fold. First, Adapex wanted to understand how many users of a given site were able to be identified using alternative identity solutions. Second, Adapex wanted to understand the impact of identifying a user through a privacy-compliant identity solution (versus the third party cookie) on CPMs.
Adapex tracked whether users that attended their publisher network websites were identifiable through 6 specific identity solutions. Then, through an A/B split test, Adapex assessed CPM changes when they sent identifying information on a user versus when they did not send identifying information to the bidder.
Results
The ability of identity solutions to identify users varied significantly based on the browser and identity solution. Coverage for the six identity solutions ranged between 15%-40% on cookieless browsers, and between 2%-27% on Chrome, which still utilizes the third party cookie.
An increase in CPMs were consistent on cookieless browsers over the research period for users that were identified by one of the six alternative identity solutions that Adapex tested. This is in contrast to Chrome, which still utilizes the third party cookie for tracking but is set to deprecate the cookie next year.
Publisher Impact
Since the ability to identify a user varies based on identity solution and browser, diversifying identity solutions is important to maximizing CPMs, particularly as the advertising community adopts and agrees on the best solutions for alternative identifiers.
While CPM lifts were small on the cookieless browsers, ranging between .06% to 2.08% for single identity solutions, the lifts were consistent across the dataset and represent material impacts to revenue opportunities. When considered in aggregate, the CPM lifts represent between 2-10% CPM increases, since there are 12 total identity solutions in the Adapex network, increasing the lift with each deployed identity solution.
To put the numbers in perspective, the CPM lifts for a publisher with 1 million bids per month and an average bid of $.60 could represent between $12,000 to $60,000 per month in revenue gains across the 12 identity solutions.
Looking Ahead
With the impending deprecation of the third party cookie on the horizon, more research is needed to understand how this will exacerbate the trends already seen with alternate identifiers. Adapex predicts that more coverage is likely, meaning that as these identity solutions advance, more users will be able to be identified and targeted through privacy-compliant means.
