The End of the Third-Party Cookie: Why the Online Advertising Industry Urgently Needs to Raise Awareness
by Grace Dillon on 16th Feb 2021 in News
Cookie consent pop-ups annoy consumers. This is unlikely to change. But do Internet users even know why they see them? Do consumers understand that content can only be free if personalised advertising takes place and cookies are accepted? Kasper Skou (pictured below), co-founder and CEO of Semasio, doesn't think so. In his guest article, Skou outlines where the industry is falling short when it comes to informing consumers of their data sharing options, and suggests how this problem could be solved.
The Internet has never been free. Websites monetise their content through advertising, providing businesses with a space to reach their target audiences. Thus, consumers see personalised advertising in exchange for otherwise free content. However, since few understand the connection between cookies and their free browsing experience, they view online advertising in isolation from the rest of the content – to them, ads are nothing more than a disruptive factor to their browsing experience.
Despite being introduced to make consumers better informed of this data exchange, cookie consent pop ups have not improved the situation. Since consumers don’t want to spend time reading information they don't understand, most of these pop-ups have been designed with a convenient, binary choice – “accept all"; or “reject all". This process is inherently flawed – instead of an informed exchange of values, a frustrated act of convenience decides the future of digital advertising. This needs to change. Once it does, it will ensure that the evolution of the industry beyond the cookie brings a better future!
The digital advertising industry must educate consumers
A recent study by The Trade Desk shows that consumers often do not understand that content can only be offered free of charge thanks to advertisements. According to the survey, only 23% of respondents know that a large number of websites rely on users' data in order to display advertising, and thus finance their content offerings. At the same time, 61% of respondents reported not knowing exactly what data they are providing to a website after accepting its cookies.
This shows that the digital advertising industry has failed to sufficiently educate users, a shortcoming which has resulted in the widespread myth of the ‘free Internet’. As long as users don’t understand that content is a commodity, and that they have the power to decide whether to pay for it with their data or with money, cookie pop-ups will continue to have a hard time. The result is likely to be a permanent decline in consent rates. This threatens not only the survival of the digital advertising industry, but also that of publishers, who are largely financed by advertising revenues. At the same time, these developments are strengthening the walled gardens that are self-reliant due to a wide network of log- ins already in place through their services. A rethink is needed here to implement solutions that do not artificially narrow the Internet.
Fair value exchange and informed purchasing decisions
But instead of addressing the root of the problem, the industry is focusing on cosmetic fixes – it tries to make the buttons as consent-friendly as possible, or develops transparency and consent strings that pass on the relevant information about the user’s consent to all tech vendors involved. However, the sensible, long-term path for a good relationship between provider (website) and customer (users) is education: only when consumers understand the value of their data can they decide which websites they want to trade it with in exchange for free content. In such a scenario, completely new possibilities begin to appear – it becomes conceivable that users will voluntarily and generously provide their data to fund websites that offer them value. In this case, it almost wouldn't matter how a button is designed in order to obtain as much consent as possible, because a fair, value-based trade would be established between publishers and consumers. Such enlightened data trading would at the same time create a completely new basis for the future development of the ad tech industry. Instead of starving for lack of cookies, new transaction models could emerge on an equal footing.
Good solutions are already out there
Companies like The Trade Desk or similar Project ReArc-based providers are leading the way to reforming the consumer-publisher relationship. They have recognised the failures and the resulting risks and are already taking the first steps to create change. Project ReArc educates consumers about value exchange online and is working on an Open ID single sign-on (SSO) solution using hashed email addresses. This should simplify the process for all parties involved and ultimately improve the user experience. At the same time, this creates balance and leverage against walled gardens.
But what I'm hoping for most from consumer education is a shift away from the current either-or attitude when it comes to allowing or rejecting cookies. Educated consumers could decide how
much data they wants to trade for which content. The current consent policy in Europe, opt-out in
California, and even the new SSO solution all offer this binary consent option, and not a fair exchange of
value per transaction. Visiting a trusted website every day has a different value to a user than a one-off
visit to a random site. Therefore, providing both with the same amount of personal data would not feel
like a fair deal.
One implementation option would be to offer standardised benefit packages instead of a cookie banner. The individual packages would have to clearly indicate what personal data is included in each of them and how much content a consumer gets in return. That way, consumers could decide at a glance which deal they want to enter into. Here's another idea: what if we used Project ReArc's structure, like The Trade Desk's Unified ID, not just as an SSO solution, but also as a kind of data wallet? This way consumers could decide how much they want to pay for specific content. Whether publishers opt for these solutions or not, the point is the industry has options.
To its own detriment, the digital advertising industry has failed to involve consumers in its product development at an early stage and to educate them about the data trades they enter into whenever they surf the web. The result has been the widespread myth of the ‘free Internet’ coupled with consumer cookie fatigue and an expected decline in consent rates. If the advertising industry wants to have a future away from the walled gardens, it's time to educate consumers about both the value of their data and the value of online content. Only then will we have a true transaction model. This could be a new and exciting beginning for all of us – making the death of the cookie nothing more than a passing memory.
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