The Demise of Third-Party Cookies Could Help Premium Publishers

Facebook and Google are well positioned

First Safari and now Firefox are blocking third-party companies from dropping cookies on publishers’ sites to protect users’ privacy. Those moves hurt revenues of the smaller publishers that depend on third parties to sell ads. But, paradoxically, the winners could be premium publishers and large media companies, especially Facebook and Google, who will be able to prop up their proprietary audience data as the ideal alternative.

Big traditional publishers whose ad revenue has shrunk as readers and advertisers shift online could recoup their losses by parlaying their first-party audience data into even higher ad rates. “We believe the cookie discussion really does put a spotlight on the value of first-party data,” said Hearst Digital chief revenue officer Kristine Welker.

“Somebody has to figure out how to give personalized content to the end-user,” said Barry Lowenthal, president of The Media Kitchen. “If browsers don’t want to help figure that out, then publishers have to figure that out. That’s why big media companies [such as The New York Times Company and IAC] are at a big advantage.”

Facebook and Google are even better positioned. Like macro-versions of traditional media companies, they can solicit names and email addresses from massive user bases, append that personal information to unique user IDs and view their behavior across a growing number of owned properties, giving them tons of data that others would have to compile piecemeal across any number of publishers and augment it with third-party data.

In such a post-cookie digital ad world, the most ad dollars theoretically would go to those with the most information on the largest audience and the bigger first-party audience data management platform that can connect with big first-party customer data management platforms. Facebook previewed this potential future last week. It let advertisers take the first-party customer transaction and demographic information housed by data providers Acxiom, Datalogix and Epsilon and have Facebook cross-reference it with Facebook’s billion-plus user base.

“In a cookieless world, publishers with business models that naturally collect strong names and addresses and other personally identifiable information are going to be able to…connect into CRM databases,” said Geoff Amborn, director of partner development at Acxiom. “For publishers that have a weak PII story, they’ve been more heavily reliant on the cookie world.”

In other words, smaller publishers are screwed. Most long-tail sites like mommy blogs lack readers’ names or emails, so they rely on third-party cookies from ad networks and others that can infer their audience makeup and pool them with other publishers to meet advertisers’ demands for scale.

Without a third-party cookie, long-tail publishers may have little choice but to band together into federations like Glam Media’s or WordPress’ blog networks, said Andrew Casale, vp of strategy at ad network Casale Media. Those entities could then drop network-wide first-party cookies and institute network-specific user IDs à la Facebook Connect to build audience profiles approaching the size and depth of media giants like Facebook, Google, Hearst and the Times.