Who wins when Browsers block Third Party Cookies?
This blog post tries to look at a future online advertising world after browsers decide to block third party cookies by default. How would things be post an imminent nuclear first-strike against the online advertising industry?
The future of the Display eco-system relies heavily on the big three: Google, Yahoo and Facebook. For the original Display Lumascape Image, please go to: http://www.lumapartners.com/lumascapes/display-ad-tech-lumascape
Firefox announced in Feb 2013 to change its third party cookie default setting and it had the IAB General Counsel Mike Zaneis tweeting ‘This default setting would be a nuclear first strike against ad industry’. Why is there so much brouhaha about cookies? Tracking users relies on browser cookies . Without user tracking there can be no intelligent advertising and performance analytics would go for a toss. The caveat is there is a fear that intelligent advertising may become ‘intelligence’ and user online privacy might go for a toss.
We at Vizury believe in gearing up for industry disruptions and adapting timely course-corrections. We researched this topic in great detail for all possible alternatives / solutions to third party cookies.
Browser Fingerprinting / LSOs / work-arounds to stamp cookies such as URL based identification, sub-domain-based cookie stamping are all immediate alternatives. But none of them are fool-proof / provide sufficient user privacy so as to replace cookie based user-tracking. Since this is an industry-wide problem, some hacks in the code will not be a long-term solution. What is needed is a solution applicable across the industry.
The problem is accentuated by the fact that each web browser has a unique ‘default’ behavior pertaining to browser cookies. While Safari blocks ‘setting’ third party cookies by default (but allows third party cookies that already exist), Firefox does not (but contemplated going the Safari way last year), Chrome and IE accept all third party cookies by default.
The reasons for this are quite simple: A. Money B. User Experience (Privacy) C. A mix of both
The online ad industry has been one of the fastest growing industries in the world providing a whole lot of opportunities resulting in the creation of numerous small entrepreneurs operating in this medium. What started out as an ad network business has now grown into a behemoth spawning Ad Networks / DSPs / SSPs / Ad Exchanges / Retargeting Companies / Analytics Providers and so on. The Display Lumascape (http://www.lumapartners.com/lumascapes/display-ad-tech-lumascape/) clearly depicts the ever-burgeoning online advertising industry.
In the last few months, things have changed. While Safari users factored only to about 5% of all browsers in the PC world, with smartphones on the rise the balance has tilted and this is having dire implications on third-party cookie based advertising. In certain geographies, Safari+iOS comprises of about 50% of users compared to all other browsers. Hence, ad tech companies are increasingly bothered about retargeting users with third party cookies blocked.
Safari Default – Does it guarantee total privacy?
But is this a threat or an opportunity?
It is both. For all the website owners / premium publishers – it is a big opportunity to set up the next business eco-system. For all the third party networks / DSPs / SSPs / retargeting players, it is a big threat, as essentially, the problem is not with cookies, but with third party tracking.
Why is this a threat for third party networks?
Cookies have been the most efficient way to ID users thus far. With that out of the picture, customized ad serving / user segmentation and targeting / user tracking & reporting – all would fail – resulting in a big blow to the third party networks in particular, though not limited only to them.
Why is this an opportunity for website owners / premium publishers?
Two big players are definitely going to be more or less unaffected by the Safari default setting as of today: Facebook and Yahoo. Both of these use their own domains for stamping cookies that are used in Advertising (Yahoo made the transition last month). Google is slightly worse-off as it relies on DoubleClick domain cookies. But potentially, it can make the transition to track users based on google.com’s cookies through some technical changes. These three have very high user reach and so, would be able to track a lot of users. (Almost 90% of the searches in the world are on Google).
This means that with Safari’s Cookie Block Default Setting, these three have an opportunity to disrupt the entire display eco-system and emerge as the front-runners controlling most of the display buys and will involve crippling the entire relatively small entrepreneur space, crippling all DSPs, SSPs, retargeting players, behavioral targeting players, DMPs and hence, crippling all innovation.
There exists a better option in the RTB / programmatic buying world by creating a certified eco-system of third party players. This implies, at the very least, the top 3 Ad Exchanges opening up their own user identification service for other players to piggyback on. Google already sends its unique Google ID for the user in every bid request sent to the retargeting player. The retargeting player can carry on retargeting by identifying users through Google IDs and not its own cookies.
But is this as simple as it sounds? What are the complexities involved and how can Ad-Tech companies overcome them? All this and more in my next blog. Keep watching this space.