Google announced this year that it would eliminate automatic third-party cookies on its Chrome browser. The company joins Apple and Mozilla, which earlier made users opt in to the technology on their browsers. While Google’s move may be positive for users who want privacy, it’s bad for companies that want to target ads to specific audiences.
Boston University’s Tesary Lin and Chicago Booth’s Sanjog Misra evaluated the alternatives for advertisers. Building an analytical framework and conducting an empirical experiment, they find that advertisers have few good options for constructing accurate user profiles.
“The system was already broken and imperfect,” Misra says. “Any time there is fragmentation, anything you want to measure is going to be off to some degree. Now the rules have changed, and it will exacerbate that fragmentation to a much greater degree.”
Cookies are tags from websites that live on a person’s computer or internet-capable device. When you search for shoes online, the search page and the sites you visit leave cookies that can be collected to tell a company such as Zappos that you’d be a good target for an ad.
Because people use more than one device, a third-party company can collect cookie data to see a person’s browsing history. These companies use a data-linking strategy to cross-reference cookies to see where names, email addresses, and other identifying features overlap and then stitch together a more complete user profile. Advertisers can track if an ad is effective, even if that ad is viewed on a smartphone by someone who bought the shoes on a laptop a day later.
But the picture that emerges is never perfect. People may use different email addresses on a work computer and on a tablet at home, keeping those fragments from being connected.
With Google and Apple controlling about 85 percent of the browser activity in the United States, according to web-traffic analyst Statscounter, the new restrictions make third-party cookies essentially obsolete and increase the fragmentation, leaving companies less certain about how to target ads effectively. Even companies that use data linking will have to rely more on partial links, increasing bias in their assessment of an ad’s effectiveness, the researchers write.
Courtesy Chicago Business Review/By Brian Wallheimer