Web cookies help double ad revenue for online publishers

Irritating for users most of the times, web cookies nearly double ad revenue for online publishers and if users decide to opt out of online ads, there is over 50 per cent reduction in advertising revenue, new research has found.

A computer cookie, also known as a web cookie, Internet cookie or browser cookie, represents data packets that are sent to your computer to help a website track your visits and activity.

As a result, the site is better able to track items in your shopping cart when browsing an ecommerce site, or personalize your user experience on the website so that you are more likely to see content and ads you want to see.

Researchers from Boston University, Leeds School of Business at the University of Colorado and Shaoyin Du of University of Rochester explored the real value of the cookie to websites, advertisers, and found that cookies represent higher revenue to online publishers.

According to the study, there is a 52 percent reduction in advertising revenue to publishers when cookies are eliminated through Internet user opt-out protocols.

On the other hand, when cookies are present, publishers' ad pricing doubles.

The study, to be published in the journal Marketing Science is authored by Garrett Johnson of Questrom School of Business at Boston University; Scott Shriver of the Leeds School of Business at the University of Colorado; and Shaoyin Du of the Simon Business School at the University of Rochester.

According to them, while most Americans decide not to opt-out of online advertising, 0.23 per cent of American online ad impressions arise from users who decide to opt out of online ads.

These users, in effect, have opted out of the use of cookies to track their online navigation of a particular site.

The authors calculated that the inability to behaviorally target opt-out users results in a loss of roughly $8.58 in ad spending per American opt-out consumer.

"Though few users tend to opt out, we note that certain types of users are more likely to opt out, and that has certain consequences for the advertising industry," said Du.

"We find that opt-out rates are higher among users who install non-default browsers, such as Firefox and Chrome, which tells us that opt-out users are likely more technologically sophisticated. We also note substantial variation in opt-out rates by region by city and state and by certain demographics," Du informed.