Understanding
Online Advertising

A cookie is information (a small text file) that a site saves to your computer using your web browser. Cookies make the personalization of your web experiences possible. For example, a cookie may allow sites to record your browsing activities — like what pages and content you've looked at, when you visited, and whether you clicked on an ad. Cookies can help sites remember items in your shopping cart, your log-in name, your preferences such as always showing the weather in your hometown, or your high game scores. Other cookies may be placed in your browser by third-party advertising companies to help deliver the ads you see online. These "third-party cookies" may be used to “remember” parts of your online activities in order to deliver ads tailored to your interests. For example, if you read an article online about running, a cookie may be used to note your interest in running. As you continue to surf the web, you may see coupons to save money on running shoes. Cookies are not spyware or adware, and can’t deliver viruses or run programs on your computer.

The term "third-party" indicates that rather than having a direct relationship with a user, a company has a relationship with one or more of the websites that a user visits.  For example, if a user visits sportsfan.com, that website is the "first party."  If sportsfan.com partners with an advertising network, platform, or exchange to place ads, the network, platform, or exchange is the "third party."  The advertising network uses cookies when the user visits sportsfan.com to help it select and serve the best ad. These cookies are considered "third-party cookies".  First parties partner with third parties in this way because third parties have technology and expertise to enable more efficient ad placement across websites.  NAI members, working with brands, publishers and websites, use third-party cookies to make advertising more engaging and relevant to users and more valuable to publishers and advertisers.

The short answer – a Web beacon enables two websites to share information. Generally, a web beacon consists of a small piece of software code, just like the other code that makes up a web page, and that incorporates a graphic image on a web page or email. There may or may not be a visible graphic image associated with the web beacon, and often the image is designed to blend into the background of a web page or email. Web beacons can be used for many purposes — including site traffic reporting, unique visitor counts, advertising auditing and reporting, and personalization.

Many of the banner ads displayed on web pages are not selected and delivered by the websites you visit, but by third-party advertising companies that manage and provide advertising for numerous unrelated websites. Websites work with third-party advertising companies because these companies can more efficiently sell advertising space. This enables the websites to make more revenue and continue providing free content and services. Some of these companies, which we refer to as "third-party ad networks,” or “third-party ad companies,” join NAI to signal their adherence to privacy best practices and to provide a means for consumers to opt out of Interest-Based Advertising on the NAI website.