The future of third-party cookies

Much has been said about the future of third-party cookies and the broader advertising ecosystem, and it seems virtually everyone involved in the digital marketing community has weighed in to offer perspectives on and reactions to the great cookie debate. Given little has been settled, it makes sense to revisit the conversation objectively and lay out what we do know about an issue that is important to consumers, marketers, and ad tech providers alike.

The benefits of ceding more control to heavyweights are dubious...at best

Even if you accept that third-party cookies are eventually eliminated through technical means, such as cookie blocking or cookie deletion at the browser level, another technology -- or approach -- will emerge in its place. This is because advertisers universally want to retain their ability to uniquely ID visitors on and off of owned digital properties; it's foundational to how the whole online media industry works. The question is who (i.e., vendors) and what (i.e., technologies) replace it.

Last year, major advertising providers including GoogleMicrosoft, and Facebook hinted at creating proprietary tracking technologies to fill the void left if third-party cookies were no longer viable. While not much is known about the specific implementations being developed, the implications for advertisers are fairly clear.

One concern we hear often from advertisers is the hidden cost of ceding more control to companies that already sell the vast majority of digital media inventory. Anyone that has ever experienced taking a car to the service station for an oil change only to find out the vehicle also needs to have the air filter replaced, a fuel injection, and four new tires understands the value of working with a trusted third-party that can help you make informed decisions about purchases. Even if the industry coalesces behind support for a small number of vertically-integrated IDs, marketers will still want to integrate data across service providers to ensure they can effectively reach consumers across channels, regardless of ad network or parent company.

With time, the industry may adopt some form of a vendor-agnostic, universal matching system that spans all service providers. Until then, cookie-based systems will remain the status quo.

The mobile opportunity changes ownership

Another inhibitor to integrating data across service providers is the industry's relatively nascent understanding of the growing mobile landscape.

According to recent research for marketing analyst firm eMarketer, 203 million U.S. consumers -- more than three-fifths of the population -- access the internet and interact with media on multiple screens monthly, outnumbering single-screen consumers by a ratio of 2.5 to 1. It was also projected that by the end of 2013, mobile devices will outnumber people – globally. In order to reach customers on these different devices, advertisers are following audiences to these devices -- largely with mixed results.

Since most tablets and smartphones don't not allow advertisers or third-parties to universally set a cookie -- as desktop-based browsers do -- advertisers are left with a foggy picture of what's actually happening when someone sees an ad (if they can verify it was seen at all).

The future of third-party cookies

Even if Google or Facebook do start setting unique IDs, companies will continue developing new cross-device analytics tools to attempt to complete the picture using advanced statistical methods and cookie matching techniques. At this point the mobile advertising market has much work to do to reach parity with the unified, cross-device impression-level data available on desktops but will just continue to gain momentum if the entire cookie landscape is fragmented.

The road ahead

Data and measurement were both major driving forces behind the rapid growth of the $100 billion dollar digital media industry. First- and third-party cookies continue to help advertisers, agencies, and publishers measure audience behaviors and marketing performance while providing advertisers with the level of insights required to effectively reach customers and compete in an increasingly complex digital media ecosystem.

In the year ahead change is a certainty, but the cookie's demise is far from it. Meanwhile, marketers should continue to discuss priorities with technology providers in order to fully understand any implications should major industry dynamics involving cookie-based technologies change.

Natasha Moonka is product marketing manager at Adometry.

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