The impending death of the cookie has been heralded for a while now.
The little engine that made targeted advertising possible. The bane of privacy advocates. Depending on who you ask, the cookie is being given as little as two and as many as five years to live.
So what will kill the cookie?
The popular narrative right now is that privacy concerns will kill the cookie. Privacy was one of the top issues at last month’s SXSW Interactive conference in Austin, for example. Ongoing news from the Snowden files, and ongoing allegations about NSA spying on U.S. citizens have kept privacy top of mind.
It’s a nice narrative. Power to the people! Down with the corporate overlords spying on me while I check basketball scores!
But there are a few big misconceptions with this narrative:
1. The “death of cookies” isn’t really only about the death of … some cookies. It’s third party cookies – the ones that don’t come from the publisher of the site you are browsing – that have the death sentence. These cookies track your behavior (anonymously) across the web. First party cookies, which come the site publisher, aren’t going anywhere. They’re helpful. They’re the good cookies. This can be confusing. It’s like trying to remember which is the “good” cholesterol and which is the “bad.” But confusing or not, they’re different.
2. It will be a slow death. The internet likes to get hyperbolic about “THE DEATH OF <insert thing here>!” But 85% of the top 1,000 web sites drop third party cookies, and these cookies are still critical for driving display advertising, which is still the biggest digital revenue source for most publishers. Programmatic advertising in its current form cannot exist without third party cookies, and as last week’s Ad Exchanger Programmatic/IO Conference in San Francisco (3/24) made clear, programmatic will continue to grow in the near future. Big advertisers are moving more budget into programmatic, and are committed enough to programmatic that they are hiring their own buyers and planners instead of outsourcing that task to agencies.
3. But the real story twist is that the death of the cookie WILL NOT be due to privacy. It will die because something better gets created. And “better” generally will be defined as “better for advertisers,” at least as long as they’re still the ones paying the freight for most digital publishing.
This isn’t an attempt to dismiss the privacy issues. After all, privacy is the stated reason Microsoft’s Explorer, Apple’s Safari, and Mozilla’s Firefox have all now disabled 3rd party cookies by default.
The cynic, however, might claim that the real reason these three browsers disabled 3rd Party cookies is less about privacy and more about competing with Google. Google’s Chrome is the number one browser. Google makes most of its money from advertising. Apple, Microsoft, and Mozilla don’t.
The plot thickens.
Disruption: creation, not legislation
Disruption is driven by the creation of something better. Not legislation, despite the good intentions of the Do Not Track Act.
There is a growing desire for something better, and a growing number of new disruptors working to build something better. Among the factors driving this:
1. The world is going mobile, and cookies don’t work on mobile. (Or, when they do work, don’t work nearly as well as they do on the desktop based open web.)
2. Cookies don’t track across multiple devices. Cookies were created when it was extremely rare to have more than one device. They are specific to browsers and devices. Advertisers want to track people, not devices, and you can’t do that in the system driven by third party cookies when multiple devices are the norm.
3. Registration-based publishers (who don’t need third party cookies to track, and whose registrations track across devices) are starting to show that ads on their platforms are more effective. (For example, Facebook ads.) The data is more reliable and more specific.
Mobile, multiple device use, and other, better forms of tracking are what will eventually kill the cookie.
That’s right. Better forms of tracking. Ones that include a lot more personal information – because you registered, and because that data will start including things like location.
That’s not exactly a move to greater privacy.
An uncertain future
Nobody knows where this all comes out. At the moment, the ad tech companies (the ones the rely on a cookie-based system) can hold their ground because, well, they have the most sophisticated tracking technology and the most efficient exchanges for buyers.
But most analysts believe that eventually this means the big digital publishers — and by big, meaning Google, Facebook, Yahoo and AOL, for example — will come out as the winners in this. They’ll be the ones with the best data, and good data is what drives the price of digital advertising.
Mid-sized and small publishers? Nobody knows. Very few of them have the mass or content diversity individually to generate enough audience data on their own for it to be useful for advertisers. Third party cookies allowed them to level the playing field to an extent, because, in essence, they resulted in a system where everybody shared data.
The new middle-men that have emerged over the last few years, the DSPs and SSPs and ad exchanges? They’ll likely have to pivot. Some will do it successfully, some won’t.
Advertisers will have to deal with a more confusing landscape for a while, but will ultimately benefit as better tools come online. They’re used to that pattern by now.
And users? We know even less at this point. A lot will depend on how judicious the big players are with our data, because those big players will be in the driver’s seat. For now.
More than one speaker at SXSW proposed that users should get to keep all of their data in a vault — and then sell it to ad platforms at their own discretion. That would certainly be a pro-user solution. The only problem is that nobody seems to be working on that yet.
Quick, some enterprising startup — get on that.