Online advertisers have been using third-party cookies to track users’ online activities for years. Cookies are small text files that can be stored on a user’s computer or mobile device when they visit websites, allowing the advertiser to collect information about what pages were visited, how long each page was viewed, which links in those webpages were clicked, etc., so it can target ads at them later. This is called “retargeting”. It allows an advertiser to serve up more relevant advertisements based on previous browsing history.
In addition, some companies use cookies to monitor whether you’ve seen their digital advertising before, as well as if you’re interested in buying something from them. These two types of cookie tracking allow businesses to show ads to people who may not otherwise see them. For example, say I’m looking for a new car; my browser might send a cookie with my name and email address back to the website where I saw the ad.
However, there are also privacy concerns around this practice: If someone has opted out of having his/her data collected by third parties, then he/she should expect no further contextual targeting via retargeted ads. And even though most browsers give you control over your own personal data, many sites still don’t respect these settings. So while we all know that cookies aren’t always bad, sometimes they can cause problems.
The FTC recently announced plans to regulate the digital advertising industry and Google and Apple have both agreed to self-regulate.
The Death of the Cookie
Cookie deprecation is one of the biggest changes coming to the internet. The EU General Data Protection Regulation requires organizations to obtain consent from individuals prior to collecting any personally identifiable information. In other words, if you want to keep your identity private, you must opt-out of being tracked through cookies.
This change could affect millions of Americans because nearly half of U.S. adults now block third party cookies. According to eMarketer, approximately 50 percent of American Internet users blocked third-party cookies. A study by Google in 2019 found that cookieless websites yielded an average of 52 percent less revenue for the publisher than traffic for which there was a cookie present. That stat was higher for news publications at 62%.
Despite this research, Google has announced that by 2023 it will stop advertisers using cookies to deliver personalized ads across its platforms. Instead, it says it will rely solely on behavioral signals such as location, time spent on site, age, gender, interests, and purchase behavior. Apple’s view on cookies is similar. Both companies claim that consumers prefer seeing fewer ads rather than more intrusive ones.
But despite the fact that cookies are dying off, they won’t disappear entirely. They’ll just become less important.
How Cookies Inform Targeted Advertising Today
Cookies are used to create targeted advertising. Target advertising means showing ads only to certain groups of people. For instance, if you search for “car” on Amazon, you will likely get ads for cars related to cars. However, if you searched for “cars” instead, you would probably receive different results.
A third party cookie is not tied directly to an individual person but it does contain some identifying information. A tracking pixel or beacon allows a website owner to collect information about visitors’ online activities in order to improve their services. These pixels may store non-personally identifiable information like IP addresses, browser types, referring URLs, timestamps, and mobile device IDs. The difference between first party data and third party data is that first party data belongs to the user. Third party data comes from outside sources and is often shared without permission. This type of data is considered sensitive because it reveals details about our lives. It includes everything from what websites we visited to how much money we spend.
Moreover, when you visit a website, the company knows exactly which pages you viewed and what links you clicked. That way, they can track your movements throughout the web. Some companies sell this kind of data to others so they can target advertisements at you based on your browsing history.
How can Users Manage Their Privacy Today?
What are consumer expectations for privacy? Consumers have been conditioned to expect that every click leaves a trail. But there are ways to limit the amount of personal information collected. You should know where these options exist:
1) Do Not Track : DNT lets you tell sites that you do not wish to be followed around the Web. When enabled, browsers send a signal saying “I don’t want my activity monitored.” Sites then respect this request. Unfortunately, many major sites still ignore this setting.
2) Opt Out : If you’re concerned with having your data sold, consider opting out of targeted marketing programs. Many ad networks offer tools to help you manage who sees your data. For example, Google offers Ad Settings Manager. Facebook also provides a tool called Ads Preferences Manager.
3) Use Incognito Mode : While most people use regular mode, incognito mode hides your tracks. In addition, it prevents any saved passwords from being used elsewhere. However, if you close all tabs while in incognito mode, you lose access to anything stored locally. Also, incognito mode doesn’t work well with password managers.
4) Delete Cookies : Deleting cookies isn’t always easy. Most browsers allow you to delete them individually or via a button located near the address bar.
5) Block Tracking Pixels : Blocking tracking pixels means that no one can see your behavior across different devices. Plus, it stops companies from collecting information about your visits.
Advertising Without Cookies
60% of US marketers believe they’ll need multiple identity solutions to survive in a post-cookie world (emarketer.com). Their top concerns are the amount of buy-side adoption, transparency and yield. It is important that marketers have a solution that will align with their current operations and tools.
There are some ways companies can still advertise online without cookies. One way is called “behavioral marketing.” It uses anonymous identifiers like IP addresses or mobile device IDs to track what websites visitors visit after clicking digital marketing. This allows marketers to target specific audiences based on demographics and behaviors. Types of alternative user-level identifiers include IP addresses, MAC address, device fingerprints, mobile network IDs, geo location, and others.
Another method is known as remarketing. Remarketing lets brands serve up relevant advertisements when customers return to their sites.
Plus, a few companies offer services where you pay them money in exchange for not tracking you at all. These include Ghostery and Disconnect.
Other publishers are looking at how their paywalls and subscription systems could help track “known users” and an anonymized version of their profile could be sent to an adserver to serve better tailored ads. Wallkit is one paywall provider that has spent time developing a spin off product to provide a known user offering. Their Reader.ID system is already being used to help pass cohort information to major adservers.
This has led to an increase in ad blockers. According to eMarketer, more than half of U.S. Internet users now block advertising using software such as uBlock Origin, NoScript, and Adblock Plus.
Alternatives to Third Party Cookies
What will replace cookies? As mentioned above, cookies are going away soon. That doesn’t mean that every website needs to start removing them immediately. Some sites may choose to continue serving cookies but use new technologies to do so. Here are three examples:
1) WebPagetest.org offers a tool that helps web developers test how well their pages load under various conditions. To do this, it loads each page with a cookie containing unique identifying numbers. Then, it measures performance metrics including loading speed, number of requests made, etc.
2) Facebook also recently introduced a feature called Custom Audiences. With this service, people who have opted into a list of email lists can be targeted with messages sent directly to their inboxes.
3) Google Analytics provides analytics tools that help businesses understand how visitors interact with their websites. But these tools don’t work unless there is a cookie present. So, Google created a version of itself that does nothing except record basic visitor data. When someone visits a website served by Google, the company sends out a request asking whether anyone wants to share their data. If no one answers, then Google records only basic info about the user.
Google has also announced FloC which is designed to make third party cookies obsolete. Instead, it would allow apps to access information from its servers directly. In other words, if your app wanted to know something about me, it could ask Google directly rather than having to rely on a 3rd party site.
Will Advertising Survive The Death Of The Cookie?
In many ways, we’re already living through the transition from traditional media to digital media. The same thing is happening right now with cookies. We’ve seen the rise of ad blockers over the past several years. And while most people aren’t willing to give up free content completely, they certainly want to see fewer annoying popups and other interruptions.
Publishers could embrace the idea of paying readers instead of relying on advertising dollars. There are lots of different models available today. For example, Patreon lets users set monthly contributions toward creators’ projects and Wallkit allows medium to large publishers to charge for access to content.
The key point here is that publishers shouldn’t feel obligated to choose just one funding source. Rather, they should focus on creating great journalism and entertainment. People will come back because they love reading/watching/listening to those things — and then they can build economic models around their engagement
The future of online advertising looks pretty bright. It just might not look like what you expect though!
