There are a lot of scary stories floating around out about advertisers’ use of online “tracking cookies”. These include the announcement of Microsoft’s default “Do Not Track” setting in its latest browser, Internet Explorer 10. As well as recent developments in Europe that are moving to thwart advertiser’s use of cookies.

Marketers and the online advertising industry are up in arms for fear that our industry will be utterly destroyed. Privacy advocates and tech pro’s seem to think it’s a slam dunk of good over evil.

I recently read an article by Matthew Schwartz on informationweek.com, a highly respected IT industry website, which made the case that advertisers’ protests against new data privacy restrictions are unfounded and sinister. The article was titled: ‘“Do Not Track” Restrictions don’t pass the smell test.”

http://www.informationweek.com/security/privacy/advertisers-do-not-track-protests-fail-s/240008925

I contend that the concerns of privacy advocates like Mr. Schwartz are unfounded and misguided, but not for lack of good intentions. They simply fail to understand the realities of online advertising and the unintended repercussions if anonymous cookie based online behavior tracking were to be eliminated.

I can appreciate the practical performance arguments against having dozens of cookies placed on a user’s browser during each session.  However, it’s clear to me that most who object to online “cookie” based tracking from a privacy standpoint have little or no understanding of how all this really works or what value it brings.

For a moment, let’s set aside the fact that Mr. Schwartz’ employer generates revenue from the content he produces, due in part to advertisers buying that site’s traffic on the Google Ad Exchange using anonymous cookie data; he may not realize this since he does not report to the sales department. Instead, let’s take his argument at face value and just focus on 7 simple counterpoints to the privacy argument we should all understand if we are going to have an intelligent debate on this issue.

1)      With a few exceptions, advertisers aren’t evil. They subsidize content that you enjoy so that you don’t have to pay for it. In return, they would like you to see and consider their message for a fraction of a second whether you would be interested in buying their product or not. Does that arrangement offend you? If so, feel free to pull out your credit card and buy your content directly from iTunes (which of course never tracks your behavior.)

2)      “Cookies” placed on your web browser by advertisers do not personally identify you. Not even close. The tracking data within ad cookies that we buy gives us just enough data, within a large margin for error, so that we can feel somewhat smart about where we place our advertising dollars and who they are reaching. It’s an intelligent guess at best. Cookies make seemingly irrelevant websites and web traffic worth something to an advertiser.

If we could identify actual specific consumers via ad cookies, people in my industry would be making a LOT OF MONEY. Media buyers would all be living on private islands and driving Tesla sports cars. I currently drive a Toyota Camry. I’m not complaining; it’s nice and roomy.

3)      Most websites that you visit every day can’t attract advertising dollars on their own.

They:

a)  Lack valuable and highly targeted content and/or

b) Lack brand awareness to attract media buyers and/or

c)  They don’t have a large enough sales staff to monetize their traffic

We’ve come to refer to these as “long tail” websites. This refers to their ability to deliver some additional reach and frequency to your campaign’s ad message, even though those sites are not targeted to the content or audience you are trying to hit. The only way that long tail sites can survive is by selling their ad inventory on ad networks and exchanges, where advertisers can cherry pick the audience anonymously by buying certain cookies that fit a particular profile.

Think of the following scenario: You are a company trying to sell high quality luggage to frequent fliers/business travelers. Logic would say that you should buy ads on travel sites like Travelocity, Expedia and Orbitz. However, with the use of advertising data, I can also find these frequent fliers on sites like cooking.com, msn.com, sfgate.com and Politico.com; and this can be done at a fraction of the cost of only buying the “relevant” site based on content. Thus by expanding the ad buy beyond the endemic content sites the efficiency of your media buy is greatly increased.

Without cookie data you’d be crazy to spend any money of these “non travel” sites, for fear of reaching a completely irrelevant audience. Repeat this scenario for the thousands of other advertisers who could buy a “relevant portion” of these sites.

What will happen to the thousands of sites that simply aren’t targeted or premium enough to attract advertiser dollars? Well, much like the NBC Fall lineup, those websites will get canceled — or will need to put up a subscription based pay wall. What would you be willing to pay for Facebook?  How about FailBlog?

4)      If online advertising becomes less targeted, with less reliable data and inventory on targeted sites becomes more in demand and expensive, then advertisers will pull money from online advertising all together and put it back into other mediums such as television, radio and print.

Why? Because the quality of online advertising, after reliable audience data is removed, isn’t that great! A small glob of pixels flashing on the page for a few seconds with an ad message doesn’t provide nearly the same impact or quality of impression as an ad on television or in a magazine.  The reason why online advertising took off is because for the first time it provided real actionable DATA to advertisers and agencies. If there is no data there is little value.

5)      I wonder if the critics of online advertising realize how much PERSONALLY INDENTIFIABLE DATA they are currently providing to Google and Apple through their use of Google search, Android, iPhone and iPad? Think about it. Those companies know who you are, your credit card number, your purchase history, and your home address and where you are located right now! So why then are people getting worked up if I as a marketer buy an ad cookie that tells me that User X might have a propensity to respond to an ad for sporting goods based on his or her visitation of golfchannel.com within the past 7 days?

6)      If you are concerned that cookies jeopardize the security of your computer or network, keep in mind that cookies are not ‘active’, executable, software. They do not spy on data that is stored in the computer nor can they carry a virus. Don’t lump in ad cookies with Adware or spyware, which is rightfully reviled by all non-scammers.

7)      Has anyone, anywhere, ever, been forced to buy a product based on seeing an advertisement? Consumers have the power here, not the advertisers.

This debate will surely continue. My hope is that the leading voices in the advertising and publishing communities can come together and convince the Web Browser companies like Microsoft, Mozilla and Google to avoid tacking unilateral action against cookies without putting into place a sensible alternative for publishers and advertisers. The solution to privacy concerns on the Internet is not to simply destroy the competitive advantages of eMarketing. That genie is out of the bottle and we won’t go back in. Instead we need to find smart ways to serve the needs of all parties fairly and securely.

I’d love to hear both supporting and dissenting opinions on this. Please feel free to comment on this blog or email me at kevinflint@justmedia.com.

Kevin Flint
Just Media, Inc.