Once a mainstay of online advertising, third-party tracking through cookies is under a full-blown attack.
Firefox now blocks third-party cookies by default; Microsoft is implementing Do Not Track by default in Internet Explorer 10; Safari has blocked third-party cookies for over a decade. And AdBlock has more than 10 million installs in Google Chrome alone.
All that is a simple response to user preferences. As consumers learn more about third-party tracking, they have become more uncomfortable with it. In 2008, 57% of consumers did not want to be targeted. By 2012, that number increased to 68%.
It’s easy to understand why audiences are, at best, ambivalent, if not openly hostile toward tracking. Many personalized experiences are just plain creepy. For example, one common use of third-party cookies is for retargeting campaigns, which, by serving ads based on previous website visits, makes it blatantly obvious that the customer is being tracked and watched.
It’s time for our industry to adopt new technologies that alleviate customer’s privacy concerns and also strengthen the online business model. In fact, one large publisher recently told me that they ripped all third-party pixels off their website. (A pixel must be present for a third party to drop a cookie on a user.) That bold move was driven by solid business concerns.
- Publishers do not have good documentation on what third parties are doing with the data collected.
- Publishers have enforceable guarantees that their own terms and conditions are being adhered to by third parties.
- Publishers see little business value from the pixels that they do host.
In the case of the publisher who removed them, third-party pixels were available on more than 70% of their inventory, but they only represented 11% of revenue.
Because third parties can’t drive significant revenue, publishers have turned to first-party cookies to provide data that the site itself can control. Those first-party cookies track site visits and sessions in an anonymous way, and the goal is to understand the user based on their anonymous behavior on the site.
First-party data has clear rights and enforceable controls, which give publishers competitive differentiation in the marketplace. Because the only way to access the data is to work with the publisher, they can charge premium rates.
But anonymous first-party data only solves half the problem. Publishers control the use of the data, but they have done nothing to improve the quality. That’s why the future of online advertising demands that websites create compelling experiences to drive user opt-in.
The Value of Driving Users to Create Profiles
Getting users to opt-in to sharing their identity with you and creating a site profile are the keys to unlocking lasting value from your audience. A user’s profile, voluntarily shared, and improved upon over time, is an annuity for the business —a renewable asset that continues to gain value as the relationship between the user and the brand deepens. That’s a stark contrast to cookies, which have a short shelf life and no lasting value for the website or the consumer.
Research has proven that user profile data is almost three times more accurate than behavioral targeting at getting the right message to the right user. Appallingly, only 35% of behavioral targeted ads reach their intended audience. But, because it’s nearly impossible to track the data through the multiple layers of targeting and segmentation, the industry’s targeting capabilities are rarely rigorously examined.
Opt-in data also avoids all the messy problems around trust and access to user data. Instead of the Association of National Advertisers and Digital Advertising Alliance fighting with technology companies, ignoring Do Not Track settings, and generally making it seem like advertisers are the “bad guy,” we must continue to stay focused on identifying the unique offerings for which users are willing to opt-in.
Banner advertising on websites was invented in 1993, and the industry has grown dramatically through anonymous third-party tracking. But, the next phase of growth will be driven by website owners controlling the value of their own audiences through enhanced user profiles.