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Online advertising continues to grow by leaps and bounds, but that doesn't mean that life is easy for players in the digital ad ecosystem. In fact, the thriving online ad economy is increasingly complicated.
Unfortunately, things are only going to get more complicated. Need evidence? Look no further than last week's announcement that one of the most popular browser makers, Mozilla, will begin blocking cookies from third-party ad networks by default in Firefox 22.
Nuclear first strike, but against who?
Despite the fact that Firefox has seen its marketshare decline in recent times and another major browser, Apple's Safari, already blocks third-party cookies from ad networks, Mike Zaneis, SVP and general counsel at the Interactive Advertising Bureau (IAB), posted a tweet calling the Mozilla move a "nuclear first strike."
In theory, it's easy to see why those representing the interests of advertisers, including advertisers and ad networks themselves, would react so negatively to Mozilla's announcement: blocking third-party cookies by default would make life more difficult.
But as an astute Slashdot reader observed, the Firefox patch that implements the blocking, which was developed by Stanford researcher and privacy advocate Jonathan Mayer, may not be that simple. The reader, Giorgio Maone, explains:
The patch is not exactly a one-liner, because the implemented behavior is not as straight-forward as just "block 3rd party cookies".
It's "block cross-site cookies from origins which I've not visited yet as a 1st party websites [sic] and have already 1st party cookies from".
This means, for instance, that Facebook, Google and Twitter gets likely a free-pass to track almost anybody.
And that once you (accidentally or not) click any ad box, you give a free-pass to its advertising agency too.
If Maone's assessment of the patch code is accurate, it would appear that Firefox 22's third-party cookie blocking will do less to protect user privacy than it would appear to at first glance, and that if anybody is going to be hurt as a result of this functionality, it's minor players in the ad space, not the major players many believe pose the greatest threat to user privacy.
Even if ad industry complaints about Mozilla's move are overblown, one thing is clear: privacy concerns are changing the face of traditional online advertising. Perhaps the best example of that in recent times was Yahoo's decision to ignore the Do Not Track signal from Microsoft's latest browser, IE10, because of the way Microsoft chose to approach Do Not Track.
With more conflict likely, it's no surprise that advertisers, while still interested in the slow evolution of display advertising, are increasingly experimenting with and investing in native ad formats. With native ads expected to account for a third of social ad spend by 2016, it's safe to say that efforts to reign in display ads and the methods advertisers use to target them may impact the market for display advertising, but aren't likely to reduce the prominence of advertising in internet revenue models.