• by August 6, 2020

The pending demise of cookie-tracking technology has stirred debate about how it may negatively affect advertising sales of publishers. A recent report on Wired's website indicates the end of third-party cookies can be a good thing for digital ad revenue.

The magazine highlights the experience of Nederlandse Publieke Omroep (NPO), the main public broadcaster in the Netherlands, which boosted ad revenue after scaling back its tracking to comply with stricter privacy rules in the European Union.

The experiment worked so well it abandoned tracking altogether this year, and saw its yearly revenue jump 62% in January and 79% in February. The double-digit gains continued even after the coronavirus pandemic led to a steep drop in global ad spending, Wired's Gilad Edelman reports.

Before any U.S.-based publisher suddenly concludes it should stop online tracking of readers, there are important facts to consider about NPO's experience. The broadcaster operates in one of the most regulated media markets in the world, especially after the EU started to enforce its data privacy law two years ago.

NPO's management decided to strictly follow the General Data Protection Regulation, giving website visitors a choice of opting in or out of cookies, the data files that websites put on web browsers to record repeat visits and other online activity. The United States doesn't have a comparable national privacy law, though California is helping to set the tone for the country with stricter rules on data sharing.

As NPO found, most website visitors opted out of cookie tracking, but that didn't spell doom for its ad revenue. Instead, the broadcaster earned more money from ads shown to people who opted out than to those who accepted cookie tracking.

NPO's experience bolsters the argument that contextual ad placements are more meaningful than ads served to people based on their demographic characteristics. Publishers love contextual targeting when it means they can keep a bigger share of ad dollars instead of sharing them with tech middlemen that capture almost half of programmatic ad spending, as discussed in a past column.

With Google planning to phase out third-party cookies and Apple's gradual tightening of privacy controls, publishers are pondering a future without the tracking technology that underpins much of the digital ad market.

Conde Nast, as one example, touted its new technology to track digital audiences without using cookies, while giving advertisers a way to target high-intent audiences with contextual targeting.

As Wired's story suggests, publishers that can capture a greater share of digital ad spending will have more financial resources to support higher-quality editorial content that appeals to consumers. Ideally, that leads to a virtuous cycle of higher readership, revenue gains and better results for advertisers.