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The Cookie Debate: Research Reveals Advertisers Pay 3X More for Cookie-Based Ads

Written on
Feb 11, 2014 
Author
Richard L. Tso  |

ADOTAS – Ad targeting is in a state of transition these days, with browsers like Firefox ending support for third-party cookies. A new study released on Monday at the IAB Annual Leadership meeting by the Digital Advertising Alliance is stoking the debate a bit more, revealing that advertisers will pay up to 3 times more for cookie-based ads. The premium rises to 7X if the cookie is 90 days old.

While it comes as no surprise that brands are willing to shell out more cash to pay for interest-based ads, the timing of this revelation is almost a moot point, as ad tech companies are already exploring alternatives to cookies as a way to deliver highly-targeted display and mobile ads to consumers.

The DAA’s self-regulatory principles require members to allow users to opt out of tracking, but the current mechanism for doing so relies on cookies that at some point soon won’t work in one of the most popular browsers. Apple’s less-used Safari browser has long blocked the same variety of cookies, known as third-party, which are installed by companies that don’t have a direct relationship with consumers.

“There hasn’t been a lot out there about the benefits of interest-based advertising and what it has delivered to the Internet,” said Lou Mastria, managing director of the DAA, which plans to share the results of the study with policymakers in Washington. “This shows interest-based advertising is the workhorse for subsidizing content on the Internet.”

The new research, conducted by Navigant Economics, comes at a time when advertisers are waging a battle with Washington over cookie-based targeting, and so far the industry has been able to hold off regulators and new legislation that would limit how brands deliver ads to audiences online.

On Monday, the White House is meeting with consumer privacy advocates to further examine the intersection of big data, advertising and online privacy.

“The kind of content available on the Internet is based on the money that will fund it, and that’s the sale of advertising, which is everyone’s business model these days,” said Prof. Howard Beals, one of the authors of the study.

One thing that’s certain is that the online publishing industry could be severely impacted by the heavy decisions taking place in the near term. Large and small publishers depend on the revenue generated from premium interest-based ads, and cinching this revenue stream will wreak havoc among the smaller sites where interest-based ads make up to 60 percent of their inventory.

Alternatives to cookies are currently being explored by several advertising companies, with solutions ranging from matching IP addresses to leveraging data from universal logins to the more controversial digital fingerprinting techniques. Each of these solutions aims to help marketers identify consumers across devices. Until a new standard is embraced by the industry and blessed by consumer privacy advocates, the debate will rage on.

 





Richard L. Tso is a reporter for Adotas and an avid writer covering the intersection of technology and advertising, fashion and music. With over 12 years of experience in the Advertising, Marketing and Public Relations industries, Richard has held executive positions at global agencies and technology companies and is founder of the interactive communications firm Pseudosound Consulting LLC. A classical cellist and painter, he believes that sometimes sound carries more weight than words. He is a graduate of Stanford University.

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