- What is Mozilla doing that is causing concern?
- What is a cookie?
- What is a first-party cookie?
- What is a third-party cookie?
- Why would blocking third-party cookies hurt small businesses in particular?
- Why would Firefox’s changes particularly hurt small businesses?
- How would the widespread blocking of third-party cookies devalue interactive advertising?
- Why is the economic value of the interactive advertising industry important to protect?
- How would the widespread blocking of third-party cookies unfairly advantage big businesses?
- Why should consumers and businesses alike worry about an internet dominated by giant companies?
- Won’t eliminating third-party cookies benefit premium publishers, like magazine companies and newspapers, that have been hurt by the internet?
- Why does blocking third-party cookies threaten consumer privacy?
- Can’t the innovative digital advertising and media industry invent a new way to deliver content without using third-party cookies?
- How does Mozilla’s intended update to Firefox restrict freedom of choice?
- How does blocking third-party cookies by default hurt the user experience of the internet?
- What’s the difference between what Mozilla is proposing and what’s known as Do Not Track?
- How will blocking third-party cookies affect viewable impressions?
- Who is IAB and why does it does it value user privacy and positive user experiences online?
A. On February 25, 2013, Mozilla announced intentions to block all third-party cookies by default in upcoming releases of its Firefox browser. Only first-party cookies would be allowed.
A. A first-party cookie is defined as a cookie from a website that a user has visited.
A. Third-party cookies are placed in your web browser by trusted partners of the websites you visit. A third-party cookie is defined as a cookie from sources other than websites a person has visited. Third-party cookies are frequently placed in your browser by ad networks, which provide advertisers access to small business publishers across the internet and make these small ad-supported businesses possible; analytics firms, which measure, and therefore help publishers optimize, the performance of websites and advertising; social sharing services, which better enable users to share content; and data management companies, which help advertisers present users with more relevant advertising and helps publishers increase the value of their advertising inventory.
A. The internet has a lot of websites and pages that attract large audiences, but there are many more pages and sites that attract smaller niche audiences, such as blogs. The small businesses behind these web pages cannot afford to hire a staff to sell their advertising inventory directly to advertisers. And as much as advertisers—both big, national brands as well as small, local businesses— value the deeply interested users these smaller sites attract, they do not have the resources to negotiate thousands of deals independently with website owners across the internet. Ad networks are a type of company that fill this need. They aggregate the advertising inventory of many sites and then sell it to advertisers by audience segment. For example, ad networks can identify auto enthusiasts across dozens, or even hundreds, of sites they represent, bundle them into a package, and offer that audience to automotive manufacturers – thereby giving auto advertisers the reach they need into a special-interest group, and providing smaller sites an opportunity to get advertising from large companies that would otherwise ignore them. This business model, which is based on cookies, enables advertisers to reach their target audiences across the wide and expansive internet, and it empowers small businesses to earn money from their valuable visitors.
Without third-party cookies this small-business engine goes away. Without third-party cookies, ad networks as they are today would cease to exist, as they would never have the opportunity to issue first-party cookies. This would force small publishers to sell their advertising inventory directly, person-to-person, and it would force advertisers to buy advertising in the same manner, transaction by transaction. Neither party has the resources to do this. As a result small ad-supported publishers would close their doors. Small, internet-only retailers, too, would be hurt immeasurably, because they rely on online ad networks to reach niche enthusiast segments at scale.
A.The Firefox browser has an approximate 15-20 percent market share. If Firefox blocks third-party cookies, it could cause a possible 15-20 percent loss of income for small business owners—a significant amount. This change would also serve to drive advertisers away from ad networks, which would inhibit them from advertising on small publisher sites and create even a greater loss. Many would go out of business.
A. For most of the past century, advertisers have purchased advertising time and space according to a very simple formula: They seek to reach an audience segment with an advertisement that is shown with a specific degree of frequency. In the language of advertisers, “reach x frequency = gross rating points.” This formula is used whether advertising on television, in magazines, or on the Internet; it assures that an advertiser’s message is seen, heard, and hopefully understood by an adequate number of people in an audience segment, while also assuring that the target audience isn’t oversaturated with the ads, which would be wasteful to the advertiser and offensive to the audience.
Third-party cookies are the technology that allows advertisers to deliver their ads to specific audience segments and to cap the frequency with which these ads are served to the same person. Without third-party cookies, advertisers could unintentionally serve the same ad to the same person one thousand times in a short timeframe, turning the Internet into a vast wasteland of irrelevant and repetitive ads.
Third-party cookies also allow advertisers to tell if an ad inspired a purchase—in short, whether or not an ad worked. When an ad works, the value of the ad increases. This success inspires advertisers to spend more on ads of that kind and on interactive advertising in general. It also inspires them to invest in the production of creative digital advertising campaigns, helping websites large and small earn more money, and invest more in compelling content.
