Digital Advertising Needs a New Class of Cookies

Privacy laws came about to protect privacy, but are attribution and frequency capping even a privacy issue?

You probably heard that the IAB Tech Lab issued a report expressing significant concerns about Google’s Privacy Sandbox.

The task force found that most use cases are “explicitly not supported or have been degraded to the point of being untenable.” Among those use cases are bread-and-butter topics for successful campaigns, like frequency capping and attribution (something the IAB calls essential event-based metrics).

This is no small problem for advertisers who want to pay the right price for inventory-driven outcomes and publishers who want to earn the CPMs their inventory and audiences warrant. But as the report warns, “Essential event-based impression and click counting are only temporarily supported, later moving to aggregated reporting. Bid loss analysis is impossible, making revenue reconciliation and troubleshooting extremely difficult.”

To some in the industry, such as Uri Lichter, CEO at Intango, the problem is that the notion of third-party cookies is too broad. The industry needs to come together to develop a new class of cookies that help the advertising business function properly and ones that browsers don’t ban.

What Irked Consumers About Cookies

It’s hard not to take the consumer’s side in many privacy discussions. I remember signing on to my healthcare portal to check on something and seeing a Facebook ad a few minutes later that said something like, “This dentist is available in your network and area.” It was creepy.

Our data was (and likely still is) widely available for sale. It felt like every click was captured, packaged into an audience segment, and sold to anyone who wanted it. This is what Shoshana Zuboff calls surveillance capitalism.

But there’s a difference between surveillance and optimizing the ad experience. One can argue that consumers aren’t opposed to things like frequency capping — who wants to see the same ad repeatedly?– or attribution. Most would even support attribution if they understood that their favorite publications benefited from it. I love gardening and want to see ads for Gardener’s Supply. If I purchase from them (and I have frequently), I want to know when the new shipments of perennials come in when I’m reading the news in the morning.

How companies use third-party cookies makes a big difference. Third-party companies that capture data without the consumer’s knowledge are irksome, especially when one considers how much money those companies have made from those data sales. 

Designating Cookies Based on Use Case, Not Who Places Them

But are those third-party cookies in the same league as cookies that help publishers track revenue or media agencies apply frequency capping? 

“Publishers may use a tracking cookie, but it’s deployed by a service provider as the publisher didn’t have the tech infrastructure to do it themselves; in which case, would it be considered first or third party? There’s a case to be made that they’re not in the same league,” Uri said in an interview.

In other words, the cookie’s purpose is more relevant than the entity that places it (after all, the policy regulations require brands and publishers to conduct due diligence on their vendors to ensure they’re using all consumer data appropriately).

Advertisers also often rely on third-party cookies for tracking revenue and attribution. Understanding how companies use these cookies and distinguishing between first-party and third-party sources is crucial. This knowledge helps in identifying any potential issues and finding suitable solutions.

“Everyone understands first-party cookies, but Google is categorically sweeping several cookies under the “third-party” umbrella, and this isn’t necessarily the right thing to do,” Lichter said. This kind of umbrella designation of “all third-party cookies bad” is hurting the industry.

Lichter suggests developing a new type of cookie that is distinguished from the cookies that are being deprecated, although he isn’t sure what such a cookie would look like at this moment. He’d like to see the industry come together to hammer it out.

There may be some wiggle room in the regulations themselves. GDPR has a legitimate interest article, and one can argue that attribution, measurement, and applying criteria like frequency capping are required for a successful industry.

It’s in everyone’s best interest to get to a state where companies can track users for attribution to determine where advertisers can understand where to spend, which is ideal but not possible yet.