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A Tale of Two Cookies

  |  April 11, 2014   |  Comments

Although many marketers rely heavily on cookies, they aren't always the best way to measure and manage campaigns. But what will replace the cookie in the marketing ecosystem?

Search marketers rely on cookies for tracking and targeting, as do marketers and publishers across the digital marketing ecosystem. I hope you enjoy the odd framework for the editorial rant below: I found it interesting to frame the conversation within the context of a classic.

It was the best of times... (cookies worked well for tracking, were rarely if ever deleted, and browsers always accepted all first- and third-party cookies).

It was the worst of times... (cookie-blocking software proliferates, multi-device use makes it challenging to understand consumer behavior across these devices, and browsers are launching with opt out of tracking as the default).

It was the age of wisdom... (forward-thinking Internet marketers and publishers saw the likely onset of privacy regulation across the globe and started relying on alternate ways to target and track).

It was the age of foolishness... (aggressive marketers cared not about PII, privacy, and the implications of reckless use of both anonymous and personal information).

It was the epoch of belief... (perfect tracking means one can achieve the perfect campaign with no waste, harvesting demand without worrying about having to create a brand or change preference).

It was the epoch of incredulity... (cookies are losing their ability to track and target users across search and display, and the removal of keywords from the HTTP referrer means you'll have to guess which visitors to your site are really desirable).

It was the season of light... (broadband penetration is up; social media has enabled marketers to have one-to-one conversations).

It was the season of darkness... (social media has enabled marketers to have one-to-one conversations, and there are millions of customers clamoring for attention).

It was the spring of hope... (consumers are more engaged than ever with online and social media).

It was the winter of despair... (e-mail inboxes are cluttered, SEO algorithms have changed, and one can no longer afford bids for pay-per-click (PPC) clicks that were once affordable and plentiful).

We had everything before us... (the Internet was brand-new and the sky was the limit).

We had nothing before us... (consumers ignore most advertising, except perhaps search, video, and clever rich media).

We were all going direct to heaven... (our companies were going public or selling for a billion dollars).

We were all going direct the other way... (cluttered markets filled with buzzword-spouting Ivy League dropouts have nearly every company getting funded and the rare successes are fueling the fire with even more crazy deals being struck).

Now back to a more standard column.

Paid and organic search practitioners have taken tracking cookies for granted for many years. Digital marketers engaged in display media, social media, affiliate marketing, and other forms of online marketing have also become accustomed to cookies. First- and third-party cookies have formed the foundation of a mechanism that not only facilitates tracking of conversions, but also as a way to create targeting pools for behavioral ad targeting.

Many search marketers are buying time-shifted behavioral search from third parties where the data originates from publishers and is stored in cookies. The cookies are used to buy impressions across ad exchanges where relevant advertising (display or text links) can be showed to consumers. The steady erosion of the cookie as an accurate tracking and targeting method has a material impact on the ad industry. Are you ready?

Cookies aren't always the best way to measure and manage campaigns, either. Display media bots and bots clicking on search links are a huge problem for the search ecosystem, resulting in billings to marketers for potentially invalid clicks or impressions.

That brings us to the question of what will replace the cookie. My prediction is that the authenticated user will replace the cookie (this has already happened in many cases). This means the publishing and platform powerhouses in the world of digital advertising will have even more power in the future than they do now.

Think about who authenticates users and how this facilitates better ad targeting, as well as validation that impressions and clicks are authentic:

  • Google: Whether it's Gmail, Google+, a Google login used to engage in search, or Google Docs, the penetration of users across the globe who both have a Google login and use it regularly is very high. The authenticated user login is very powerful, as it even closes the information gap across devices.
  • Facebook: While Facebook usage varies significantly across their heavy users and those whose accounts are partially lapsed, Facebook has done a great job in developing an authenticated user base.
  • Microsoft: Outlook.com and Skype join Xbox and Microsoft's enterprise move toward cloud computing to give Microsoft an unusual snapshot of a user's life. All of these platforms require authentication.
  • Apple: While Apple hasn't really dominated in the ad ecosystem, their authenticated user base is an interesting asset.
  • Twitter: The challenge for Twitter (and to some extent all social media platforms) is the power curve of their users' usage patterns. Heavy users spend their entire day on the platforms, while light users barely use the platform at all. This dilutes some of the value of the authenticated user, unless that authentication reaches beyond the confines of the social data stream and into the broader Internet. 
  • LinkedIn: A very B2B social network, the authenticated LinkedIn user is highly valuable to some advertisers, not just recruiters. 
  • Amazon: Most people don't think of Amazon as a publisher, but in addition to regular site-side embedded ads they are becoming a formidable video distribution platform. And Amazon knows more about its members (particularly Prime) than most of the others on this list.

As search and digital media evolves, I suggest you think about how you are going to continue to use the cookie while it continues to exist, while planning for the day when the cookie will lose much of its value.

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ABOUT THE AUTHOR

Kevin Lee

Kevin Lee, Didit cofounder and executive chairman, has been an acknowledged search engine marketing expert since 1995. His years of SEM expertise provide the foundation for Didit's proprietary Maestro search campaign technology. The company's unparalleled results, custom strategies, and client growth have earned it recognition not only among marketers but also as part of the 2007 Inc 500 (No. 137) as well as three-time Deloitte's Fast 500 placement. Kevin's latest book, "Search Engine Advertising" has been widely praised.

Industry leadership includes being a founding board member of SEMPO and its first elected chairman. "The Wall St. Journal," "BusinessWeek," "The New York Times," Bloomberg, CNET, "USA Today," "San Jose Mercury News," and other press quote Kevin regularly. Kevin lectures at leading industry conferences, plus New York, Columbia, Fordham, and Pace universities. Kevin earned his MBA from the Yale School of Management in 1992 and lives in Manhattan with his wife, a New York psychologist and children.

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