Like Fine Wine, Cookies Gain Value With Age

andrewcasaleupdated0315The Sell Sider” is a column written for the sell side of the digital media community.

Today’s column is written by Andrew Casale, president and CEO at Index Exchange.

Many wines taste delicious despite only making a quick trip from barrel to bottle to glass. Others, however, need time. A really fine wine improves with age. It’s more valuable, too, because it is better tasting and scarcer.

A browser’s cookie is a lot like a bottle of fine wine in that the older it gets, the more value it tends to have for buyers. In a sample of platform-wide bid data from January, a clear correlation emerged when examining the relationship of average bid price to the age of a cookie.

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There are two factors at play here: quality and scarcity. Just as wine gets better with time, a cookie becomes much more nuanced. A newly created cookie doesn’t have much information attached to it. The longer it exists, the more the ad tech LUMAscape can discern from it. Day by day, the cookie can be connected to first-party interactions with marketers, third-party data based on likes and habits and offline data via syncs as consumers purchase products.

Mobile aside, marketers still rely on cookies to place a value on audience. With audiences as fragmented as they are today, an ocean of brand-new cookies creates scarcity for older cookies. And that scarcity creates a second source of value.

Buyers aren’t talking about the age of a cookie as if they should have an explicit interest in them. Publishers aren’t discussing how to build this valuation of their audience data into their cost structures. And if there’s so much value riding on something that ultimately fails to indicate the quality of a targeted consumer, we’re relying too much on an unreliable signal. Not surprisingly, this is the core reason the cookie continues to come under attack amid predictions of its doom. Yet despite its faults, it is still universally relied upon.

Why Old Cookies Have Value

If you don’t clear out your browser cache, every ad impression your browser generates is worth more to buyers. The moment you clear your cache, your value falls off a cliff. Therefore something as simple as the frequency of clearing cookies determines the value of a publisher’s audience to the buyer.

The more devices we have, the more fragmented our audiences and their cookies become. As this fragmentation continues, it becomes more imperative to understand the value of these audiences, where that value comes from and what that means for buyers and sellers in more dimensions than just the cookie.

This is especially important because publishers often don’t know all the factors that determine why a marketer will sometimes bid $2 for an impression, or sometimes $20 or $100. In the absence of asymmetry of audience data between the buy and sell sides, a signal as simple as cookie age in the absence of any other, is better than nothing – and it’s free to use.

The oldest cookies in existence are tied to users who don’t clear them. Maybe they genuinely don’t care or they’re less savvy users who don’t know how to clear them or that they even exist.

Maybe, as a buyer, that isn’t your best audience. A young cookie might be the best possible target for a certain buyer, but how is the buyer to know?

Weaning Off The Cookie

Like the click, there’s a big prize for those who find new ways to wean us off our cookie overreliance. There are already many companies focused on this today. Device recognition vendors, DSPs and forward-thinking publishers are making their far more reliable first-party data available for better audience identification. Those that get there first will enjoy a first mover’s advantage because they’ll find a valuable audience competitors haven’t spotted, at far more attractive prices than those chasing well-aged, less scarce and more expensive cookied audiences.

Cookies may gain value with age, but that doesn’t always mean the oldest cookie is the best. It’s just one factor in the value of digital media, and like purveyors and oenophiles, it’s up to discerning individual buyers and seasoned sellers to determine when it’s a benefit or a handicap.

Follow Index Exchange (@IndexExchange) and AdExchanger (@adexchanger) on Twitter.

 

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