For the past 20 years, the humble cookie has been following our every online move.
It knows when we’ve been shopping for trainers. It knows when we’ve been booking accommodation for a forthcoming trip to Barcelona. And as much as it would like to get those images out of its mind, it knows when we’ve been looking at obscure Japanese porn.
But despite how hard this little piece of HTML code has been working, the cookie is facing imminent demise.
Matt Hunt, managing director of online advertising platform Adconion, calls it the “cookie apocalypse”.
Online advertising, especially retargeting – the function that keeps reminding you about the shirt you lingered on while perusing an online shopping site – is largely dependent on cookies to track consumers’ behaviour across the web. But while this has become standard industry practice, Hunt says using cookies “is a completely unsophisticated and antiquated approach to ad targeting on the internet”. He says: “It is not the future and it is not where the most sophisticated companies like Facebook, Google and Adconion are focused.”
How can this be so when cookies are so entrenched in the web?
“Cookies really do underpin a huge amount of the industry,” says Ben Chamlet, sales engineer at marketing software provider Turn. “There will be a move away from them and I think the future potentially is away from cookies, but I’m not going to call out 2014, 2015 or 2016 as the year of their death. It is a very rudimentary technology and there are other ways we can do it but we have to prove those other ways of making advertising experience relevant to the consumer.”
Bruce Buchanan, chief executive of digital referral marketing company ROKT, believes it is important to distinguish between the two types of cookies.
Websites use first-party cookies to store information about a user that will be used the next time they visit, such as their log-in details.
Third-party cookies are what is used to track consumers across the web and to serve them advertisements.
Buchanan says: “Death of cookies is probably a bit of broad sweeping statement, but for ad tracking purposes the value of third-party cookies has plummeted over the last two years to the point where it is a fraction of the traffic you are seeing you get measurable value from.”
Last year Paul Cimino, the former VP/GM Brilig Digital Data Solutions at Merkle, said: “We’ve found that the third-party cookie is dying as the number of machines that you can see on the Internet versus the number that you can cookie has been dropping over the last three years. It’s now at around 50%.”
Buchanan says ROKT has seen a similar decline. He says: “After doing thorough analysis of our advertisers’ campaigns, we have seen that by using cookie tracking advertisers might only see around 20% of the actual conversions, compared to using ROKT Analytics.”
According to industry experts, there are three main forces diminishing the usefulness of cookies.
The rise of mobile
“The prevalence of mobile usage has gone up dramatically and by default you can’t put third-party cookie tracking on any iOS device and most other mobile devices don’t allow it,” Buchanan explains.
“This is a critical usage. Fifty per cent of all transactions in Australia across our network, which represents most of the big transactional sites, at the start of this year had gone mobile.”
Mary Meeker’s KPCB Internet Trends 2014 report found mobile usage has reached 25% of total global web traffic, up from 14% just last year.
PricewaterhouseCoopers recent Australian Entertainment and Media Outlook 2014-2018 forecasts smartphone penetration to reach 81% by 2018 and tablet penetration to hit 80% in the same year.
Multi-device habits
“The old technology[cookies] was fundamentally flawed in that it assumed a device was the same user and multiple devices are always different users,” Buchanan says.
Do Not Track
“The ability to opt out of cookies and block cookies is far easier from a consumer standpoint. That is really where the drop off is coming from,” says Adconion’s Hunt.
Internet users can go into their browser settings and choose to block third party cookies as simply as launching Incognito mode in Google Chrome.
For more information on ‘Do Not Track’ developments in 2013 check out this report.
Privacy fears have fuelled the use of anti-tracking technology but Hunt believes education could turn consumers back onto the idea of being tracked.
“Our position has always been that people don’t dislike advertising, they dislike irrelevant advertising,” says Hunt. “As an industry we haven’t done enough to explain the benefits of ad technologies to the users so that is where the scepticism is coming from.
“The industry needs to do a much better job in explaining why this is better for the user, provide all of the controls and work with consumer groups to ensure that the internet delivers on its original promise to be the most relevant, effective way of connecting brands with audiences.”
So what does a Cookie-less future look like? According to Hunt the opportunity is a “re-birth” for the industry. He says: “The whole of the ecosystem has no choice but to adopt and embrace new flexible technologies that allow people to see more relevant advertising.”
The industry has already started to turn towards a process called ‘Fingerprinting’.
Going forward companies that create flexible user identification and targeting capabilities beyond the cookie will be ahead of the game particularly as programmatic trading steps it up.
Cookies might be facing an apocalypse and if so, something else is coming. Still Turn’s Chamlet says he is yet to “see the technology I’m willing to stake my mortgage on that will take us into 2020 and beyond”.
