Bye bye cookies

Cookies have been demonized till the point that now they seem condemned to extinction. Let’s try to understand how we have arrived to this point and what’s the future of internet advertising without cookies.

What’s a cookie and what are the benefits?

It’s a small piece of data sent from a website and stored in a user’s web browser. Cookies were designed to remember useful information of the user activities on a given website (e.g. remember preferred languages, continue to be logged in, etc…). These are called “first-party cookies”, because they come from the domain you’re visiting.

On the other hand, we have “third-party cookies”. These are the cookies installed by other domains and commonly used to compile long-term records of individuals’ browsing histories. These are the cookies used to show more relevant ads inferring user interests or for retargeting purposes.

Privacy concerns and progressive limitations

The ability to collect browsing histories (although it’s an anonymous tracking) has arisen potential privacy concerns. Legislators took action to regulate cookies and let the user define his choice. The new regulation means that cookies can only be placed on devices where the user or subscriber has given their express consent (Instead of letting them opt-out). This means that now websites are obliged to ask for the users permission to use cookies.

On the other hand, browsers have started to include DNT (Do not track), a signal telling the websites that the user doesn’t want to be tracked. It first started as a preference, but Microsoft Internet Explorer decided to activate it by default. Now 30% of internet users are signalling DNT. But advertisers are not paying too much attention to those signals…

But Mozilla, hit back again, announcing it will block third-party cookies on Firefox. Although it’s not still implemented, this will led to the inhability to track users through cookies as it has been done till today.

What will be the direct effects of these measures?

Blocking cookies will affect specially small websites, because small sites with niche audiences cannot afford to hire a staff to sell their advertising. Those sites rely on adnetworks, they aggregate the advertising inventory of many sites and then sell it to advertisers, relying on cookies for segmentation purposes.

This is a disruptive change that will affect how it internet advertisement works today.

How will the ecosystem will adapt to this new situation?

The big tech giants (Google, Facebook, Microsoft, Apple, Amazon…) are already developing their own tracking technology to replace cookies. Those companies are working on creating Ad Ids, that will populate through network premises thanks to their database of registered users. Consumers will be prompted to accept this ID with the user agreement or terms of service.

What are the advantages of these new tracking systems?

The big advantage is that these new tracking systems will be cross-device. What’s already possible on desktop web browsers with third-party cookies will be extended to new devices like smartphones and connected TVs. These will led to work on a user approach, insted of a media-approach. For example, we could show a video on desktop for a given user, and then show targeted banners to the users who saw the video, when they are on the move with their mobile devices.

What are the big concerns of these new tracking systems?

Cookies are a technology that isn’t owned by one company, it’s a standard that allowed a huge third-party ad ecosystem to flourish. Replacing it with propietary technologies would consolidate power of Google, Facebook, Microsoft and others with large opt-in audiences. The consequences could be many, the more evident, the restriction on the use of their technology, that would block the access to this business to other specialised players (Adnetworks).