Targeting users based on behavioral or demographic data requires a persistent identifier to tie an individual to a data set. These identifiers include device IDs (like Apple's IDFA or Google's AAID), browser cookies, and publisher-provided IDs (PPID) tied to user logins.
These identifiers typically have a one-to-one relationship with an individual. The IDFA on your iPhone will never match anybody else, a cookie dropped on your browser uniquely identifies you, and publishers tie a PPID directly to your login. This direct relationship between identifier and individual powers the precise targeting and attribution methods used by most ad tech platforms.
So what happens when Chrome finally kills third-party cookies? How could anyone target using audience data on iOS when most users opt-out of tracking in Apple's new AppTrackingTransparency framework?
PPIDs offer some semblance of hope but require a user to login. Additionally, they can only power audience data targeting within a first-party context since the identifier won't persist across apps and websites not owned by the same entity.
Universal identifier solutions like The Trade Desk's Unified ID 2.0 and LiveRamp's ATS aim to solve this issue but require users to share a piece of personally identifiable information like an email address or phone number. These solutions require action from the user, which is an obvious disadvantage from the passive nature of cookies or device identifiers, which are readily available persistent identifiers that require no action from a user.
The number of trackable users will certainly decrease once browsers and device manufacturers restrict access to cookies or device IDs. Ad platforms are scrambling for solutions, but there is an existing passive identifier available on all platforms and offers household level precision: IP Address.
A user's IP address may soon be the only reliable passive persistent identifier available, passive meaning it does not require any action from a user like logging in. It is available via an HTTP request on desktop, mobile and connected TV.
Many data platforms have used IP addresses as the identifier of choice for audience targeting on connected TV for years. IP Address even works as a usable identifier across all TV manufacturers, even those without a device ID.
What is an IP address?
An IP address is a unique numerical string that identifies networked hardware using the Internet protocol. Internet Service Providers (ISP) will assign an IP address to your router that most likely changes periodically.
Ad platforms can derive IP address from an ad request in one of three ways:
1. Via the HTTP ad request
Servers can view and log an IP address of a client when they make an HTTP request to request content.
2. As a value in an OpenRTB request
There is a specific field available in the device object of OpenRTB to communicate the IP address of a device. This field exists since a server is typically making the ORTB request on behalf of a client, allowing the server to pass along the IP address.
3. As a query string parameter in a VAST request
If a publisher requests a video ad via VAST, they can add a query string parameter to a VAST request to communicate the user's IP address. To do this, publishers add a parameter like "ip" to the request URL like so:
How is IP used for audience data targeting?
Data Management Platforms (DMPs) use IP addresses in the same way as any other identifier like a device IFA. Publishers or advertisers feed IP addresses collected on their websites and apps via pixels, APIs, or file uploads to the DMP.
Publishers or advertisers know a user's IP address the same way an ad platform would in point 1 above — they can read it from the HTTP request a user makes to the server hosting their website or app.
DMP customers then organize IP addresses into "audience segments" based on behavior or demographics. The DMP can then push these audience segments to any ad platform and activate them for targeting. If a publisher or advertiser targets an audience segment on a campaign, then every IP address within that segment is eligible to be served that campaign.
Are there drawbacks to IP address audience data targeting?
There are multiple downsides to using an IP address as a persistent identifier.
IP privacy concerns
Despite the negativity surrounding cookies and device advertising identifiers receive, they offer one key privacy advantage to IP addresses: users can reset them. A user can delete their cookies or reset the Apple IDFA / Google AAID. Resetting a device identifier or deleting cookies disconnects the user from the profiles built by ad platforms.
Users cannot easily reset their IP addresses. Typically a user will have to wait until an ISP rotates the IP address for them.
The European Union also treats IP addresses as personally identifiable information, so it is subject to GDPR and CCPA, making its usage for audience data targeting impossible for some in Europe and California.
Rotating IP addresses
Speaking of rotating IP addresses, this is also another drawback of using IP as a user identifier. Consumers typically receive a dynamic IP address from an ISP, meaning it can change whenever. So when an ISP rotates an IP address, ad platforms lose sight of the original household profile.
Employing strict TTLs (time to live) on an IP address profile can combat rotating IPs. A TTL is a policy put in place on a platform to expire a piece of data after a set period.
If a DMP or ad platform has a 30 day TTL on profiles, they will expire that record after 30 days. An ad platform can "refresh" a user profile and start the 30-day timer if they see that same IP again.
IP address targets the household and not the individual
An IP address does not offer the same device-level precision as a cookie or device identifier since the IP address received in an ad request is the router's and not the device itself. When an ad platform targets an IP address, they target a household's router, and any device connecting to that router will be eligible to view the ad.
So when dad browses for a new set of power tools on his iPad, his daughter may see ads for Black & Decker on her connected TV.
Is IP Address a workable replacement for cookies or device IDs?
An IP address can serve as a replacement identifier to facilitate data targeting when access to third-party cookies and device IDs becomes more restricted.
If a campaign only requires household level precision and platforms maintain a strict TTL, then IP addresses could replace other identifiers.
IP addresses can offer a solution that works on all devices when browsers and device makers deprecate traditional advertising identifiers.
However, using an IP address as the persistent identifier of choice hamstrings a user's ability to be "forgotten." Additionally, privacy regulations like GDPR or CCPA may restrict its usage. With users demanding more privacy and control, utilizing IP addresses for audience data targeting could be a step in the wrong direction.