Third-party cookies are being deprecated soon, and the digital advertising industry is scrambling to meet user targeting needs with a mix of cookieless solutions.

These cookies have numerous privacy and security concerns, and have led to companies restricting them (Safari, Firefox, Brave) and broad-reaching regulation (CCPA, GDPR). In response, the industry is doing a mix of cohort-based targeting, exploring alternative IDs, and making first-party-data transfer easier.

We don’t believe these alternatives meet brands, publishers, or users’ needs.

Cohort-based targeting, like Google Privacy Sandbox and Facebook’s Interoperable Private Advertising, is less accurate than targeting individual users. This reduced advertising efficiency leads to brands paying more and publishers making less.

Alternative IDs like Prebid’s SharedID or Unified ID 2.0 have not reached feasible scale because users don’t want to share a personal identifier, like their email or phone number, and have no incentive to do so.

First-party data solutions, like LiveRamp’s ATS, allows a website to contribute user data anonymously with the rest of the industry. This has similar privacy concerns to third party cookies and are at risk of regulation.

Brands and publishers need individual targeting at scale, but users don’t want to share personal data.

Replace third party cookies with identifiers that don’t use personal information.

Blockchain wallet addresses are pseudonymous and do not contain personally-identifiable information. They are a permission-less and open standard

Use advanced cryptography to share insights without sharing user data.

Encryption methods like zk-SNARK/STARKs allow wallets to generate proofs of ad engagement, browsing activity, and a specific cohort, while not sharing the underlying data. A blockchain allows for these proofs to be verifiably true.

Address the network cold start problem by providing tokens incentives to early users.

Token emissions can incentivize new participants from advertisers, publishers, and users to be early adopters and bootstrap the multi-sided liquidity needed for an advertising network to function.

I believe zero-knowledge proofs will reach internet-scale sooner than expected, and that blockchain tokens allow us to bootstrap enough users, brands, and advertisers to overcome the network cold-start problem.

Zero-knowledge proofs have been written off as a practical solution. First, they require significant computing resources to generate a proof. Recent developments reduce the computing resources to a fraction of what was previously needed, such that application-specific zk-rollups can handle 10,000 transactions per second. Second, larger companies want to avoid regulatory scrutiny around crypto like Operation Chokepoint 2.0. I believe broader acceptance to crypto will come, but only a startup with little to lose would take that gamble.

I’ve also seen how blockchain tokens uniquely allow upstarts to challenge incumbents. I saw first-hand how one of our competitors, Blur, unseated the dominant platform, OpenSea, by providing token incentives for users to use their platform. A similar playbook would allow us to onboard advertisers, publishers, and users onto our standard, even without a major tech company partner.

Twitter: @Patrick_Lung