Cookie Control: Ad Tech’s Next Ordeal

This article was written by Integrate and was originally published on the Company's blog

For fifteen years behavioral targeting has been the standard. However, with browser cookies expiring and users increasingly opting-out of tracking, only 30 to 40% of the total audience is reachable at any given time. Reach is a systemic challenge for advertisers and the online advertising industry.

--- Ray Kingman, CEO of Semcasting.

Much has been made of Mozilla’s recent move to block third-party cookies by default in its latest iteration of Firefox, and for good reason: 52% of ad agencies and 43% of marketers use third-party data in their digital campaigns, according to an October eXelate and Digiday study. Randall Rothenberg of the IAB asserts that many companies “will go out of business” if third-party cookies are restricted, and if “Mozilla follows through on its plan to block all third-party cookies, the disruption will disenfranchise every single Internet user.”

I’d like to begin this post by clearing up two important issues:

1. The Firefox update in question is currently limited to its “Nightly” build—used mostly by developers and other advanced users—unless Mozilla removes the update, the new policy will appear in the public version of Firefox on June 25
2. Most internet users (77.7%) will be unaffected, and the Firefox users who don’t like it can opt-in to ads or switch browsers

For an industry that purports to embrace consumer choice and the somewhat-idealistic vision of a rich browsing experience, the backlash against Mozilla—and subsequent digital ad-mageddon/doomsday prophecies—is surprising.

Mozilla is just doing business. Three out of the top four web browser parent companies are the heaviest hitters in several other product categories (operating systems, phones, tablets, app stores, cloud services and advertising to name a few), and browser-building is Mozilla’s chief racket. The only real way to differentiate is to actually be different, and initiating an opt-in policy protects consumers from third-party cookie targeting will distinguish Firefox from both Chrome and Internet Explorer in a valuable way—one that benefits its user base.

Other leaders in the ad tech industry see it differently. Regarding the impact of Mozilla’s ban on third-party cookie targeting, AdRoll CEO Aaron Bell said, “The only form of display with a reliable return on investment for advertisers is audience-based targeting[...] Browsers will add obstructions, advertisers will find new workarounds, and with no standards, ultimately the users will be the ones left behind.”

Chango CRO/CSO Dan Hamman further advocates for users, adding that “the decision to include this functionality activated by default will lessen the consumer experience by removing relevancy (and not just in advertising), remove their choice (because many won’t know this is occurring) and set a precedence that fails to balance the needs of the consumer and the marketing industry.”

For all the references to consumer experience, no one seems to actually know the facts about consumer preferences:

• They aren’t interested in receiving personalized ads or recommendations (The figures are between 65% and 80% against personalization according to two studies by ChoiceStream and Ipsos Public Affairs).
• A quarter of them don’t notice targeted ads (According to an AYTM Market Research survey from December 2012, 74.5% of US internet users ever notice online ads targeting their interests or browsing history).
• Only half of them ever see ads that match their interests (51.2% of userssaid that online ads matched up with things they like or would potentially buy about half the time or more often).
• They’re more likely to click on ads targeting their online activity (60.6% of users said they were somewhat or definitely more likely to click on these ads).

These figures not only illustrate that consumers have no idea what they want—and my hat is off to Mozilla for at least venturing a guess—but also point to a significant misunderstanding of privacy issues in the digital space, or at least a blatant consumer mistrust for advertisers.

Is this kind of targeting actually bad, does it violate our privacy in any way? My answer is no. But that doesn’t mean that I’m not ready to give you a solution, should the unthinkable third-party ad-apocalypse threaten to spread outward from Firefox.

Deliciously Sugar Free

Cookieless targeting. Specifically, Smart Zones targeting enabled by Semcasting. Similar to how cable companies define the Internet Grid and TV broadcast zones, Semcasting aggregates concentrations of individuals with similar demographic attributes into audience micro-clusters called Smart Zones, categorizing nearly 100% of US traffic by over 750 demographic and socio-economic attributes. Because this method is based on a patent-pending method that triangulates location, demographics and IP addresses, advertisers don’t require third-party data; if the IP address forwarded from an ad call falls within the target cluster, then an advertiser’s DSP will bid on it accordingly.

Why is this cool? Semcasting reports an average CTR of .2% using Smart Zones—a 128% lift over the industry average of .09%—and aggregated data is never linked to a single individual or their personally identifiable information, only to neighborhoods. It maintains consumer privacy while avoiding “creepy” ads based on users’ browsing history.

If consumers truly just want their information to be used responsibly, and if advertisers, ad tech companies and publishers are sincerely concerned with appeasing consumers, this is the best method I’ve seen thus far.