IP addresses may not be the post-cookie data solution adtech wanted

Beep. Beep. Beeeeeep. That’s the sound of the IP address as an identifier on life support.

In mid-October, Google announced that it planned to begin experimenting with a feature that cloaks users’ IP addresses within its Chrome browser, following in the footsteps of Apple, which in 2021 began hiding user IP addresses in Safari and Mail by default.

The feature is called IP Protection (formerly Gnatcatcher, which sounds cooler, tbh), and it will limit IP tracking by third parties. IP addresses, a unique series of digits that identify a particular device online, can, over time, create a “persistent user profile and track a user’s activity across the web, which represents a threat to their privacy,” Google engineers previously explained in a note posted to GitHub.

The tech will be opt-in for US users to start, will roll out in phases, and will be available as a core feature within Chrome. Google spokesperson Scott Westover confirmed the company’s intent to experiment but told Marketing Brew that the company didn’t have any more details to share.

If the proposal is adopted, it would mean that two of the largest web browsers will be limiting a signal that’s frequently been used by adtech companies to target advertisements, cap ad frequency, and even detect ad fraud. Chrome is the most popular web browser in the US, with a 46% market share, while Apple’s Safari owns 43% of the market, according to Similarweb.

Since IP Protection will only block third-party access to start, publishers will still have access to users’ IP addresses, and will still be able to use that data to understand their readers and viewers. However, their programmatic partners could lose that access, depending on how Google rolls out the feature, which could be “extremely disruptive” for the adtech companies that create identifiers or target households based on IP addresses, Mike O’Sullivan, the founder of Sincera, said.

“This will completely blow [that strategy] out of the water,” he said.

The crackdown on IP address tracking also comes ahead of Google’s plan to kill off third-party cookies in the second half of next year. As it stands today, IP addresses are less useful than third-party cookies, but in a world without cookies, some in the industry view them as the next best thing. “If cookies go away, more and more programmatic advertising companies will start relying on IP addresses more heavily,” Paul Bannister, the chief strategy officer at the publishing tech company Raptive, told Marketing Brew.

If they’re both gone, “you’re basically going to have to replumb all of programmatic overnight,” Andrew Casale, president and CEO of the SSP Index Exchange, said. “It’s a gargantuan task, [and] it’s going to amount to a significant amount of work.”

Beyond retooling programmatic exchanges, less data could mean less investment in the space, which could spell more trouble for the industry.

“When addressability diminishes, when signal diminishes, less advertisers bid on media,” Casale explained. “When less advertisers bid, prices drop.”

Not that there’s a need for alarm. Those potential price drops didn’t materialize after Safari began hiding users’ IP addresses, Bannister said, and in fact, the change had “no material impact on monetization.”

What is clear, though, is that Google and Apple’s moves could mean that the IP address is not the viable post-cookie alternative some thought it might be.

“It’s all like a cat-and-mouse game, and they’re trying to shut as many of the mouse holes as they can before the mice get out,” Bannister said.

Correction 11/9/2023: This story has been corrected to reflect that Paul Bannister works at Raptive.