Crumbling Cookies Threaten SEM and Online Advertising

A recent Jupiter Research report found “as many as 39 percent of online users may be deleting cookies from their primary computer every month, undermining the usefulness of cookie-based measurement and leaving many site operators flying blind.” Client data we’ve seen indicates the problem may not be quite as dire as all that… yet. But the trend toward blocked or deleted cookies is clearly increasing.

Over the last few years, spam nearly killed the email marketing industry, at least as far as opt-in email as a customer acquisition vehicle is concerned. In an overall ecosystem, the cheaters who sent the spam caused mailbox clutter and consumer outrage. Users found themselves digging out from under mountains of spam. ISPs and independent software companies stepped in to offer technology to reduce spam.

Yet no solution really works perfectly, and the email marketing industry is moving too slowly. Domain authentication still isn’t standard for email sending. Bummer. Now, even legitimate opt-in communications from publishers and companies to their customers and subscribers are often flagged as spam or not delivered.

A lesson can be learned from email’s demise as a customer acquisition vehicle. Self-regulation must be early and decisive when there’s preventable activity that threatens an entire industry.

A similar threat looms over the entire online advertising industry, the Web analytics business, online publishers, and even paid search. That threat is cookie blocking, cookie removal, and cookie scrubbing by consumers and businesses alike. The proliferation of spyware and unwanted adware has resulted in a surge in popularity of spyware removal programs. Many of these also remove third-party cookies. Simultaneously, many Internet security software packages include cookie blocking, cookie removal, or cookie management features that are turned on by default.

Without third-party cookies, many industry technologies would have to rely on alternate means to measure ad performance. The user also loses. Cookies, like an email or a postal address, or a customer phone number, can be used by marketers wisely or poorly. Instead of using cookies to enhance the user experience with highly targeted advertising, some have instead focused on short-term gain.

Many Internet adverting businesses worry it’s too late. They think wild hysteria and paranoia fueled by spyware, privacy advocates, and media will kill the cookie as a viable way to bring users better site experiences, easy log-ins, relevant advertising, and personalization.

Who Can Save the Cookie?

Several trade associations are positioned to help save the cookie as a viable ad tracking method (if it can be saved). They have several weapons at their disposal, including:

  • Proactive consumer PR efforts, so consumers will understand cookies’ positive effect in helping them manage their online experiences and even to see more relevant advertising

  • Lawmaker education on the realistic levels of privacy “invasion” caused by non-personally-identifiable cookies served by first- and third-parties

Trade associations that should add cookie preservation to their agenda include, but aren’t limited to:

  • The Direct Marketing Association (DMA). The DMA wasn’t able to save email from spammers, but it may be able to slow the cookie’s demise. Direct marketers are online tracking’s heaviest users, so their members have the most to lose. The DMA recently affirmed a commitment to interactive marketing while disbanding the Association for Interactive Marketing (AIM), its interactive arm.

  • Interactive Advertising Bureau (IAB). The IAB’s primary members are online publishers, who have a tremendous amount at stake. Online advertising pitches itself as trackable. Losing that tracking will reduce ad inventory value. Even simple ad-server tasks such as frequency capping are much more difficult (if not impossible) without cookies.
  • Search Engine Marketing Professional Organization (SEMPO). Though SEMPO is a fairly new organization, the membership and board are motivated to ensure search marketing gets the visibility it deserves. Loss of cookie tracking would make search advertising, as well as engine-level result personalization, much more challenging. All SEMPO constituents: agencies, search engines, even searchers, have something to gain from continued cookie use.
  • American Association of Advertising Agencies (AAAA). Ad agencies need tracking for interactive marketing. Interactive and search marketing are a growing percentage of media budgets. Tracking and effective ad serving are critical to the continued success of the agency community.
  • Association of National Advertisers (ANA). Advertisers want tracking. Cookies are an important part of tracking for online media, as well as serving to facilitate better ad targeting.
  • National Retail Federation (NRF) and Shop.org. The NRF is the world’s largest retail trade association, and its Shop.org division is the association for online retailers. Both rely on cookies for everything, from affiliate marketing and online advertising to CRM (define) data collection.
  • Advertising Research Foundation (ARF). It’s much more difficult to conduct online research without cookies. Need I say more?
  • Magazine Publishers of America (MPA). Magazine publishers are going online and supporting themselves through advertising. Ad serving and tracking are superior with cookies.
  • Web Analytics Association (WAA). Most Web analytics firms use cookies to track user behavior over time. If there are no cookies, there will be no tracking and, hence, poor Web analytics.

Is the potential outcome of the “cookie crisis” overstated? Perhaps. But I don’t want to see the cookie’s value to consumers, advertisers, and publishers evaporate.

I was recently appointed to chair SEMPO for the next year by its newly elected board of directors. I’ll extend an invitation to the other organizations affected by the cookie issue to determine if inter-organization cooperation or coordination is appropriate. I urge all readers who belong to these organizations and agree education and positive PR may help turn the tide to share their views on the potential of a cookie crisis.

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