How and Why We Track: Confessions of an Ad “Tracking” Company

cforcookie380In tech, everything moves quickly. So quickly, that there are times when a topic gains so much steam that the nomenclature and hyperbole used to discuss the topic are effectively separated from the technology that enabled it (see, “Cloud Computing,” “Big Data” and “SoLoMo”). The latest, persistent example in the ad industry is the ongoing debate about online tracking, a topic that includes increasingly muddled discussions around specific technologies, preferences and implementations including do-not-track signals, consumer choice and third-party cookies.

Mozilla’s recent announcement to block all third-party cookies by default in the new version of Firefox has sparked renewed interest in these topics, and as you would expect, opinions vary wildly depending on perspective and priorities. Reactions from those representing the ad industry predominantly have been critical, while many privacy advocates have applauded the decision. My reaction was one of frustration for several reasons, but one in particular that is relevant to this discussion — my company builds and sells a product that is used by advertisers and ad agencies to “track” what is happening online.

Common Theme, Different Issues

To adequately discuss privacy, you must first define what it is you’re discussing. Currently, there are two major movements being debated, both of which involve the way Web browsers and providers of online content (predominantly publishers and advertisers) exchange and store information.

First, the Do Not Track (DNT) HTTP header was designed in conjunction with the World Wide Web Consortium (W3C) and is intended to provide consumers with a standard way to indicate to Web applications, digital advertisers and publishers they do not wish to have their behavior tracked across Web properties. All major browsers currently support this feature and the industry is moving toward adopting it as a standard; however, last year Microsoft announced that beginning with Internet Explorer 10, it would enable DNT by default, subsequently causing widespread confusion since the header was designed to be opt-in, not opt-out. For this reason, the vast majority of publishers and advertisers currently ignore all stated DNT preferences, including Google, Facebook and Yahoo.

Mozilla’s recent announcement involves a separate debate about whether or not browsers will accept third-party cookies. For the uninitiated, cookies are small files that include data that allow your computer to interact with the websites you visit. Third-party cookies traditionally are set by advertising companies and analytics firms, such as mine, to help understand what is happening on a website over a certain period of time. Prior to Mozilla’s announcement, only Safari blocked third-party cookies by default among the major browser providers. However, Mozilla’s market share (approximately 20 percent according to Net Applications) is much larger than Safari’s and represents “critical mass,” thus the renewed interest in this topic.

Why We Track

Companies track information online for different reasons. In the analytics world, our business is one of scale. Unlike behavioral targeting, our business model is predicated on the ability to identify correlation across millions of advertising “events” and making recommendations based on huge data sets across large-scale media campaigns.

Typically, advertisers purchase huge inventories of ads across a large number of sites their desired audiences frequent. Each of these ads has a different price associated with it, which increasingly is determined by demand and effectiveness. To make sure they get what they pay for, advertisers often choose to work with an analytics firm to better understand which ad campaigns and channels (search, display, etc.) are more effective and why. As a simple example, browser cookies allow us to determine which advertising is resonating with consumers and how many times that message should be displayed before it gets annoying and loses effectiveness, allowing advertisers to avoid waste and poor experiences.

Unintended Consequences

By most estimates, the first online ad appeared roughly 20 years ago. As a technology, cookies have been used for almost as long. They also serve as a fundamental component that underpins the economics of the open web. Small and upcoming publishers rely on the data provided through third-party advertising technologies to quantify and price the “real estate” accompanying their content, often selling ad inventory as part of large-scale networks that provide reach and attract larger advertising customers. Without these networks, it’s difficult to see these publishers attracting ad revenue necessary to compete and offer high-quality, ad-supported content. Paywalls will also become more prevalent for those publishers that have sufficient resources and audiences to support them.

Also, by eliminating the ability for publishers/advertisers to price and purchase higher-quality placements based on relevance, you can expect a return to “spray and pray” tactics where ad inventory prices plummet and the total number of ads displayed and purchased rises drastically. In other words, if you think some ads are disruptive today, get ready to see much more aggressive tactics employed.

Lastly, while cookies are a relatively mature technology with existing browser controls, industry opt-outs and comprehensive privacy policies, there are alternate tracking approaches that don’t have the same level of consumer control. These alternate methods — including device fingerprinting, flash cookies, local storage, etc. — represent the Wild West of tracking technologies. They are very difficult to detect, lack proper controls and can be abused by fringe tracking companies. None of them represent progress or improvement for the customer.

Choice

The advertising community takes privacy seriously and we agree with the Interactive Advertising Bureau (IAB), National Advertising Initiative, Digital Advertising Alliance and other organizations advocating for the continued development of existing consumer-choice mechanisms. We welcome participation from Mozilla and other browser vendors that seek to deliver easy and transparent privacy solutions to consumers; however, these need to be developed in concert with both advertisers and publishers to be effective.

Paul Pellman is the CEO of Adometry, Inc., a marketing analytics provider that generates insights about the performance of marketing campaigns through combining and interpreting advertising data from online and offline channels. Prior to joining Adometry, he was executive vice president of marketing for Hoover’s.


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