As the public grows increasingly concerned about data privacy, there’s demand from consumers and legislative bodies alike to protect private information and regulate how it can be utilized and monetized.
As a response to this privacy-minded climate, a number of things have happened. Europe’s GDPR was the first major legislation to attempt to regulate the use of data online. CCPA followed in California, adopting many of GDPR’s tenants and reinforcing its impacts in the United States.
Google announced the depreciation of the third-party cookie on Chrome. When they did, they rocked the foundation of the digital ad ecosystem and sent publishers and DSPs on a search for new data strategies and privacy-compliant traffic sources. (Use of the third-party cookie, which tracks user behavior across web properties and has until now served as a crucial digital ad targeting tool, is set to phase out on Chrome by 2024.)
But the problem is not as straightforward as it seems. Parallel to the demand for data privacy, consumers have grown accustomed to personalization that’s only possible through access and use of their data. Advertisers have also grown dependent on the ability to effectively target and convert consumers online with massive implications to a business’s bottom line.
So, the question of how to balance these seemingly disparate goals, privacy and personalization, became the challenge that defined digital advertising over the course of the last few years. Thankfully, by 2023 we’re gaining some ground.
Balancing Privacy and Personalization
To address this particular problem, the IAB Tech Lab created Project Rearc. In February of 2022, it announced a specification to help advertisers and publishers balance the ethical use of data with pinpoint ad targeting. That specification is called Seller-Defined Audiences, and it’s gaining attention for good reason.
Seller-defined audiences allow publishers to utilize first-party data and monetize against it responsibly, without reliance on the third-party cookie. They work by allowing publishers to define and track user attributes across their owned properties and file them into groups in an anonymized way.
Publishers stand to benefit from SDAs because they give them some control and monetization capability over their first-party data. Advertisers and DSPs stand to benefit from the rich data set that can be utilized in machine learning models to create more efficient and effective digital ads.
A New Frontier
It’s worth repeating that these seller-defined audiences are merely a new specification, which means that there are infinite variations on how these segments can come to fruition and be utilized. Innovation with SDAs is just beginning, and as with most paradigm-shifting innovations, early creators and adopters are poised to benefit.