Coming this June, Firefox v. 22 will change its default behavior to not accept third-party cookies. Much has been written about this upcoming change and what it will means, but here's the simple version. The new advertising landscape will less easily attribute site events, including visits and conversions, to display.
If a user views an ad on a publisher's site, but the tracking cookie is rejected, then the user goes to the Web site of the ad at a later date. This activity will not be able to be attributed to the ad, therefore, investment levels will change. Essentially, there is no way to tell the ad deserved any credit for the conversion or that the money spent was not wasted.
Apple's Safari already has a similar policy. This change will increase volatility to measurement to 48% when Firefox launches. Many mobile devices will not accept third-party cookies either. In 30% plus of mobile sessions, attribution is not possible. That is problematic enough, 48% of the market and 30% of mobile devices not factored into tracking data is a serious hole, but all signs point to the idea that this is a continuing trend.
Microsoft has begun to campaign on the negative impact of tracking cookies on privacy. Senator Jay Rockefeller is pushing the industry to implement Do Not Track more robustly, calling privacy a “basic American instinct.”
For the tracking cookies that do get set, longevity is far from secured. Security software providers such as Norton and MacAfee are increasing the frequency at which they clear third-party cookies, making it harder for advertisers to construct a customer's life-cycle.
With the decline of third-party cookies, the market will need to turn to first-party solutions. First-party data—proprietary data such as CRM data and registration data that the user offered up at one time—provides more accurate measurement and more persistent targeting.
Companies like Yahoo, Google, Facebook and Microsoft possess ample first-party data and operate in the first-party space with first-party cookies that are far more persistent. In this scenario, these large companies achieve the biggest wins because they are both advertisers and publishers. This eliminates the tracking gap created by third-party networks and mostly bypasses the third-party ecosystem.
There is some advantage to using third-party cookies because they provide broader reach and a larger cookie pool but migrating to the use of first-party cookies and first-party technologies is possible, though it takes longer to accumulate for the smaller advertisers and publishers.
Smaller advertisers and publishers can either better leverage their existing CRM or other first-party data or start to create proprietary first-party data to better target and measure their advertising across the Internet.
As media buying has moved from contextual “set it and forget it” buys to audience buys where better data wins, measurement has become more important. First-party cookies provide additional persistence; reach, frequency and site overlap can be reported much more accurately to enable campaigns to be optimized successfully.
On the targeting side, third-party data is great for broad targeting to acquire users into the customer purchase funnel. Once a user has entered the funnel, the first-party data provides the rich, up-to-date targeting to move the user farther down the funnel or to cross-sell or upsell existing customers. It significantly improves return on ad spend for media advertisers.
The best solution would be to combine existing third-party data with a new stronger first-party network, allowing both the broad and targeted reach to be synthesized into a more robust system.