“Data Driven Thinking” is written by members of the media community and containing fresh ideas on the digital revolution in media.
Today’s column is written by Eric Picard, CEO at Rare Crowds.
I’ve been writing about some of the ethical issues with “opt-out” third-party tracking for a long time. It’s a practice that makes me extremely uncomfortable, which is not where I started out. You can read my opus on this topic here.
In this article, I want to go into detail about why third-party cookies aren’t needed by the ecosystem, and why doing away with them as a default setting is both acceptable and not nearly as harmful as many are claiming.
First order of business: What is a third-party cookie?
When a user visits a web page, they load a variety of content. Some of this content comes from the domain they’re visiting. (For simplicity sake, let’s call it Publisher.com.) Some comes from third parties that are loading this content onto Publisher.com’s web site. (let’s call it ContentPartner.com.) An example would be that you could visit a site about cooking, and the Food Network could provide some pictures or recipes that the publisher embeds into the page. Those pictures and recipes sit on servers controlled by the content partner and point to that partner’s domain.
When content providers deliver content to a browser, they have the opportunity to set a cookie. When you’re visiting Publisher.com’s page, it can set a first-party cookie because you’re visiting its web domain. In our example above, ContentPartner.com is also delivering content to your browser from within Publisher.com’s page, so the kind of cookie it can deliver is a third-party cookie. There are many legitimate reasons why both parties would drop a cookie on your browser.
If this ended there, we probably wouldn’t have a problem. But this construct – allowing content from multiple domains to be mapped together into one web page, which was really a matter of convenience when the web first was created – is the same mechanism the ad industry uses to drop tracking pixels and ads onto publishers’ web pages.
For example, you might visit Publisher.com and see an ad delivered by AdServer.com. And on every page of that site, you might load tracking pixels delivered by TrackingVendor1.com, TrackingVendor2.com, etc. In this case, only Publisher.com can set a first-party cookie. All the other vendors are setting third-party cookies.
There are many uses for third-party cookies that most people would have no issue with, but some uses of third-party cookies have privacy advocates up in arms. I’ll wave an ugly stick at this issue and just summarize it by saying: Companies that have no direct relationship with the user are tracking that user’s behavior across the entire web, creating profiles on him or her, and profiting off of that user’s behavior without his or her permission.
This column isn’t about whether that issue is ethical or acceptable, because allowing third-party cookies to be active by default is done at the whim of the browser companies. I’ve predicted for about five years that the trend would head toward all browsers blocking them by default. So far Safari (Apple’s browser) doesn’t allow third-party cookies by default, and Mozilla’s Firefox has announced it will block them by default in the next version of Firefox.
Why I don’t think blocking third-party cookies is a problem
There are many scenarios where publishers legitimately need to deliver content from multiple domains. Sometimes several publishers are owned by one company, and they share central resources across those publishers, such as web analytics, ad serving, and content distribution networks (like Akamai). It has been standard practice in many of these cases for publishers to map their vendors against their domain, which by the way allows them to set first-party cookies as well.
How do they accomplish this? They set a ‘subdomain’ that is mapped to the third party’s servers. Here’s an example:
Publisher.com wants to use a web analytics provider but set cookies from its own domain. It creates a subdomain called WebAnalytics.Publisher.com using its Domain Name Server, or DNS. (I won’t get too technical, but DNS is the way that the Internet maps IP addresses – the numeric identifier of servers – to domain names.) It’s honestly as simple as one of the publisher’s IT people opening up a web page that manages their DNS, creating a subdomain name, and mapping it to a specific IP address. And that’s it.
This allows the third-party vendor to place first-party cookies onto the browser of the user visiting Publisher.com. This is a standard practice that is broadly used across the industry, and it’s critically important to the way that the Internet functions. There are many reasons vendors use subdomains, not just to set first-party cookies. For instance, this is standard practice in the web analytics space (except for Google Analytics) and for content delivery networks (CDNs).
So why doesn’t everybody just map subdomains and set first-party cookies?
