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The use of Cookies in Online Advertising

What are cookies?‎

Cookies are very small text files which are downloaded to your web browser when you visit ‎certain websites. These files are generally un-intrusive and in their simplest form contain a ‎site name and a unique user ID. When you visit the same website again, it is able to ‎recognise that you have been there before, and tailor the content it displays to you ‎accordingly. For instance, log in data may be recorded in a cookie, allowing you to re-enter ‎secure areas of the website without having to re-submit a username and password.‎

More sophisticated tracking cookies can also record data on the length of time you spend on ‎certain pages, which links you tend to click, even things like your language, preferred page ‎layout and colour scheme. In this respect, cookies are used to improve the browsing ‎experience on frequently-visited websites. ‎

How are they used in online advertising?‎

Cookies have become crucial in online advertising for a number of reasons. By tracking a ‎user’s online surfing habits, it is possible to target them with adverts which should be more ‎relevant to their interests; this is behaviour-based advertising. Advertising space on websites ‎is auctioned on real-time bidding exchanges, with advertisers bidding for space not just ‎based on the type of site, but also the type of visitor. The cookies stored in a user’s web ‎browser provide a profile of that particular person and their browsing habits, allowing ‎advertisers to target specific groups of people. ‎

Website cookies are known as ‘first-party’ cookies, and the advertisers which have ‎subsequently been invited to target the user of the site, can also download ‘third-party’ ‎cookies to the users browser through their ads. Third-party cookies manage how ads, ‎widgets and other elements of the web page appear, and can control how often ads are ‎repeated for the same user, while also tracking the users browsing habits for advertising ‎purposes. By combining data received from both types of cookie, advertisers are able to ‎characterise and segregate the target audience in a variety of different ways.‎

The future for cookies

Since the inception of cookies there has been an on-going discussion about the storage of ‎personal data and privacy, and in 2012 legislation was passed in the EU requiring every ‎website which uses cookies to ask the users permission to store and retrieve data about ‎them. ‎

The use of third-party tracking cookies has often been a contentious point, as they can be ‎downloaded to a browser despite the user not actually visiting the site they originate from. ‎Mozilla announced early in 2013 that the next version of its Firefox browser will have a ‎default setting to block third party cookies, following Apple’s Safari browser which blocks ‎cookies from sites which have not been visited. Google’s Chrome browser still allows third ‎party cookies by default, and although Microsoft’s Internet Explorer 10 includes a ‘do not ‎track’ default signal, advertisers have already indicated that they may ignore the signal and ‎continue to track via third party cookies, arguing that users retain the ability to block ‎cookies via browser settings if they so wish. How this discussion is eventually resolved could ‎determine to what extent cookies will be used in online advertising in the future.