Cookies, the little pieces of code that track our online habits, will soon have competition from proprietary tracking systems being developed separately by Microsoft Corporation (NASDAQ:MSFT), Google Inc (NASDAQ:GOOG), and Facebook Inc (NASDAQ:FB), reports Elizabeth Dwoskin for The Wall Street Journal. They would give advertisers access to far more personalized information about consumers, but probably for a stiff premium.
Functions of cookies
Cookies are a fundamental part of how websites work, so even if marketers abandon them completely (also unlikely) they will still be used whenever you sign into a site or make an online purchase, the task they were first designed for. Cookies are used to gather information about people online because it’s the best method available, but it has a lot of weaknesses. People are increasingly aware of cookies and how to manage them, so third-party cookies are routinely blocked by many people. Cookies are also deleted, give conflicting information, and can’t tell when multiple people use the same browser or when one person uses multiple browsers.
They are also cut off from the most exciting advertising space available: smart phones and tablets. What the three tech giants have over almost every other company (except Apple Inc. (NASDAQ:AAPL), who can’t be far behind), is access to uniquely identified users across multiple platforms. Selling demographic information has long been a part of these companies’ business plans – and an essential part for Google Inc (NASDAQ:GOOG) and Facebook Inc (NASDAQ:FB) – but the new tracking systems let advertisers interact with consumers in ways they couldn’t have imagined in the past.
MediaBrix, to take one example, says that it uses an emotional targeting system to serve up ads when gamers are most susceptible. Results will probably be mixed, but this type of highly personalized, invasive targeting would become the norm. Smartphones are infamous for showing people at their most impulsive, and advertisers will certainly try to capitalize on that.
But not everyone is excited about the new paradigm. “We don’t want that walled garden,” says Interactive Advertising Bureau vice president Steve Sullivan. But there is a limit to how much Facebook Inc (NASDAQ:FB) or Google Inc (NADAQ:GOOG) would be able to charge. Marketing departments keep a close eye on ROI, and if the new systems are overpriced they won’t be heavily used.