The Death of the 3rd Party Cookie: What Advertisers Need to Know

By Jerelle Gainey in Industry News on November 21st, 2013

There’s been a lot of discussion in the media lately about the death of 3rd party cookies and the plans of some companies to replace them with their own tracking technology. This is indeed a time of great change in the digital advertising industry. Consumer sentiment seems to be trending in the direction of ‘greater privacy’, new technology is making it easier for users to block 3rd party cookies, legislative initiatives (especially in the EU) are placing more restrictions on 3rd party cookies and browser makers are enabling more ‘privacy’ features by default. It’s a work in progress, but we are indeed in the waning days of the 3rd party cookie. But before we discuss the ‘death of the cookie’, let’s quickly review the role of the cookie in today’s advertising environment.

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Advantages of 3rd Party Cookies Essentially all aspects of online advertising are enabled by cookies and the data they’re capable of generating. Cookies are tiny bits of code that websites and ads drop onto your computer that allow advertisers to measure your surfing behavior and activities. Cookies enable many of the conveniences web surfers are accustomed to, such as helping sites know whether you’re logged in, saving your favorite website “themes” and remembering that you like the “safe search” option enabled in Google. They also allow advertisers to target you with relevant ads based on the sites you’ve visited or actions you’ve taken on websites. Recent Controversy Surrounding 3rd Party Cookies However, 3rd party cookies have been under fire in recent years because opponents say that they can be used to reduce your privacy on the internet (even though the data stored by cookies is supposed to be anonymous). This has led to efforts like DNT (Do Not Track), cookie notices on websites, the pursuit of legislation to limit the use of cookies and a regulatory environment that is generally focused on increasing cookie restrictions. The entire business models of some of the biggest players on the web such as Google and Facebook rely heavily on cookies to track user activities and target ads. Therefore, the death of the cookie could be a very unfortunate event for the health of their businesses.

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Browsers Are Lining Up to Enhance Online ‘Privacy’ To exacerbate this “death” even further, recent iterations of browsers often enable cookie blocking technologies by default. Microsoft caused a huge stir when it revealed that DNT would be enabled by default in IE10. Firefox has announced that it is considering blocking 3rd party cookies by default in an upcoming version of the popular browser. Safari, the default browser in iOS and OS X (Apple’s Operating Systems), already blocks 3rd party cookies by default. Of the major browsers, Google’s Chrome is the last man standing in full support of all cookies by default (but like all other browsers allows users to disable this behavior). Are Microsoft and Google Developing their Own Cookie? While the cookie’s days (or rather years, as this ‘death’ will occur slowly over time) may be numbered in the single digits, the advertising industry will continue to flourish. Microsoft, Apple, Google, Amazon, Facebook and many others are all independently working on or already have in place technology capable of replacing the 3rd party cookie with proprietary ID systems, which we’ll generically refer to as Tracking IDs. Google, for instance, is working on a system called AdID that aims to replace cookies and would be positioned as a more private alternative to cookies. Apple uses a system called IFA (identifier for advertisers) to enable advertisers to target users as an alternative to 3rd party cookies. Microsoft is developing proprietary technology that enables the tracking of users across desktops, tablets, smartphones, Xbox and various Microsoft services. Facebook can leverage proprietary identifiers to track users across any device capable of accessing Facebook (so basically everywhere). Yahoo and Amazon are also believed to be working on similar systems. In addition to cross channel measurement, many of these platforms are taking measurement a step further by partnering with data providers such as Datalogix to enable offline tracking. In a post-cookie world, not only will advertisers continue to thrive, capabilities will actually be augmented creating more seamless multi-channel visibility and measurement capabilities. Where Do We Go From Here? Okay, now a bit of speculation. As the death of the 3rd party cookie and the rise of proprietary tracking systems are in their early stages, we can only speculate on the long term impact on the advertising industry. We believe it’s safe to presume the owners of the technology (Microsoft, Google, Facebook, etc.) will definitely become much more powerful forces in the online advertising space (even more so than they are today), as they will be the owners of brands’ digital footprint, with unique access to multi-device engagement points. They will probably implement mechanisms that allow (or force) users to opt into these tracking systems in order to use their services, which will be outlined in the terms of service we often blindly accept. As a matter of fact, this is already happening. It is also safe to presume that they will vigilantly guard the privacy of these users since their reputations depend on it, thereby enhancing privacy, which should satisfy the ‘privacy’ advocates. It is likely that rather than locking out ad networks and advertisers from being able to track users, they will likely grant access to the tracking IDs the tracking IDs via partnerships or a new breed of data exchange. If this happens, rather than moving towards a world of less online visibility, we’ll move toward a world of more comprehensive visibility, albeit via the proprietary tracking IDs. We are indeed in the midst of a time of great change in digital tracking and we’ll be following developments and technologies closely to help guide our clients through this digital measurement evolution. At BKV, we’ve focused on developing highly accurate and effective measurement and tracking systems which are further enhanced by our Analytics and Data Services teams. As the industry evolves, so will our tracking technologies. We’ll continue leveraging our state-of-the-art platforms and expertise in advertising technology to guide our clients through this transition, grow their revenue and continually enhance their media performance.