Who Ate My Cookies? “Do Not Track” Legislation Will Hit Mid-Market Hardest
http://www.adotas.com/2012/06/who-ate-my-cookies-do-not-track-legislation-will-hit-mid-market-hardest/
ADOTAS – A recent resurgence of display ads for B2B marketing might well point to a bright spot in a lackluster economy. Indeed, with the Interactive Advertising Bureau reporting a $31 billion business in 2011, internet advertising revenue numbers indicate a clear jump compared to 2010. But the rising success of ads is tied to third-party tracking, which uses cookies in browsers. So when the FTC began to push advertisers to implement a “Do Not Track” mechanism, marketers had to pay attention. While tracking is commonly associated with shopping, e-commerce and brand sites, a new study we conducted at Mintigo shows that a majority of B2B marketers now use tracking as well, and must be cognizant of the changes ahead.

Third-Party Tracking for Marketing Success

Over the past several years, third-party tracking — which uses cookies to collect information about web users so that ads can be targeted efficiently — has emerged to make online ads more profitable. The advances no doubt contributed to the growth of display ads, which previously languished behind search engine ads.

When Mintigo looked at top-ranked websites, we found that the use of third-party tracking was correlated to website traffic. Specifically, we found that third-party tracking was actually lower among the largest traffic sites, and peaked at 59 percent usage by midsize sites (those averaging an Alexa rank of approximately 3,000 — see Figure 1).

Figure 1. Third-Party Tracking Peaks for “Midsize” Websites

In addition, certain industries like computers, software, internet, financial services and automotive now show more than 50 percent of top sites using third-party tracking (see Figure 2).

Figure 2. Third-Party Tracking by Category

Third-party tracking benefits the world’s midsize businesses, which leverage it to target their ideal audience — that is, customers who will most likely be interested in buying based on past browsing history. In some cases, it makes the difference between being profitable and not profitable.

However, the practice of third-party tracking has given rise to concerns over privacy. With the FTC threatening legislation, the advertising industry is considering a self-imposed “Do Not Track” mechanism. The chairman of the FTC has predicted that such a mechanism will be in place by the end of this year. In May, Microsoft announced that it would ship Internet Explorer 10 (IE10) with “Do Not Track” enabled by default. Although the default was ruled non-compliant with spec standards, in favor of opt-out cookie disabling by users, if such a default were to be honored by ad networks, it could in theory render the estimated 20 percent of web traffic that switches to IE10 “un-targetable.”

The bottom line is that Do Not Track could have serious implications for digital marketers at midsize to large companies. It is interesting to note that some of the largest websites in the world may be less affected by Do Not Track. Marquee sites such as Facebook, Yahoo!, and Amazon have such a high volume of traffic that they can rely on first-party tracking with their own traffic logs. After analyzing the correlation of company size and tracking practices, we determined that sites with the highest rank (i.e. the most web traffic) were not the highest users of third-party tracking. This may be for competitive reasons, or perhaps risk mitigation around privacy concerns. These large sites may gain a marketing advantage if Do Not Track advances, as they will still be able to leverage their volume of traffic to target audiences more effectively.

Innovative Alternatives That Work

With cookies at risk in the wake of Do Not Track, many marketers in midsize and large businesses will seek new alternatives to reach their ideal audience. Fortunately, today’s marketer has new options from which to choose. It will be increasingly important to leverage the vast quantities of public information available on the web and social networks. While this overload of information is more than people can digest manually, technologies like semantic crawling and artificial intelligence make it possible to identify an audience without using cookies. It’s even possible to discover proxies for buyer intent, which is perhaps the most exciting innovation of all.

According to Jeff Ernst, principal analyst at Forrester Research, “B2B buyers leave lots of hints about their needs and buying intent through their social media profiles, updates and conversations in online communities. Technology that can discover these hints and identify ideal prospects will greatly improve how marketers target and communicate with buyers in the future.”

The Do Not Track movement augers change for many marketers, but it does not spell disaster. Rather, it presents an opportunity to explore new approaches that yield marketing ROI and maintain a healthy balance with privacy concerns — a win-win for all involved.