There’s no shortage of data, insights, and outright speculation circulating in our industry right now as it relates to the future of identity. Much of it looks indefinitely down the road, to a forthcoming privacy-first future built on a lot of assumptions. But what about the next 12 months? What do we know is headed our way, and how can advertisers and publishers prepare?

In the short term, identity is still everything, given that identifiers such as third-party cookies and Android IDs are still in use, along with fingerprinting in some environments. At the same time, over the coming year, identity discussions will take center stage in global advertising as platforms and agencies create a growing sense of urgency. Here’s where the discussions and immediate activity will focus.

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While choice is certainly good, it breeds complexity, which makes it difficult for marketing organizations to quickly and efficiently find the tools they need.

The advertiser’s test-and-adopt imperative

Innovative brands and publishers will test and adopt a growing number of privacy-first solutions available in the market. Contextual advertising, already widely available on the web, will expand in CTV, in-image, and mobile advertising. As a result, I predict contextual to become one of the broadest privacy-centric approaches in the next 12 months for advertisers.

Although a challenging macroeconomic environment may make it more difficult for advertisers to carve out budgets to test alternative identifiers, I expect buying platforms to continue investing in testing cohort-based approaches, including those from larger players such as Google and proprietary tools such as cohort-based contextual solutions. As testing scales up, advertiser collaboration will also increase to test the efficiency of different approaches.

Agencies will also continue investing in testing alternative identifiers, educating brand clients, and encouraging them to prepare. Unfortunately, many advertisers, especially small and medium-sized brands, will continue operating in a business-as-usual fashion over the next 12 months - and they’ll feel the pain of that decision over the long haul.

Advertisers should carve out a budget for testing alternative identifiers with agencies, tech and platform partners, and publishers. The scale of the alternative identifiers will grow over time, but in order for platforms and vendors to fine-tune them, advertisers need to collaborate.

In the web environment, there are already alternative identifiers available that can unlock non-addressable inventory in Safari and Firefox, which have less competition and relatively lower cost compared to addressable inventory. Using alternative solutions to create audiences may reveal new insights for marketers that have been targeting the same segments for years.

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The publisher’s pivots

On the sell side, publishers will become much more aware of the value of their first-party data. Publishers will expand their first-party data collection efforts by interacting more closely with their audiences. As a result, we will see greater penetration of first-party data technology, such as Amazon’s recently launched AWS Clean Rooms, a privacy-first environment where publishers, brands, and other partners can combine, match, and analyze their first-party data.

By the end of 2023, I expect roughly half of the technologies used in the digital advertising industry will be these types of privacy-first tools.

As advertisers experiment with more contextual approaches, publishers will also expand their use of contextual signals. If they aren’t already, many will begin using contextual information to improve the effectiveness of ads on their sites and segment their audiences.

Large tech platforms, such as Apple and Google, will introduce and test additional privacy-centric regulations and solutions in the next year, including new iterations for Safari's Intelligent Tracking Protection (ITP) and Google's Privacy Sandbox. Google’s Privacy Sandbox timeline includes pre-launch testing of multiple APIs in the first half of 2023 before general availability in Q3 2023. During testing, publishers will take a more active role in cookieless targeting and measurement discussions and help shape the future of advertising.

In the next 12 months, we’re going to see a lot of groundwork being laid for the future of advertising, and both advertisers and publishers need to lean into this process. Advertisers need to think deeply about how they can reach their target audiences in environments where there are no addressable audiences.

They should engage with publishers to build trust on the IAB Tech Lab’s Seller-Defined Audiences and help publishers define taxonomies. Advertisers should also engage with platforms to test alternative identifiers. They should investigate how to activate their CRM data into alternative identifiers in order to build a bridge between third-party cookies and alternative identifiers. Can it be done at scale? They need to find out—and now is the time.

How are you adapting to the current identity landscape? Need advice on the correct route forward? Join the conversation with a global network of CMOs and marketing leaders on the CMO Alliance Community Slack channel.