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The way the cookies crumble: The Trade Desk seeks a better way on internet privacy

By   /   Friday, October 2nd, 2020  /   No Comments

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The Trade Desk is aiming to change the way advertisers reach consumers by reshaping their relationship with the internet.

Called Unified ID, the new system would offer more privacy and control for users compared to the current system of sprawling “spiderwebs” of cookies that follow them from site to site.

“That’s putting the user in control beyond just saying ‘accept all cookies,’ and making it understandable,” said Gruia Pitigoi-Aron, senior vice president of product for The Trade Desk, which is based in Ventura. “It’s a net better iteration on the technology.”

Using hashed and encrypted identifiers, the new user flow would allow people to sign in to websites and browsers using an email address, much like current Facebook and Google sign-ins. That places layers between advertisers and individuals, tracking interests and behavior rather than personally identifying information.

It also aims to do “a much better job in explaining the quid pro quo of the internet,” Pitigoi-Aron said. While the internet gives users unprecedented access to content and information, that comes at a price: viewing digital ads.

“I don’t think that quid pro quo ever became clear or ingrained or a normal part of using the internet,” said Brian Schwartz, managing director and senior analyst for Oppenheimer and Co. “The byproduct is you basically got this spiderweb of cookies all over the internet, and that has led to a tremendous amount of complexity.”

Targeted ads can make that experience better for consumers and reduce the overall number of ads they see, Trade Desk CEO Jeff Green has said on earnings calls with investors.

But while third-party cookies that track users from site to site have led to very accurate, customized profiles, they often pick up sensitive information like medical conditions, financial status or political preference, said Bruce Edward DeBruhl, an associate professor of computer science and software engineering at Cal Poly, San Luis Obispo. They can also funnel users toward ads for larger online retailers, siphoning traffic away from small businesses.

A new system would need granular consumer controls and an easy opt-out function for consumers, Green said in August. He also highlighted a simplified consent framework for publishers and a single sign-on so users don’t have to provide consent at each new website.

“As more advertisers embrace datadriven advertising, especially with the (connected TV) surge, they want to ensure that the market is competitive and that they can compare one media property to another,” he said. “That kind of measurement and comparability is key, and it’s not possible within walled gardens,” like Facebook and Google.

The Trade Desk’s programmatic advertising technology connects websites, and other online publishers that have available ad space, with advertisers looking to reach specific viewers. The company reported $139 million in quarterly revenues in August, generating a $25 million profit. The share price has doubled since the start of the year, closing at $518 on Sept. 30.

While Gruia Pitigoi-Aron said the technology is relatively simple to create, following an outline by the nonprofit IAB Tech Lab, it requires mass adoption by publishers and advertisers.

“We do not need to go get billions of consumers to sign up for something in order for us to succeed on this,” Green said on the earnings call. “All we need to do is get a few of the most forward thinking publishers and (supply-side platforms) and exchanges to understand and adopt and then it will be successful because we’ve already shared this with one of the biggest advertisers in the world.”

While The Trade Desk is providing the engineering power behind the effort, the software would be open-source and governed by a coalition of industry partners that can audit companies and revoke access in the event the data is mishandled, Pitigoi-Aron said. Just because it doesn’t generate revenue directly doesn’t mean it won’t have a return on investment, Schwartz said. With Unified ID, the company is angling to become the industry standard.

“The assumption is, who is going to know the most about the tech—how it operates, how to develop it in the future, how to get the best analysis out of it,” he said. “Who’s going to have the best ecosystem of partners that are contributing? It’s going to be the company that’s the developer of the system.”

A proof of concept version is expected to be tested with a publishing partner within a month, with a larger launch planned for early 2021. The rollout comes against a backdrop of increased demand for privacy and control, with Apple removing third-party cookies from its phones and Safari browser and Google announcing in August 2019 that it planned to phase out third-party cookies by early 2022 and replace them with “trust tokens.”

Regulations like the General Data Protection Regulation in Europe and the California Consumer Privacy Act have also provided legal protections for users and put pressure on tech giants to come up with ways to manage the data they collect. Unified ID would be “regulationproof for the future,” Pitigoi-Aron said, “because it is a place where we explain really clearly what’s happening.”

He said the privacy concerns are an existential issue for the advertising industry. “At the most macro of levels, the direction that things are going, if independents don’t step in, it’s essentially an ecosystem that’s run by Google and Facebook,” Pitigoi-Aron said. “In that kind of world, we actually see smaller publishers having a really hard time surviving. … We believe a free internet is powered by effective advertising and we have to help maintain that.”

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