In the world of online advertising, data leakage refers to the capture of user data by a third party via a publisher’s website; often without the publisher’s knowledge or permission.
Advertisers, ad networks and data companies are able to place cookies on a user’s computer through ad servers or ad tags running on a publisher’s website. This is not a new concept having been common practice for several years, with the data being used for reasons such as measuring ROI. However, the regular practice of ‘cookie dropping’ combined with advancing internet technology and the development of real-time bidding exchanges, has made this data extremely valuable for advertising purposes.
How is data used?
Cookies provide an abundance of information about a user and their browsing habits, and data companies are able to build a unique profile for each cookie before separating them into groups based on a variety of criteria. In this way an advertiser can build up a ‘cookie pool’ which they wish to target with a marketing campaign. This type of audience targeting is crucial in online advertising, enabling advertisers to get their message in front of exactly the right people in the most cost-effective way.
It is the ability to track a cookie pool and market to it across the internet which has caused a conflict between advertisers and publishers. A premium website will consistently produce high-quality content over a long period of time to grow and retain a large audience, and publishers are able to charge premium rates for advertising on the strength of the size of their readership. With the use of cookies, advertisers can build a cookie pool of the publisher’s audience then market to it through other cheaper sites and ad networks, thus reducing the value of the publisher’s initial advertising space.
Controlling data leakage
Many publishers are looking to technology which will prevent data leakage, giving them control over advertising to their audience and retaining their place in the value chain. Some are also taking the opportunity to offer an audience extension product, and actively selling their audience on ad exchanges.
The reward for investing in technology and quality editorial on a website to build a large and engaged audience has always been premium prices for advertising; publishers are keen for this situation to remain. The audience of a market-leading website carries this premium as they can only be targeted through that site. If the audience becomes a simple data pool they can be targeted anywhere on the web, making the value of the audience virtually worthless.
With vastly reduced costs in mind, advertisers are keen to explore and utilise data gleaned from third party cookies, while publishers remain intent on protecting the ‘asset’ of their readership.
