Mozilla, the organization behind the popular Firefox web browser has recently announced that they may ship future versions of Firefox with "third-party cookies" disabled by default.
The Interactive Advertising Bureau (IAB) has taken a stance against this, saying that the move will hurt small to medium sized businesses. But how? What are "third-party cookies," and how might this affect the local, online publishing industry?
An Explanation: Third-Party Cookies and You
Third-party cookies are essential to tracking the effectiveness of digital advertising campaigns. Without them, adservers have no way to figure out whether a user clicking on an ad ultimately led to a service signup or product purchase. That's known as a conversion.
They're also essential for targeting. Third-party cookies allow adservers to track online behavior anonymously so it can create a profile of a user's interests. The adserver can then serve ads that the user is most likely to be interested in.
The idea of "tracking" sounds creepy to some, but the data is anonymous. Additionally, it's an important ingredient to make remnant advertising, which some local publishers depend on, effective.
What Does A World Without Third-Party Cookies Look Like?
Imagine that a world-wide third-party cookie ban was in effect. What would happen to the average local publisher?
Advertisers Wouldn't Be Able to Target The End-User.
This is big for local publishers. Today, when remnant advertising such as "Google Ads" are placed on a site, the adserver often shows ads that are relevant to the end user, not necessarily a site's content as a whole — thanks to the utility of third-party cookies.
Without such precise targeting, an advertiser has little reason to want to show ads on a small publisher's news website.
Suddenly, the world would be dragged back into the dark ages of digital advertising, when big brands like Ford and Chevy are more inclined to allocate advertising budgets toward outfits like Cars.com and the NY Times (as examples), instead of relying on targeting technology to reach potential customers wherever they might be on the internet — like a local news site.
Small publishers could essentially expect remnant ad revenue to whither up.
Luckily, the Situation Isn't That Bad
Mozilla is the only organization entertaining this change, but the Firefox browser still has an estimated 20% market share. That's 20% of potential internet users who can no longer be effectively targeted online, driving down the revenue a publisher could expect, and the number of advertisers willing to serve ads on a small, general purpose news website.
The two mitigating factors here are that most local publishers rely on sales to local advertisers, not remnant ads. Second, Google and Microsoft, who dominate the remaining 80% of browser market share, both depend on third-party cookies in one way or another, and are unlikely to follow suit.
So Why Would Mozilla Go Ahead With This?
Mozilla has been a leader in pushing the "Do Not Track" initiative, a movement to give the internet's end-users the ability to opt-out of tracking by digital advertisers and other entities.
Past releases of Firefox have made "Do Not Track" functionality optional, an important step in the direction of a users' freedom of choice.
Mozilla's move to block third-party cookies could be seen as an attempt to capture a segment of internet users who don't like the idea of being anonymously tracked, preventing further erosion of its user base to the likes of Google Chrome.
Recap: Publishers as a Whole Should Expect Noticeable Revenue Impacts
If Mozilla, which hasn't exactly committed to this plan yet, and is still testing, does decide to move forward, publishers who depend on remnant ads can probably expect a 20% drop in remnant display income over time.
If the romance of not being tracked catches on, that revenue drop will accelerate.
Fighting off the revenue drop may mean that publishers actively promote the use of browsers such as Safari, Chrome, and (gulp) Internet Explorer. It may also mean educating users as to the anonymous nature of tracking, and how it helps to keep all that free content flowing.
We hope this post explains the impact of Mozilla's move on small publishers. Post any questions or comments below!
Stay tuned — we'll follow this up with another post providing some interesting insight into the life of a third-party cookie.