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Online advertising firms won't abandon Internet cookies anytime soon

There's talk about the imminent demise of the cookies used in tracking and analyzing Web activity, but online advertising insiders say it's all hype.

There has been a lot of talk in recent months about the demise of Internet cookies. The chatter was sparked by a string of separate announcements from Microsoft, Facebook and Google, each saying that they are working on technology that could track user data much in the same way cookies do today.

If these new technologies supplant cookies as the go-to method for gathering user data, it could have major implications for online advertising, which relies on data from Internet cookies to fuel predictive models and help marketers decide when and where to make ad buys. But Internet advertising insiders say the cookie has yet to crumble and any changes to the primary way data is gathered from Internet users are many years away.

"Until someone can offer up some kind of alternative that's more than a press release, that we can actually look at and see how it would work, and until we as an industry can congeal around that alternative in a ubiquitous way, I think it's just a bunch of hype," said Zach Coelius, CEO of Triggit, an online advertising campaign platform.

People started talking about the demise of Internet cookies in October, when Microsoft introduced a new advertising ID feature in its Windows 8.1 release. The feature tracks user data whether they are on a PC or tablet. Two days later, Google sketched out a plan to start tracking user data by specific profiles, rather than devices. Facebook has also announced plans to track what users are doing on other sites when they are logged into their Facebook account. All of this stirred rumors about the imminent demise of cookies.

But Coelius said so much of what happens on the Internet, particularly in online marketing, is built on cookies. It is hard for him to imagine that changing, especially because several of the large tech firms are still only talking about their new technologies in abstract terms. The Internet cookie is still so ubiquitous and the new technologies so vague that he doesn't expect anything to change for Internet marketers anytime soon.

"[Cookies] are there, and because they're not controlled by anyone, they do work, so it's hard for me to imagine someone launching something that could replace the cookie," Coelius said.

Beware the walled garden

Internet marketers are wary of their industry becoming reliant on any type of infrastructure that gives control of data to one large entity. As Internet giants talk about technologies that could replace cookies, the inevitable fear is that they would begin charging for access to the data. Steve Sullivan, vice president of advertising technology at the Interactive Advertising Bureau, a trade group for online marketers, said this sort of "walled garden" approach would hamper other positive developments in the industry.

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As audiences have migrated to online media channels, marketers have followed. The industry is digitizing at a rapid pace, and a lot of the developments are being driven by accessible technology, like the Internet cookie. For example, data generated by cookies enables marketers to do real-time ad bidding, which helps them tailor their media buys to specific audiences. But Sullivan said the coopting of user data by one large tech company could slow down a lot of this progress in the online advertising industry.

"We want to make sure that the industry's transformation into something digital is smooth and happens with as little difficulty as possible," he said.

Miguel Alejandro Sanchez Vega, CRM manager for Club Premier: Aeroméxico, a Mexico-based airline loyalty program, said a lot of marketing analytics operations would have a difficult time accessing data if there was a fee attached to it. Club Premier performs sophisticated analytics using SAS Institute technology to tailor offers to customers' interests. His organization relies more on transactional data from other websites than cookies, but he said cookies are an important source of data for most marketers. Adding a new cost to data collection could hamper a lot of this work.

"It's hard to get on board with letting someone else do the collecting for you," he said.

Coelius said any tech company introducing a new system of tracking user data would have to prove its value in order to justify charging for access to that data. One way to prove value would be to solve the problem of cross-platform tracking. Cookies aren't capable of following users as they switch between their desktop, smartphone and tablet. Coelius said many online advertising firms would be happy to pay any company that solves this problem for access to the data, but the value has to be clear.

The question of privacy

Concerns about privacy could also derail the widespread adoption of new cookie alternatives. Many users may feel uneasy when they learn their data will be tracked across the Internet regardless of platform by a small handful of large tech companies. It is important to note that each tracking system proposed or implemented thus far offers users an opt-out option. But enough users would still have to acquiesce to being tracked for these systems to work.

We want to make sure that the industry's transformation into something digital is smooth and happens with as little difficulty as possible.

Steve Sullivan, vice president of advertising technology at the Interactive Advertising Bureau

And that acceptance is anything but certain. Sanchez Vega said users are becoming more conscious about how businesses use their data and some feel uncomfortable with intrusive tracking.

"Customers are getting a little touchier about what businesses do with their data," he said. "They don't want to be watched. So in the end you have to keep the balance of reasonable measures for collecting data. You can get all the data you want, but you have to be very, very careful."

On the other hand, new methods of data tracking could bring benefits to users who are concerned about how their data is used. Sullivan said there is no ubiquitous way to opt out of being tracked by cookies, as there would be with the new methods of data collection being discussed. Users have to tell individual sites not to drop cookies on them or clear cookies through their browser. The new systems could allow users to opt out by checking a single option in their operating system or browser.

Additionally, Sullivan said new data tracking methods could allow users to express their desires more clearly. For example, if the user consistently receives an ad for a product they have no interest in, they could change their ad profile to reflect this, which is something cookie collecting operations currently cannot support.

Not the end, but prepare for changes

For all of these reasons, Internet cookies aren't expected to go anywhere anytime soon. But internet marketers should still prepare for changes. Rather than think about life after cookies, marketers should look into how they will operate when they have access to data from cookies as well as newer generations of user tracking systems.

Coelius said the growing adoption of mobile devices, which aren't as friendly to cookies as desktop computers, are gradually making cookies less relevant. At the same time, the tracking methods being developed may mature and eventually supplant cookies. But these developments will play out over many years. Because the cookie is so foundational to so much of what happens online, it would "break the Internet" to remove it from the conversation completely without a ubiquitous substitute, Coelius said.

Sullivan also said online advertisers should prepare for a world where they have access to data from Internet cookies as well as from other sources. As online advertising IDs become more common and ubiquitous advertisers will rely more heavily on them. But that doesn't mean the cookie will vanish from the Internet. Sullivan said it will just go back to its original purpose, which has nothing to do with gathering user data for online advertising. The cookie will return to its more humble origins: allowing sites to differentiate your device from someone else's.

Ed Burns is site editor of SearchBusinessAnalytics. Email him at eburns@techtarget.comand follow him on Twitter: @EdBurnsTT.

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