Kicking Third-Party Cookies To The Curb: The Fallout For The Digital Ad Industry

Cookies

Image via Magnetic

More and more Web browsers are blocking the use of third-party cookies by default, a development which has sparked a fierce debate in the digital ad industry.

Firefox is the latest browser to make the announcement, forcing marketers, ad technology companies and ad agencies to discover another means for reaching consumers with targeted advertising.

This controversy began with Safari, but because Safari had a mere 5% market share, it didn’t ruffle many feathers. However, over time, other browsers have followed suit including Microsoft with “Do Not Track,” and now, Firefox.

Even more troubling is that on mobile – the fastest growing Internet access method — iOS/Safari has over 60% market share, and that number is just too high to ignore. It’s time to face the facts: cookies are being kicked to the curb.

Cookies Aren’t Used For Insidious Purposes

Digital advertising is a $40 billion industry in the U.S. alone, and about half of that spend requires using third-party cookies to locate and target relevant consumers. Third-party cookies aren’t used for anything particularly insidious. They are needed to target reach and frequency for online campaigns, for example. Without cookies, ads can’t properly be tracked for frequency and could accidentally be served to the same user hundreds upon hundreds of times. Basic stuff…

Cookies are fantastic largely because users can dump them and start anew. They are also great for advertisers because they effectively track the performance and targeting, providing the basis for campaign analytics.

What Happens When The Cookie Crumbles?

So what is going to happen when cookies go away? Do you remember the maxim, “There’s no such thing as a free lunch“? There is a tacit agreement between consumers and publishers: the Internet is free but you’ve got to watch our ads (or pay for our content).

As you may imagine, no advertiser wants to deliver you ads you don’t care about, so understanding what you are interested in is the tradeoff. And, with $40 billion dollars in spend at stake, and a compound growth rate that is the envy of the rest of the economy, the ability to target and measure digital ads simply isn’t going to go away.

According to a statement from Randall Rothenberg, president and CEO of the Interactive Advertising Bureau, “Without third-party cookies, they (users) will not be able to participate in the existing industry system for privacy protection.”

The truth is that targeted advertising is too large of a business to be shut down because browsers ban third-party cookies. The end result will just put advertisers and the digital industry in a position to figure out other ways to reach consumers with relevant ad messages. In theory, if all third-party cookies were blocked, a huge portion of this industry would disappear overnight. But, that won’t happen.

Consumers Will Have Less Control With Cookie Alternatives

For a glimpse of the future, let’s look at mobile. Who was the first company to stop allowing third-party cookies? Apple, which owns Safari. Apple also blocked the Unique Identifier that enabled advertisers, vendors and others to identify mobile devices. What did Apple do next? It released its own proprietary version of the cookie: The Apple ID for Advertisers, which is persistent (unlike cookies).

As traffic continues to move away from the traditional desktop and laptops and onto tablets and other mobile devices, the industry will need to devise various ways to identify each of these devices to anonymously target relevant users. And, whatever this technology is, it will end up being adopted on “desktops” and all other devices that access the Internet.

However, there is one big difference: it will be more difficult for consumers to control. Each company will use their own method of identifying and targeting consumers, and those consumers will no longer be able to easily erase these identifiers like they can with cookies.

Achieving The Opposite Of What They Intend

While companies like Mozilla, Microsoft and Apple may think they have the user’s interest in mind when deciding to not accept third-party cookies by default, they are actually doing the opposite. A default setting says nothing about what consumers really want.

The growth of mobile computing will provide the publicity cover. With each browser setting different standards and approaches, combined with the growth of tablet and other smartphone usage, users will find themselves moving from a simple life where they knew what was going on and had control  in their hands, to having their control fractured into a myriad of inconsistent choices.

Opinions expressed in the article are those of the guest author and not necessarily Marketing Land.

Related Topics: Channel: Display Advertising | Display Advertising | Display Advertising Column | Retargeting & Remarketing

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About The Author: is chief executive officer at search retargeting leader Magnetic charged with driving overall company expansion and building out Magnetic’s search retargeting infrastructure.



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  • Pat Grady

    “The truth is that targeted advertising is too large of a business to be shut down because browsers ban third-party cookies.” — All targeted advertising won’t be shut down. Can you estimate what % would?

    “In theory, if all third-party cookies were blocked, a huge portion of this industry would disappear overnight.” — I know an accurate number isn’t possible, it’s not that black and white from a technology aspect, but can you be more specific than “huge”?

  • http://www.facebook.com/tim.mayer Tim Mayer

    Pat
    Based on initial analysis for standard campaigns, the Firefox changes will add an additional 25% volatility to measurement ad targeting creating an overall impact of 48%. We published this number and other impact numbers on this change in imedia recently.
    http://blogs.imediaconnection.com/blog/2013/04/10/firefox-changes-cookie-policy-version-22-not-accepting-third-party-cookies/

    Tim

  • http://twitter.com/websta_ Websta.co

    James, really good article. Apple has killed mobile flash and now cookies. Google’s inroads with Chrome for mobile will also have a big factor I believe.

  • http://twitter.com/JamesANGreen James Green

    Tim (above) gives a good estimate of an impact of about 48%.

  • http://twitter.com/JamesANGreen James Green

    Thank you. :-)

  • http://twitter.com/JamesANGreen James Green

    Great piece in imedia…

  • bdot

    With adblockers and other programs where you can change the source code before seeing the webpage, I didn’t know people still saw ads. Well other than in youtube videos. Even then, people don’t actually see them as they immediately close them.

  • Pat Grady

    Numbers appear to apply to % of 3rd party types that would be affected.

  • http://www.facebook.com/tim.mayer Tim Mayer

    Pat

    Exactly first party cookies are unaffected by this change and have improved persistency over 3rd party cookies in general

  • http://www.facebook.com/tim.mayer Tim Mayer

    Thanks James!

  • Pat Grady

    Right, that’s my point. To say “targeted advertising would be shutdown” is to imply these stats apply to both 1st and 3rd party cookies, and they don’t.

  • http://twitter.com/JamesANGreen James Green

    First up let’s agree that we don’t know exactly how much blocking third party cookies will effect the industry. However, blocking third party cookies will radically effect first party retargeting or “site retargeting” – even though this is based on first party data (ie first party cookies) because access to the biggest and most liquid media exchanges is based on the cookie that the exchange sets and is thus based on third party cookies. So it has very very large implications.

    I totally agree that alternatives will be found, but every single display ad campaign will be effected because you’ll no longer be able to measure reach and frequency and de-duplcate reach across a campaign. All of that requires third party cookies (e.g. DoubleClick).

  • http://www.facebook.com/theryanmiller Ryan Miller

    These changes also seem like they could shut down entire 3rd party campaign tracking and attribution companies overnight. Or at least trigger an arms race where these companies resort to using tracking methods that most (IAB) would rather not see used, out of desperation.

 

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