• by Wendy Davis  @wendyndavis, January 28, 2014

Online publishers, advertisers and ad networks have long relied on cookies to remember users, personalize content, and track Web users in order to serve them targeted ads.

But in recent years, the volume of cookies set by third parties has surged, thanks largely to the boom in ad tech. That growth in cookies has resulted in “limitations” to the mechanism, according to the Interactive Advertising Bureau, which just issued a report that explores challenges posed by cookies and alternatives to them.

“For online publishers, the proliferation of cookies has slowed page load times, increased ad discrepancy counts, and led to concerns of data leakage,” the IAB writes in “Privacy and Tracking in a Post-Cookie World,” released on Tuesday. “It has also perpetuated a broken compensation model, whereby publishers risk revenue loss if they don’t support third-party cookies, as well as from users who block or delete cookies, and a tilted playing field favors large consumer Web site brands.”

The IAB adds that the boom in cookies has caused consumers to experience “increased anxiety over online privacy, transparency and control,” which is driving some to reject online behavioral advertising. “As users become more aware of the data trail created as they surf across the Internet, but lack a fundamental understanding of how that information is used, many users choose to opt-out of tracking altogether,” the IAB writes.

Another challenge posed by cookies is that they're tied to specific computers, but many users access the Web from multiple devices, including tablets and smartphones.

The report issued today identifies several possible replacements for cookies. One of the more prevalent involves device fingerprinting, which the IAB calls “device-inferred state.” Device fingerprinting relies on identifying unique characteristics of particular devices -- such as their operating systems, browsers, time zones, screen size, and installed plug-ins.

Another alternative used today involves tracking via identifiers that are set by browsers or operating systems, like Apple's Advertising ID.

The IAB's report also mentions two other potential tracking methods, neither of which is in widespread use. One, “network-inserted state,” relies on IDs set by Internet service providers, content distribution networks and other third parties. The other, “cloud-synchronized state,” refers to IDs set by a centralized service.

The IAB isn't currently endorsing any particular alternative to cookies. “There is no perfect solution available today,” the organization writes. “In fact, most solutions that are viable today have significant limitations.”

The group adds that some companies have grown so large that a “proprietary solution” is a “reasonable possibility.” “While the adoption of a proprietary solution as an industry standard would serve the multi-device consumer, it would also fundamentally change the current state management landscape, which is based on an open standard,” the report says.

An alternative to cookies should offer publishers a privacy dashboard, fewer third-party pixels and “minimal” deployment costs. Tracking mechanisms should give consumers a dashboard, controls and the ability to make choices that persist, the IAB says.

Steve Sullivan, vice president of ad technology at the IAB, says the group is hoping the report lays the groundwork for further talks. “The reason the document does not call out one solution over another is that we want the industry to engage in a discussion about the different options,” he says.