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Saturday, March 2, 2013

The Real Costs of Cookie-Blocking

The Real Costs of Cookie-Blocking

Third-Party Ad Companies and Small Sites Will Be Impacted

While privacy advocates applaud Mozilla's proposal to block cookies by default on the Firefox browser, it should be clear that this is yet another initiative that does not show how it protects people from harm. What's more, along with negatively impacting digital advertising, it could have an adverse impact on small publishers and do much to limit consumer choice online.

Why do companies want to track online activity in the first place? Small publishers rely on a host of third parties, such as analytics vendors, to understand the popularity of the content they publish. Third-party advertising technology companies generate the publisher revenues required to pay staff salaries and keep sites running. These third parties aggregate the content created by millions of small publishers and offer media buyers a reach of advertising opportunities that is comparable to that provided by large, vertically integrated publishers. But to be truly competitive, these advertising vendors must track the anonymous activity across their networks to offer frequency capping and other services offered by the largest publishers.

The World Wide Web Consortium (W3C) tracking protection working group tried to simplify the exchange of free content for tracking with a universal flag. Unfortunately, the proposed rules inadvertently gave the largest publishers an unfair competitive advantage, since they were not required to respect this flag. Absent the ability to track anonymous information, the small independent publishers' service providers could not help them monetize their sites or understand their readership base on equal footing with large publishers.
In fact, new regulations in some countries even require publishers to display annoying pop-ups to inform consumers that anonymous tracking is taking place. Since large publishers that have wide-ranging content need only display this once, but small publishers must each independently display the pop-up,some consumers may find it less annoying to restrict their visits only to large publishers. This inadvertently centralizes consumer activity to just a few players, which according to privacy advocates would help lead to the very "Big Brother" centralized database of consumer activity that they are trying to prevent.
With the Federal Trade Commission's (FTC) Children's Online Privacy Protection Act (COPPA), we have seen debate arise over anonymous identifiers and personal ones. Both privacy advocates and the industry agree that personally identifiable information (PII) can be used to identify, proactively contact or precisely locate a person. Also classified as PII is informationsuch as social security numbers that can help look up information to contact you. Thus, the definition of an anonymous identifier is one that cannot be used to proactively contact a person (e.g., an IP address or a cookie identifier). Unfortunately, the FTC further muddied the waters by declaring that personal information should be defined differently for adults and for children. Thisleads to an important point of clarity: In digital advertising we only need to use anonymous identifiers to help support independent publishers in competing with their larger rivals.
With the Firefox plan, Mozilla is making a unilateral decision without giving consumers a choice, and blocking even the collection of this anonymous data. We are steadfast advocates for consumer rights and hope that as with other anti-competitive actions, this initiative will be rethought in light of the impact it could have on the online advertising industry and on small publishers.
We believe in promoting free access to a diverse set of ideas produced both by millions of individual bloggers and by the world's largest publishers. Everyone enjoys and benefits from free content. Nearly everyone agrees that we each have a right to privacy embedded in our own identity. But each of us is also a consumer of advertising-subsidized content, and that advertising relies on the use of anonymous data. Transparency and choice are two fundamental principles that underlie digital privacy guidelines. But how can usersmake informed choices if they don't understand the implications of their decisions? The personal and even societal value of having free access to nearly unlimited content is hard to overstate, and the loss of it would have profound implications.
We hope through better understanding of the benefits of anonymous uses of information, trade groups, government and our industry peers recognize that the unintended consequences of the proposed changes would institute barriers that disproportionally impact small publishers and limit choices for consumers

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