• by Christopher Hansen , March 18, 2013

The online ad industry has made huge strides in self-regulating targeted advertising in the past few years. The AdChoices initiative has gone to great lengths to teach consumers how their data is gathered and used in online advertising, and the industry has implemented clear opt-out rules for consumers who don’t want to receive targeted ads.

But no plan is perfect for everyone involved, and some browsers have decided to dictate the conversation on targeting, data gathering and cookies. At the end of February, Mozilla, makers of the Firefox browser, engaged a really smart grad student from Stanford to create a patch that automatically disables third party cookies, effectively making the decision for consumers.

These moves from the browser makers are becoming more common and exploitative of the fact that consumers don’t fully grasp how the online economy works. If the browsers continue down this path, the online experience is going to change very dramatically in a very short period of time, resulting in greater risks to privacy than what we have right now.

Consumers have come to expect free content online; that news and information is free because it is subsidized by digital advertising campaigns, specifically through ad targeting. Advertisers pay more for ads informed by consumer data because of the increased chances of reaching actual in-market customers, resulting in greater spending efficiency than spraying ads across the web and praying they are seen.

Blocking cookies instantly changes these financial dynamics, eliminating revenue and requiring a new economic model, because publishers can’t support free content without paying their writers and staff. The most likely scenario is for publishers to create login walls for access to their content. Consumers will now have to share personally identifiable information for access, either in the form of an email registration or a Facebook connection. Certain digital publishers would then know even more about individual visitors than they do now, which negate any “privacy” benefits that come from blocking cookies.

The browser makers say that their actions go toward building a more trustworthy online ad ecosystem, but that couldn’t be further from the truth. I have written before about how this corporate messaging is in stark contradiction to the actual effects, but it’s a message that bears repeating.

Default settings eliminate any form of consumer education, as well as consumer choice. By blocking all third-party cookies, the browsers are sending a clear (and misguided) message that these are bad for consumers, without really diving into the nuances of the issue or trusting the consumer to make an informed decision on their own. The browsers are controlling the conversation, not advancing a productive dialogue. 

This is further complicated by the fact that first party cookies from big players like Facebook and Amazon will remain active. Consumers are bound to remain confused when Firefox allows select cookies despite promoting the message that “all cookies are bad”. Now, throw in the browsers’ very poor explanations of their cookie and do-not track functionality, and it is unlikely consumers will ever be able to figure this out on their own.

The browsers are taking advantage of this confusion to gain market share. According to StatCounter data from January 2013, Firefox is the third most-used browser, controlling 21.4 percent of the market (Internet Explorer, the second most used browser, created a similar uproar by turning on a default DNT signal in its browser last year). By positioning themselves as “safe,” browsers will likely inspire some users to switch. It’s a fair approach, but doing so at the expense of third party advertising is inappropriate, if not disingenuous. Not to get too cynical, but this could very well lead to the browsers getting involved in the data business, while making an end run around the already established players. 

What all consumers need to know is that turning off cookies unilaterally results in less effective ads nearly everywhere and a diminished web surfing experience. So many of the sites in action today rely on data and targeted ads to stay afloat, and the online ad industry has to do a better job explaining this tradeoff. There’s been huge progress in explaining anonymous data collection and how to opt-out, but it’s now time to show what will happen if online content is only available behind a login or paywall. Consumers deserve better than what the browsers are telling them, and they need to know about how potentially intrusive the alternatives could be. 

Christopher Hansen ispresident of Netmining.