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European Union Says Cookies Are Here to Stay

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Posted June 26, 2002 By Simon Roberts     Feedback

The European Parliament recently voted to allow businesses to continue to use cookies in their e-business practices. The vote, which struck down an opt-in campaign in favor of an opt-out policy, is particularly significant for the Web analytics ASP market.

After a long-awaited debate, Europe's legislative body reached a verdict on the future of the New Economy. The European Parliament voted in favor of allowing businesses to continue to use cookies in their study and research of online user behavior. In the future, promotion, advertising and marketing material can be sent digitally without an address and leaves the use of cookies in the hands of the individual business. Effectively sanctioning self-regulation, many consumers remain to be convinced that this vote is in their best interests.

Read and React
"The Web has to be seen as any other traditional advertising model, with the crucial difference that cookies can allow for far more personal and relevant offerings. They are the future of the digital age and successful e-business."

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The European Parliament was right to take cookie legislation seriously as legislation had been demanded by many to restrict, or even ban completely, the use of cookies for commercial purposes.

An international Internet audience had for a long time been increasingly annoyed with the new medium because of constant spamming, unsolicited e-mails and badly targeted advertising and marketing feed.

Apart from Web irritation, fear for infringement of privacy was another major issue. User skepticism about the confidentiality of information they chose to divulge on the Web was caused by the increase in unsolicited promotional material they were receiving in their in-boxes. Cookies were the source of their information.

Therefore, prior to the European Union (EU) voting, the loss of consumer confidence in using the Web as a communication and e-commerce medium was at stake.

Weighing the Opt-Ins
An opt-in policy had been proposed earlier to regulate cookie usage, which meant that before a cookie could be served to the user for purposes including remembering log-in details, assistance with remembering goods in a shopping trolley, or personalizing a site to a users behavior and interests, a pop-up box would appear asking if the user would allow a cookie to be stored. With many sites serving several cookies this would impede the browsers enjoyment of the media.

The EU voting ended the opt-in regime campaign and favored an opt-out policy to be the standard norm in the future for e-business practice. Good opt-out technology places users in control of their actions by giving them the choice to input personal details.

A particular industry sector to be affected by this positive outcome is the ASP Web analytics industry, who recognize that the development and implementation of this technology is essential to assuage consumer fears that have not been quelled by EU prevarication over the cookie issue. Therefore, it is left to companies promoting the use of opt-out systems to foster accountable and user-controlled Internet practice.

Opt-out systems do not impede the user's enjoyment of a site and ensure companies address how they use cookies. They place the user in control of any situation requiring input of potentially sensitive information. Companies piloting opt-out projects are at the vanguard of those who strive to guarantee Web security and integrity. In light of the EU vote, their role must now be to broadcast their findings to the rest of the industry to ensure that self-regulation is taken seriously.

Needless to say this voting was a watershed for the Web analytics industry, and in particular the Web analytics ASP industry. The voting was a voice of common sense for the digital industry. A Web analytics ASP is able to offer businesses the unique opportunity to rent or subscribe to an expert service of audience profiling, online user behavior and customer preferences — all crucial tools for marketing on the Web. Buying Web analytics software is expensive and requires a high level of technology know-how and time as it has to be installed, maintained and supervised by the company itself.

In today's e-business climate, companies must remain competitive and they should do so by focussing on the core business model, and outsource other services to individual experts such as the ASPs. This need for the Web analytics ASP market is reflected by a recent Aberdeen Group report that indicated a boom in the market with Web analytics ASPs capturing 22 percent of the $372 million market, and enjoyed a 54 percent rise in revenues in 2001, while software revenues declined by 30% percent (see Web Analytics Set to Soar).

Marketing With Precision
When looking at digital marketing, advertising and promotions, it is important to remember that the Internet never was a mass marketing tool, but rather a precision marketing tool &$#151; and the ultimate such — with global reach. Most people have now realized that what was thought to provide marketers and advertisers with an international campaign, reaching audiences instantly and at virtually no cost — was a false belief. Campaigns many times turned sour as individual audiences were grouped en mass and no one really benefited from the offerings. Local advertIsements from American car wash companies popping up on the PCs of British Hotmail users is a good example. The company's message reached millions of people, and enjoyed great brand recognition, but it's doubtful it got a good response rate from the U.K.

The Internet as an advertising and research medium will survive. However, it has to be used as a direct marketing tool, with highly targeted offerings to specific audiences, enabling both businesses and consumers to communicate through a real-time interactive dialogue.

At the heart of this are two things:

  1. Web analytics ASPs need to provide businesses with the invaluable reports and analysis for e-business and marketing.
  2. Cookies — the golden nuggets with crucial information on computer identification and consumer behaviour in cyberspace.
These are the tools that allow Web companies and digital researchers to identify what it is their audiences want. The same way American Airlines members and New York Times subscribers appreciate receiving promotional fares and discounted lunches at the city's finest restaurants, customers and members of any dotcom will want to have offers relating to their preferences.

The Web has to be seen as any other traditional advertising model, with the crucial difference that cookies can allow for far more personal and relevant offerings. They are the future of the digital age and successful e-business.

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