First, let me say that while it is fairly easy to map a subdomain for the publisher’s IT department, it would be impractical for a demand-side platform (DSP) or other buy-side vendor to go out and have every existing publisher map a subdomain for them. For those focused on first-party data on the advertiser side, they’ll still have access to that data in this world. But for broader data sets, they’ll be picking up their targeting data via the exchange as pushed through by the publisher on the impression itself. For the data management platforms (DMPs), given that this is their primary business, it is a reasonable thing for them to map subdomains for each publisher and advertiser that they work with.
Also, the thing that vendors like about third-party cookies is that by default they work across domains. That means that data companies could set pixels on every publisher’s web site they could convince to place their pixels, and then automatically they would track one cookie across every site they visited. Switching to first-party cookies breaks that broad set of actions across multiple publishers into pockets of activity at the individual publisher level. There is no cheap, convenient way to map one user’s activity across multiple publishers. And only those companies that have a vested interest – the DMPs – will make that investment, and it will limit the number of small vendors who can’t make that investment from participating.
But, is that so bad?
So does moving to first-party cookies break the online advertising industry?
Nope. But it does complicate things. Let me tell you about a broadly used practice in our industry – one that every single data company uses on a regular basis. It’s a practice that gets very little attention today but is pretty ubiquitous. It’s called cookie mapping.
Here’s how it works: Let’s say one vendor has its unique anonymous cookies tracking user behavior and creating big profiles of activity, and it wants to use that data on a different vendor’s servers. In order for this to work, the two vendors need to map together their profiles, finding unique users (anonymously) who are the same user across multiple databases. How this is done is extremely technical, and I’m not going to mangle it by trying to simplify the process. But at a very high level, it’s something like this:
Media Buyer wants to use targeting data on an exchange using a DSP. The DSP enables the buyer to access data from multiple data vendors. The DSP has its own cookies that it sets (today these are third-party cookies) on users when it runs ads. The DSP and the data vendor work with a specialist vendor to map together the DSP’s cookies and the data vendor’s cookies. These cooking mapping specialists (Experian and Acxiom are examples, but others provide this service as well) use a complex set of mechanisms to map together overlapping cookies between the two vendors. They also have privacy auditing processes in place to ensure that this is done in an ethical and safe way to ensure that none of the vendors gets access to personally identifiable data.
Note that this same process is used between advertisers and publishers and their own DMPs so that first-party data from CRM and user registration databases can be mapped to behavioral and other kinds of data.
The trend for data companies in the last few years has been to move into DMP mode, working directly with the advertisers and publishers rather than trying to survive as third-party data providers. This move was intelligent – almost prescient of the change that is happening in the browser space right now.
My short take on this evolution
I feel that this change is both inevitable and positive. It puts more power back in the hands of publishers; it solidifies their value proposition as having a direct relationship with the consumer, and will drive a lot more investment in data management platforms and other big data by publishers. The last few years have seen a data asymmetry problem arise where the buyers had more data available to them than the publishers, and the publishers had no insight into the value of their own audience. They didn’t understand why the buyer was buying their audience. This will fall back into equilibrium in this new world.
Long tail publishers will need to rely on their existing vendors to ensure they can easily map a first-party cookie to a data pool – these solutions need to be baked by companies who cater to long tail publishers, such as ad networks. The networks will need to work with their own DMP and data solutions to ensure that they’re mapping domains together on behalf of their long tail publishers and pushing that targeting data with the inventory into the exchanges. The other option for longer tail publishers is to license their content to larger publishers who can aggregate this content into their sites. It will require some work, which also means ambiguity and stress. But certainly this is not insurmountable.
I also will say that first-party tracking is both ethical and justifiable. Third-party tracking without the user’s permission is ethically a challenging issue, and I’d argue that it’s not in the best interest of our industry to try and perpetuate – especially since there are viable and acceptable alternatives.
That doesn’t mean switching off of third-party cookies is free or easy. But in my opinion, it’s the right way to do this for long-term viability.