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Earlier this week Google stated that the company was exploring the possibility of not using third-party cookies to track users web browsing habits, and instead rolling out its own system that uses an anonymous identifier for each individual.  While this would be great for consumers in terms of privacy, it could wreak havoc on the advertising and publishing industries.

Just how would a change like this cause problems?  Let me provide a little background information before we get into that.

Background Information on Advertising and Cookies

The digital ad business is over a hundred billion dollar industry that many publishers and other content-based sites rely on to generate revenue.  In order to serve advertisements on these sites that are most relevant to the person visiting a web page, advertisers have been installing third-party cookies on people’s computers. The problem people have with these third-party cookie is that they feel their privacy is being invaded.  And to a certain extent, it is — some advertisers may go too far when it comes to building their “profiles” on users.

Now, if you’re not familiar with what a cookie is, they have a few uses, one common use case is to remember information about a user on a site, such as your username and password, to make it easier and quicker to login.  Those types of cookies are first-party cookies.  A third-party cookie is a cookie that is placed on a device from a site that isn’t the one you are visiting.  So if you visit Website.com and they are serving ads for Website-Partner.com, chances are the Website-Partner.com will also install a [third-party] cookie on your device to continue to track your browsing once you leave Website.com.

There’s another issue with cookies that is causing companies to look for an alternative way to track users online: cookies don’t work very well on mobile, which is a growing problem as more people continue to use their smartphones and tablets to browse the web.

Why Google’s Decision Could Break The Internet

A best case scenario would be if Google made the switch to its new tracking platform and opened it up for others to have access to as well.  However, if they didn’t, perhaps the people who would be most hurt by this massive change would be small publishers.  The reason small publishers would be hurt by this change is because their ad inventory wouldn’t be targeted, meaning advertisers will end up paying even less for it.

It’s hard enough for small publishers as it is to sell ad inventory, this could make it nearly impossible or at the very least, extremely difficult.  Of course, there are other ways to generate revenue such as affiliate sales or licensing your content, but even still, it would not be pretty on the longtail side of things.  And if small publishers are unable to generate revenue, we could lose a lot of great websites.

There Are Positives Though

Negatives aside, there are a few of positives that could come out of replacing cookies with another system or simply just relying on first-party cookies.

The first obviously being consumer privacy.

The second positive being that if we moved to a first-party cookie system only, larger publishers would gain a lot of insights and details about their audience that they otherwise didn’t have access to before.  In the current third-party cookie system the advertisers are the ones who have most of the data about audience, not the publisher.  If the publisher has more data, it will be able to better determine the value of its audience and therefore could potentially even be able to charge higher advertising rates.

And the third positive could be that we [consumers] actually see better and more relevant ads than ever before.  According to Mike Anderson, chief technology officer of Tealium, a company that helps advertisers track users, says the online ad industry currently has only a 30%-60% accuracy rate for identifying a user because many cookies “cannot talk to one another.”  A new system, whether it by Google or a group effort, could improve that, while making it more privacy-centric.


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