June 08, 2022

Tech Companies Are Taking Steps to Hide IP Addresses from Advertisers

Similar to the third-party cookie, the IP address has long been used for audience targeting. Now, its days as a marketing tool seem numbered.

Like the deserts of Tatooine, advertisers could see two sunsets for important identifiers used to target audiences. The first, and most obvious, is for third-party cookies, which Google says will totally die. Maybe.

The second is the humble IP address. Though not going anywhere in the near future, major companies like Google, Apple, and Amazon have all taken measured swings at masking IP addresses, the series of digits that identify a particular device, like a laptop or iPhone, on the internet. Historically, advertisers have used IP addresses for geo-targeting and capping frequency.

While there are many different third-party cookie replacements in the works, including The Trade Desk’s Unified ID 2.0 and Google’s Topics, “there is no straight-up replacement for the IP address,” Anudit Vikram, chief product officer at ad-tech firm MediaMath, told us.

Here’s what we know so far about its demise:

Apple: Last year, it announced two measures that cloak users’ IP addresses—one in Apple’s Mail app and another in what’s called iCloud Private Relay, which acts similarly to a virtual private network (VPN) and works on Safari. It’s a big deal, and it’s in line with Apple’s public stance on user privacy, detailed in a hilarious spot that was released last month. At its Worldwide Developer Conference this week, marketers expect Apple to further its crackdown on IP-address access.

Google: In January of 2021, it proposed something called Gnatcatcher (short for global network address translation combined…you get the idea), a combination of two other proposals that would hide a user’s IP addresses, in turn preventing identification.

Amazon: In September, Ad Age reported that Amazon had been “quietly taking a page from the Apple playbook” by masking IP addresses when sharing ad campaign data on Freevee and Twitch.

IP ≠ ID

“The major companies are taking the exact same approach and speed as they did with cookies…I actually think it’s gone under the radar a little bit because there’s been so much noise about cookies,” said Wayne Blodwell, founder and CEO of digital marketing consulting firm TPA Digital.

Asking audiences whether they want “more relevant ads” has become a watered-down industry talking point—and can often be used to wave off privacy concerns, for example—but considering IP addresses are often used for geo-targeting, Blodwell said they can help make local advertising more useful and accurate. “It’s really important to maintain that just for relevance and user experience.”

IP addresses have also been a tool for advertisers to reach audiences and retarget across multiple devices in a household, explained Rudy Grahn, attribution and measurement global strategy lead at Prohaska Consulting.

Pairing cookies with IP addresses can help advertisers get even more granular with targeting, he said. It’s far from perfect. Targeting a Starbucks store’s IP address, which is full of all types of different customers, might not be as precise as, say, an accounting firm or a household.

But that same data point could easily be tied to other points to figure out someone’s identity. And like the third-party cookie, it’s innocuous until it’s not—IP addresses are commonly used for device fingerprinting, which is when someone is able to identify an individual without their consent by piecing together small data points, like a user’s browser type and IP address, for tracking. So far, Apple “explicitly identifies fingerprinting as being prohibited in ATT policy,” but has stopped short of enforcement, according to Mobile Dev Memo.

Ultimately, there’s still time before IP address-based targeting becomes a thing of the past. In describing Gnatcatcher, Google was clear that advertisers wouldn’t see it broadly before 2023. So, like it did with third-party cookies, the company could kick the can down the road.

Copyright 2022 Morning Brew, Inc. All rights reserved. From https://www.marketingbrew.com. By Ryan Barwick.

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