Image for Increased Privacy Means Fewer ‘Cookies’ for Advertisers to Nibble

Critics say the internet is due for an overhaul. The battle over privacy may force that overhaul.

The internet is generally “free” to users, with a $350 billion digital advertising ecosystem footing the bill. The “price” that average people pay is the surrender of their privacy, as website and app ‘cookies’ track their online activities, locations and preferences. This personal data mined from cookies enables marketers to target pitches with precision.

Major online players such as Google and Apple are contending with intensifying regulatory efforts to protect personal privacy by giving users a clearer choice of accepting or rejecting cookies. Morphing data collection practices by these digital titans will force the advertising industry and its clients to adjust.

Adjustments already have begun. Apple’s latest version of its Safari web browser prevents tracking when users click from site to site. Apple has given its iPhone users opt-out options from being tracked as they move through apps and websites.

Google is planning to follow Apple in allowing users on its Chrome web browser to block cookies. Users are encountering a welter of pop-ups asking for consent to place cookies, which can be rejected or accepted. Sources indicate 80 percent of iPhone users have opted out of tracking

Since Google is the world’s largest browser and Apple’s iPhone is the most dominant smart phone, app developers and internet advertisers are trying to stay afloat in the waves caused by their changes. Internet watchers say consumer privacy will be advanced, but brands dependent on digital marketing may have to pay more to reach their target audiences. Digital users may have to pay for content and subscriptions they access online.

Brian Chen and Kate Conger, who write the Tech Fix column, say sites such as Facebook, TikTok and the Weather Channel face the prospect of finding new ways to make money in this changing privacy environment. Adding to the challenge, Google and Apple are taking different approaches to the new environment.

Apple is exploring the use of “insights” to replace A sharpy reduced amount of tracking data it sells to advertisers.

 Internet watchers say consumer privacy will be advanced, but brands dependent on digital marketing may have to pay more to reach their target audiences.

Google won’t block trackers on Chrome until 2023, while experimenting with Federated Learning of Cohorts or FLOCs that groups users with shared interests rather than tracks individuals. Websites would be able to scan Google’s browser to learn a user’s cohort, which would yield a more generalized form of targeting. Google plans safeguards to prevent groupings that, for example, could target lower income users for payday loan ads.

Smaller brands that depend on digital tracking to find their customers are caught in the middle and will likely need to spend more on advertising across platforms to locate those customers. Price increases will follow. Chen and Conger cite a beauty supply firm that saw its online sales shrink to a fraction of pre-privacy revenue, prompting a substantial price hike to cover test ads on additional sites such as Pinterest.

Digital marketing experts predict the differing approaches by Google and Apple will add complexity and cost for advertisers trying to reach their target customers. The fragmentation also could mean the internet looks different based on the browser people use and the ads they see.