But if advertisers can’t determine the effectiveness of their advertising and effectiveness is further undermined by the wasteful serving of the same ad to the same person over and over—which would be the case in a world without third-party cookies—the less advertisers will invest in online advertising, the weaker the interactive advertising industry becomes, and the less money there is to invest in digital content.
A. In 2011, the ad-supported internet ecosystem contributed 5.1 million jobs and $530 billion to the U.S. economy. It accounted for 3.7 percent of the U.S. gross domestic product, up from 2.1 percent in 2007. The interactive advertising industry is one of the few U.S. industries that has continued to thrive in spite of a challenging economic environment. It is a bright spot in our economy that must be protected.
The economic value of interactive advertising is also what financially supports the creation of much of the content and services users enjoy every day. Almost all websites are free to users – from the hobbyist and political commentary blogs to the specialty recipe sites and home-improvement video sites, from the largest social networks to the smallest digital newspapers. They are able to give their content away for free because they have the opportunity to earn revenues from advertising. Advertising is what finances the diversity of content and breakthrough innovations that the internet is known for.
A. In an environment where only first-party cookies are allowed, those few prominent companies that consumers know by name and choose to visit online will be able to place a cookie on user computers, take exclusive advantage of all the strengths that cookies have to offer, and become increasingly attractive to advertisers. The smaller publishers that depend on third-party cookies to create value for advertisers would be locked out of this new “land of the giants.” If advertising networks as we know them today cease to exist, advertisers will have little access to small publishers and in this way advertisers will also be encouraged to invest solely with the existing big players. Blocking third-party cookies unfairly disadvantages small businesses by forcing them to be uncompetitive.
A. By creating an internet largely controlled by giant publishing companies, Firefox’s proposal to eliminate third-party cookies would limit consumers’ access to alternative points of view, enthusiast information, and the diversity of news, ideas, recommendations, art, and craft that animates the internet. Sites like RightWingNews.com and LiberalOasis.com (both represented by the BlogAds network) would be forced out of business. So would MotherhoodWTF.com and SuburbanDaddy.com (represented by the BlogHer network). (For a list of hundreds of small niche sites that would be impaired by the elimination of third-party cookies, go to http://www.iab.net/member_center/1521/629021.)
Businesses would suffer because competition for web advertising would concentrate in the hands of a few large providers. This would reduce the incentives sites have to be competitive in their advertising pricing and the diversity of their ad offerings. And, of course, with the ability to deliver advertising relevant to a user’s interests constrained, both consumers and businesses would revert to using irrelevant advertising, in high volumes, to assure they meet their reach and frequency targets.
A. Some premium publishers may see a few benefits from the elimination of competition from small, network-represented sites, but the elimination of third-party cookies will negatively affect most premium publishers, as well. Many premium publishers generate income by using advertising networks to sell the advertising inventory that they cannot sell through person-to-person direct transactions. This revenue would disappear. It would prevent them from bundling their advertising inventory with other select publishers into so-called “premium networks”—another opportunity lost. These businesses would struggle to gain value by syndicating their content, the practice of placing their content on other publisher sites to increase the size of their audience. Because in many of these deals, the syndicated content provider is the “third-party” and needs to place a third-party cookie to measure and analyze the performance of its content.
Eliminating third-party cookies would also destroy the digital advertising supply chain, which depends on third-party cookies to accurately measure the delivery of advertising and the performance of advertising.
A. It sounds logical: without third-party cookies fewer entities will be able to put cookies on a user’s computer and users will have more privacy – certainly more freedom from advertising. However, this is not the case.
First, blocking third-parties would invalidate the interactive advertising industry’s self-regulatory program for protecting consumer privacy that has been endorsed by the Obama administration.
In 2012, the Obama administration endorsed the work of the Digital Advertising Alliance, a consumer privacy organization of which the IAB is a part, for creating a robust self-regulatory program to protect consumer privacy rights and expectations in the advertising-supported internet. This program provides the participating 5,000 internet publishers, marketers, and other advertising industry companies clear ground rules for activity and exerts penalties if not adhered to. The principles of the program come to life most visibly through a small icon adjacent to advertising that’s delivered to a consumer based on the educated guess that the ad will be of interest to them. This icon links users to a website with information about how user data is collected and used, and gives them an opportunity to opt-out from the practice. More than 1 trillion of these icons are delivered to U.S. consumers each month. Third-party cookies make the consumer choice program functional, providing the technology that tells businesses that a user has opted out of interest-based advertising through this program. If the participating businesses do not honor user choice, they face investigation and penalties from the Council of Better Business Bureaus.
Cookies are also a notably transparent technology. A cookie is literally a small file on a user’s browser. When a company places a cookie on a user’s computer, the user has means to find out that it happened, delete their cookies, or to even block cookies from one or all businesses placing them. Technological tools and techniques that can support business operations in a cookie-less environment are often invisible to the consumer and may provide less opportunity for self-regulatory or government law enforcement detection of disreputable practices.
