Audience targeting vs. cookie regulations

In her function as European Commissioner for Competition, Neelie Kroes earned nicknames such as “Steely Neelie” for dealing with competition issues so toughly. Since 2005 Neelie appeared in the “Forbes’ The World’s 100 Most Powerful Women list” top 60 every year. Ironically enough, in her new position of European Commissioner for Digital Agenda, Steely Neelie will be responsible for carrying out measures that will help create one of the biggest monopolies (or duopolies) and contribute to unfair competition. Let’s explore how the new European telecommunication regulations on cookies can be deadly for the internet advertising branche and online publishing as we know it, and create huge advantages for large corporates with an already strong marketposition. And to what end?

The cookie law

On the 26^th of October, 2009, the EU council voted through a law that demands consent to internet cookies. This message was strategically communicated at the tail end of an 18 page press release about fishing quotas, train licenses and maritime treaties (source: Council of the European Union, press release of the 2970^th council meeting: 14657/09). That way the bill managed to pass without a fuss, disregarding the possible harmful implications on online advertising, the lifeblood of online publishing.

The written law says that a cookie can only be stored on a computer, or accessed from that computer, if a user has explicitly given his or her consent after having been provided with clear and comprehensive information. The one exception would be the situation in which a cookie is “strictly necessary” for a service “explicitly requested” by the user, e.g. cookies can take a user from a product page to a checkout without the need for consent. ALL other cookies will require prior consent.

Effectively this would mean that almost all sites that carry advertising would have to ask their visitors for consent to the serving of cookies, one for each advertising party. This would be fatal for perceived ease of use and perceived utility of customers regarding the experience of surfing the net. There must be something really nasty and scary to protect the European citizens from, if such a great risk of ruining our beloved internet is taken. Let’s see what threat is about.

Audience targeting: A gaming segment example

As an ever innovative online performance based media agency, Yieldivision is a European pioneer in the area of targeting ads based on cookie technology. As gaming is one of my personal interests I will describe how Yieldivision would use cookies to make my life more pleasant – and not threaten me, as the EU council measures imply - using a gaming example.

Suppose I browse to my favorite gaming facts website to read what’s new and make some posts on the forum. Suddenly my attention gets drawn to a banner for FIFA Online, a free online multiplayer soccer game. Full of enthusiasm I click on it and get redirected to the subscription page. From this page a cookie is placed on my computer. For some reason however I don’t complete the subscription process that instance. Based on the cookie on my machine the FIFA banner will now be shown to me, not only on gaming sites, but also when I go to my favorite news site, sports site, video sharing site or whatever other site that I visit. Seeing a FIFA banner again reminds me of my previous intention to register and play FIFA Online. I click on the banner again and this time I finish the registration process and play the game with pleasure.

When watching television, I have to sit thru all ads whether it concerns products that I am interested in such as gaming, or products that I have no interest in whatsoever at this moment, such as diapers or eyeliner. The use of simple and innocent cookies – in no way tied to a users identity – can facilitate that when surfing the internet I see more relevant ads, namely of products in a segment that I have actively shown an interest in recently. In my opinion this makes my life more pleasant without harming my privacy in any way. It is just a way of not only catching a target audience on a website with contingent content, but also catching this audience on websites with non-contingent content.

Forward, not backward

So now we’ve seen a case where cookies are used to better target ads, without compromising privacy. A valid point here would be to say “if that is the nature of that cookie and my consent is asked to place it on my machine I would give it, so what is wrong with the upcoming regulations?”. Imagine however, that in an hour surfing the web, you could easily get 50 requests for consent to placing a cookie. Are you seriously going to read and consider all these requests? My guess is that most people will either always click yes or always click no. That makes me think of an existing option in my browser, to either accept cookies or not.

Point is, that under the new regulation innovating advertisement based on data from cookies will become very hard for media agencies and ad networks. Also, websites and portals online publishers) would find much more difficulty monetizing their traffic thru cookie based advertising. This would be very much to the advantage of large corporates that can build audience data thru browsers and search engines next to their display activities. This seems like deliberately reinforcing the position of already powerful parties in the market, just to prevent a shift of power to new, smaller and innovative companies. Is this the collateral of authorities preferring to deal with a few large, easy controllable parties that have been dealt with for some years already versus dealing with a large number of smaller upcoming parties?

Whereas Neelie Kroes proved to possess all diplomatic, strategic and political skills, experience and toughness to deal with large corporates on competition issues, I wonder if she can comprehend the relatively young, very fast, and dynamic digital environment. Let’s hope policy in the coming years will not be based on fear of new and unknown things, but on recognizing and utilizing opportunities and innovations. Let’s make up policy that will help us forward, instead of policy that will make us backward.