Consumer privacy laws and online advertising and end of cookie

For 25 years – since the introduction of Internet Explorer 2 – our browsers have supported the third-party cookie technology that has formed the basis of advertising on the Internet.

The cookie party is over.

Tech lawyers and business executives need to educate themselves on what will follow in the era of cookies, as online advertising pivots to survive consumer privacy omnibus laws like the GDPR and CCPA that make old-fashioned adware that cannot be used and therefore obsolete. What happens to the cookie and what happens next? Businesses will need practical advice on how to advertise in the new web environment.

After privacy regulators in Europe, Canada and elsewhere made clear their intention to mandate the collection of consumer information only with the express permission of the data subject, the days of the third-party cookie were clearly numbered. HTTP cookies – some session cookies, some persistent cookies – involve the generally secret placement of a code on a consumer’s web browser that can remember items in a shopping cart, record browsing activity, and record the data entered in the fields of the website. These cookies are likely to survive.

Third-party tracking cookies tend to compile long-term records of a consumer’s browsing history and provide that data to anyone who could read it. Some websites might set more than 800 cookies on a visiting browser. The New York Times reported that it found that people reading a controversial article can be followed by almost 50 companies, including those that sell this tracking information to more companies. The Times author said, “As advertisers searched for ways to better target ads, ad technology companies created vast networks to collect user data and ads across billions of web pages, offering thus a one-stop-shop for advertisers to reach web users ”.

GDPR mandated privacy by design for web browsing, forcing tech companies to develop software that protects privacy by default, and automatically excludes the user from those huge ad networks, unless the user does. decides to accept intrusions. The CCPA applies to persistent identifiers, including cookies, and gives consumers the right to know the information collected and to request that the data be erased. Allowing consumers to opt out of cookie networks is bad enough for today’s advertising industry, but the EU’s requirement for automatic opt-out by default signals the demise of this business model.

And Big Tech responds. Safari (2017) and Firefox (2019) already effectively block cookies. The world’s most popular browser, Chrome by Google, deploys similar third-party cookie blocking technology. According to the Elevated Internet Marketing blog, “Once Google removes third-party cookies on Chrome, it will still allow tracking to continue without passing any personal information on to advertisers. This will give Google more power, but also increase online privacy. Google has announced its goal of making third-party cookies obsolete by 2022.

Google’s announcement quickly affected the online advertising industry. Critereo shares slumped to a 52-week low, and other companies with cookie-based advertising infrastructure fell similarly.

What does the third-party cookie track in the online advertising space?

Google advertising is not just disappearing. Clicks and purchases will be stored in the browser and will not be shown to third parties, giving browsing companies like Google more control over the data. Prioritizing privacy means much less metering and targeting from a blind mass of ad networks. Anyone with access to first-party data will continue to thrive. Loyal audiences will command a premium.

Cookies are a device-based tool. The software is device-based, linking that device to the browsing history. The future may involve a lot more marketing directed to a specific person, no matter what device they use to surf the web. Facebook assigns a unique ID to each person, which can be used to track people across the platforms they use to access the web – smartphone, laptop, iPad, TV – and gain a more complete picture of a consumer. . Brands have always used first-party data to appeal to customers, but tools are developing to enable deeper relationships.

Closed business systems like Facebook with huge herds to milk for data will certainly benefit. But the death of third-party cookies can spur a move towards a universal personal identifier that can be used by any merchant. MarTech Advisor writes, “The race has already started, so vendors only have two years to develop their universal identification solution, gain enough partners to become relevant to scale and a feasible industry alternative (in Indeed, selective customer intelligence platforms have started establishing such IDs.) Publishers will be encouraged to work with a few Universal ID providers so as not to become too reliant on a single provider. “

AI allows brands to extract marketable information from customers’ phone conversations, just as it allows Amazon to derive useful information from a customer’s browsing habits on the site. New uses of machine learning will be applied to first-person consumer data to understand their needs and wants in a way that supports traditional marketing tools.

What was old is new again. Keyword targeting was an early search marketing tool and is likely to regain its relevance. This system uses your currently expressed interests to market to you, rather than your overall behavioral profile, such as the third-party cookie regime. According to Marketing Land, “With contextual targeting, the ads you see are based on the content you view instead of your overall behavior profile. So when you check out your knitting blog, you see ads for knitting needles, and when you educate yourself on how to improve the click-through rate on your email newsletters, you see ads for the platforms. automation of relevant emails.

Movements in the marketing technology industry show that privacy laws like the GDPR have been successful in creating a desired effect – structural changes that promote consumer privacy and provide consumers with greater choice. The cookie may collapse, but the advertisers will still eat.

Copyright © 2021 Womble Bond Dickinson (US) LLP All rights reserved.Revue nationale de droit, volume X, number 182