A. Sure, but it will take years of chaos before it shakes out. For better and for worse, the cookie-based digital media supply chain was invented some 15 years ago, and rapidly came to dominate the way relevant advertising and programming content is delivered in interactive environments – in large part because no one company owns it. Today, virtually the entire digital media and ad industry depends on cookies. Were a single browser manufacturer or an oligopoly of browser makers unilaterally to block cookies from functioning, there would be a free-for-all in the way websites try to assure that relevant programming and ads make their way to users. Large companies, including device manufacturers, browser makers, and dominant sites, each would seek hegemony. The interactive advertising industry – the only segment of the media business to see unimpeded, double digit growth for the past decade, a time when most media segments have experienced significant declines – would be paralyzed, probably for years.
A. Users have the right to decide if they want to utilize third-party cookies. Any browser that blocks third-party cookies by default, as Mozilla intends to do, restricts consumer choice. It is instead the browser that is choosing the user’s experience. Browsers are the door to the internet. If browsers begin closing this door by making decisions for users that will dramatically and negatively affect the quality of their online experiences, the internet will cease to be the rich and dynamic environment it is today.
A. Third-party cookies prevent one user from being served the same ad repeatedly and allow them to receive advertisements that match their interests.
Third-party cookies enable advertisers to reach their target audiences and measure an ad’s performance. This increases the value of interactive advertising. It encourages advertisers to invest more in engaging and cutting-edge advertising experiences, and finances more of the content and services that users value online.
Third-party cookies also allow for personalized online experiences, such as websites to remember your password and news sites that produce a home page tailored to your interests. It also allows for innovative forms of public service, like this initiative that enables emergency messages to be distributed to relevant, localized audiences.
Third-party cookies empower users to utilize the privacy program endorsed by the Obama administration.
Third-party cookies fuel the interactive advertising industry and without it, websites will need to find new ways to make money, such as paywalls. The access to information, content and services, we enjoy on the internet is made possible by advertising. Without it, this access is likely to be greatly diminished.
Third-party cookies support small-business publishers and without use of these cookies, these businesses would be forced to shut down. A web where users cannot enjoy a diverse array of voices would be a much dimmed version of the internet.
Users who go online in an environment where third-party cookies are blocked by default will experience a deluge of repetitive and irrelevant ads, an anonymous and frustrating experience online, fewer ways to control their privacy, and less access to content and information.
A. Do Not Track as it has been conceived by the World Wide Web Consortium’s Tracking Protection Working Group would be a browser setting that users could turn on and turn off, similar to the setting of any other preference. It would tell businesses: tracking is fine with me or no I don’t want to be tracked. Then businesses could voluntarily honor this user choice. In October 2012, Microsoft announced it would be implementing Do Not Track in its release of Internet Explorer 10 and that Do Not Track would be turn on automatically as a default setting. The IAB and the Digital Advertising Alliance strongly opposed this move because it replaces user-driven choice with machine-driven choice. Likewise what Mozilla is proposing discourages the expression of a user’s preference. But it also goes a significant step further. The Mozilla implementation would not simply convey a user’s preference. It would create a browser-imposed technical wall blocking all third party cookies.
A. The digital advertising industry is moving rapidly to create a new “currency” – the standard by which advertising viability will be judged and compensation awarded. This new currency is the “viewable impression” – an ad that renders on the screen for a minimum period of time. Until now, digital advertising’s currency has been the “served impression,” in which the only guarantee was that the ad left the computer server responsible for delivering it to users’ browsers. By shifting to a viewable impression currency, digital advertising will be more readily measurable by brand advertisers, and more comparable to ads in other media.
While a lack of third-party cookies would limit how well advertisers could control the delivery and measure the performance of their advertising, it would not affect the measurement of whether or not the ad was viewable.
A. IAB comprises more than 500 leading media and technology companies that are responsible for selling 86% of online advertising in the United States, and more than 1,200 small business publishers.
On behalf of its members, IAB is dedicated to the growth of the interactive advertising marketplace, of interactive’s share of total marketing spend, and of its members’ share of total marketing spend.
Users are the centerpiece of the interactive advertising marketplace. When companies advertise, they are buying access to users with the goal of making a positive and memorable impression. User trust and the overall user experience must be protected to sustain a prosperous interactive advertising economy.
Interactive advertising is also what financially supports the internet as a place where users can easily discover new ideas, gain valuable information, have delightful and eye-opening experiences, socialize, build their careers, and find new ways to make their lives easier and more enjoyable.
Advertisers and those businesses like browsers, social networks, news websites, email services—all share the common interest of making users happy, and at this time they are largely dependent on each other to do so.
Advertising itself has produced some of the most memorable and enjoyable user experiences on the internet. It is part of the content and information service users enjoy on the internet every day.
IAB is committed to supporting the interactive advertising industry, and as such, the internet itself as a powerful medium that improves the lives of people around the world.
Founded in 1996, the IAB is headquartered in New York City with a Public Policy office in Washington, D.C. For more information, please visit www.iab.net.