Just how valuable are those cookie files?

Just how valuable are those cookie files?

Summary: The run on Internet advertising firms may be explained by the cache of cookies sitting in your browser. As we all know online advertising consolidation is rampant--Google bought DoubleClick; Microsoft grabbed aQuantive; WPP takes out 24/7 Real Media and Yahoo acquired Right Media.

TOPICS: Google

The run on Internet advertising firms may be explained by the cache of cookies sitting in your browser.

As we all know online advertising consolidation is rampant--Google bought DoubleClick; Microsoft grabbed aQuantive; WPP takes out 24/7 Real Media and Yahoo acquired Right Media. These moves have been attributed to everything from the desire to build an advertising dashboard, fear of being left behind by Google and even software as a service.

Perhaps icookie.pngt's all about the cookies and the quest to be an advertising Cookie Monster. Perhaps these valuations are based on the numbers of cookies held in a database. Perhaps cookies are more valuable than we think.

That case is made in a research note by Susquehanna Financial Group analyst Marianne Wolk. Her argument: These deals are based on the cache of cookies held by the likes of aQuantive. And these cookies--small files Web sites embed on your computer to track your usage--are the building blocks for behavioral targeting.

Wolk says:

Many of the recent acquisition targets have a sizable cache of cookies and other user data that is instrumental in higher priced, higher ROI advertisements targeting users (based on their interests), rather than web pages or keywords. Historically, behavioral targeting generated excellent returns to advertisers, but volumes were insufficient to scale to their needs. With Google-DoubleClick, Microsoft-aQuantive, and Yahoo! all moving in this direction, we should now see behavioral targeting deployed on a web-wide scale. The most successful implementations will provide advertisers with the highest ROI and see the greatest share of future spending.

Conclusion: Cookie histories are a lot more valuable than we give them credit for. Once Google, Microsoft and Yahoo peruse 2.6 quadrillion cookies (Jupiter Research's figures in a Red Herring story).

If companies can make use of cookie data behavioral targeting will become the norm. Wolk argues that behavioral targeting--analyzing historical user activity--will increase monetization, result in fewer wasted clicks and create better models. Today, advertisers usually pay a bounty for a sales lead or share revenue. With behavioral targeting advertisers could pay on frequency or recency of a visit instead of demographics.

Add it up and Wolk cites data that click-through rates for publishers could increase to 20 percent to 30 percent from the standard 2 percent to 5 percent rate of conversion to a desired action.

Meanwhile, eMarketer reckons that advertisers spent $1.2 billion last year on behavioral targeting. Wolk sees $5 billion on behavioral targeting in five years.

The wild-card to all this targeting will be privacy concerns. If privacy doesn't become an issue perhaps Microsoft's 85 percent premium for aQuantive won't look so crazy on a per cookie valuation.

Topic: Google

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  • Firefox's Private Data

    I have always had my 'delete my private data' set to 'after every Firefox shutdown'.

    Also, I run my quick system cleaner everyday just to stay lean & clean; it's so obvious other people don't do this when I get on another machine and fall asleep waiting on page renders, etc....
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    Cookies are just as subject to fraud as PPC or any other action/performance-based activity on the web. There have been several studies illustrating this.
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    Sure, it can be annoying, but I'd rather be secure...Passwords should be saved in your head, not on the system.
    Old Timer 8080
  • A company making MONEY???

    What's wrong with advertisers making money? Isn't that what anyone is in business for. (No, folks - I'm in the Legal field.) Personally, I prefer getting my advertising online - including by e-mails. I HATE newspapers and don't listen to TV or Radio enough or get any magazines to get any news about products. It's my understanding that behavioral targeting will cut down on advertisements not of interest to me, because the whole idea is to find out what I'm interested in, and send me only those ads. Anything I don't like, I dump. As for privacy - puleeze - what information is written on each check that you hand over to strangers all the time?! Yes, ID theft is bad news (it happened to me - but not because of the Internet), but the data collected by cookies won't provide useful information unless you can decode the IP address - then you just get my name. Of what danger is it that someone knows I like to buy "as seen on TV" type gadgets?????
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    My computer at home is used by me (61 yrs old), two sons in thier thirties (like night and day) and one of my teen grand-daughters.
    YOU DO NOT KNOW ME FROM MY WEB SURFING. Please don't sell my address to people that will buy any address that bearly qualifies as within their needs.