Common Cookies: Who Owns Your Web Audience?

Folio: The Magazine for Magazine Management, Sept 1, 2001 by Jillian Ambroz

Third-party ad servers watch people all over the Web, and may own everything they want to know about Web surfers--compromising the only real online asset Web publishers still have.

Web publishers are caught m the middle of a power struggle over their own customer data--and they may not even know it.

At the heart of the battle for audience information is the very source of most data: the seemingly innocuous, if annoying, "cookies" that most people have come to accept as a fact of Internet life. These cookies--small, unique identifiers stored on surfers' hard disks when they visit a particular Web page--are the building blocks of a data-collection mechanism that has the ability to track visitors across multiple Internet sites.

Ad-serving companies hold the power when it comes to cookies because they are often the ones that collect and analyze the cookie data. One of the highest profile ad-serving companies, DoubleClick Inc., uses a common (or third-party) cookie exclusively owned by the company that can track an individual's activity across multiple sites in its network. Competitors 24/7 Media Inc. and Engage Inc. also employ common cookies. Real Media, by contrast, uses a unique cookie (one created specifically for, and owned exclusively by, the Web site it serves) that tracks user activity on that particular site only.

These differences are now part of the marketing battle among the players. Mark Naples, director of marketing for Real Media, says that the common cookie strips publishers of their own data and thereby makes the data vulnerable to being undersold elsewhere--which he asserts is happening today. "The third-party ad server is going to reach that user on the cheapest site possible," says Naples. "They're going to sell an ad based on the cheapest place they can reach that user. It violates the relationship between the buyer and seller."

The key issue for publishers is who owns the user data collected by the cookies. The Real Media contract explicitly states that the publisher is the sole owner of all data. DoubleClick offers a couple of different services, each with a different set of proprietary rights. With its DART ad serving program, it has no rights to use any of the data gathered, says Jules Polonetsky, chief privacy officer for DoubleClick, though the information is stored in its databases, as are the cookies. If clients choose to participate in DoubleClick's Intelligent Targeting program--whereby sites pool data gathered by DoubleClick's standard common cookie and share in revenue gleaned from higher premium ads that target specific audiences based on user profiles--then DoubleClick co-owns that information and can use it to build marketing scores and sell ads, says Polonetsky. To date, DoubleClick has 100 million user profiles in its system.

Although publishers sign up for this service, and data ownership and rights of use are fully disclosed in contracts and privacy policies, it is their non-exclusive retention of user data that poses a potential problem for publishers.

Context is critical

Data collection practices reach far beyond the relationships between publishers and their online business partners, to possibly affect the entire medium. "The common cookie doesn't take into account how the consumers feel about the different sites they're going to, how much time they're spending at the different sites," says Michael Zimbalist acting executive director for Online Publishers Association, whose members include The Industry Standard, Washington Post, Newsweek Interactive and CondeNet. (The first two are DoubleClick clients.) "It doesn't differentiate between the media. It would generalize the Internet into one conglomeration of media and dilute the value of a media brand."

As a business practice, eliminating the context of the magazine Web site when serving an ad works against both publisher and advertiser, says Sarah Chubb, president, CondeNet (a Real Media client) and secretary of the Online Publishers Association. "Context makes a big difference. The context that we sell as publishers is not only the ad image and message to the right customer, but the credibility and quality of the site [that] makes a difference in the way an ad is perceived," says Chubb. "DoubleClick is selling only a piece of the pie. Context and environment are important to the way the consumer absorbs the message of the ad."

Chubb says that CondeNet's visitors can still be tracked by third parties using common cookies if they serve an ad on a CondeNet site. Not only does that undercut CondeNet, but it also creates discrepancies in user data and battles with agencies, says Chubb. "They're giving data to advertisers about my site that I don't see and about my user that I don't see. That unsettles me because that's the asset that I have to sell." So, even if publishers are aware of the various tracking technologies and choose not to employ common cookies, they may still struggle over premiums in their ad sales. Publishers should be prepared to fight for the integrity of their own data--and brand, for that matter.