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Everybody is talking about cookies, but what does it all actually mean?

08Jun Posted by Sara Benwell

If you’re a business and you have a website, you hopefully already know about the ‘cookies law’ that came into effect as of last Sunday after new European guidelines were laid down a year ago. Just in case you don’t, essentially what the new law means is that websites must obtain "informed consent" from visitors before saving cookies.

Cookies are pieces of data stored when users browse the web that can track users’ browsing habits. This regulation has come in as part of a wider EU initiative tackling privacy issues and means that all websites that store cookies or do analytics must inform users as to how their data is used. Typically this will take the format of either a pop up window or a banner allowing users to click through to a page that explains how their cookies are used and how to opt out. In fact you probably saw our banner at the top of the page.

I guess about now you are wondering what exactly is so interesting about this law, other than that everyone has to comply with it, and why am I writing a blog on it?

Good question! – For me there are two interesting things about this regulation, the first being the changing emphasis around privacy and the second being what this will mean for advertisers.

A changing emphasis on privacy

Now - the UK cookie law is scaled down from the EU e-privacy directive. The EU directive demands that people should have to give explicit consent for cookies to be used. This would mean that for every website a new user went to they would have to approve cookies before they could be used. The UK is operating a system of implied consent, whereby if you ignore the banner or pop ups talking about cookies then it is taken as implied that you have given your consent.

But just because the law is scaled back, it doesn’t mean that there’s not still an interesting shift in terms of privacy. Previously the burden was on consumers to educate themselves about things like cookies and what that means for data privacy, whereas now the emphasis is on businesses to prove that they have permission to use that data. Most people simply want to know how much data is being stored about them, how it’s obtained and what it’s used for, particularly when it comes to things like the profiling techniques that Google and Facebook use. The new cookie regulation represents a small but crucial shift towards consumer protection, and the right to keep your data private.

What might this mean for advertisers

I think this is the really interesting bit. Companies often use the information stored in cookies to promote targeted advertising. In fact, most consumer websites are driven by ad-revenue. Data mining means that companies can create better ads that track your behaviour. There must be some concern that if a large number of users opt out of cookies, then websites are going to lose a chunk of their ad revenue, as they will not be able to display advertising or collect data. This could have serious ramifications, particularly for social networks like Facebook. Also – if a website is non-compliant but carries on advertising, the adverts will be in breach of the regulation.

Advertising is one thing that keeps a lot of websites, particularly news sites, free. Tighter regulation around cookies could mean that these sites need to drive revenue another way, so we could potentially see more paywalls popping up. Assuming that a large number of people opt out that is.

This could prove frustrating for businesses too – simply because they will be faced with a lack of meaningful data analytics about who is using their website and what for.

A cookie compliant future

I think we have to believe that anything that gives power back to consumers in terms of knowing how and why their data is used, is broadly speaking, a positive thing. I just wonder if the new cookie law has really been thought through, and whether enough thought has been given to what this will mean for advertisers and businesses.




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Comments (1)

Geordie Clarke posted 8th June 2012
Governments are only now catching on to the fact a lot of private data is being collected through the internet, some of it innocuous and some of it dangerous. I suppose these laws are a good thing, although it can mean a bit of a headache for businesses operating websites. And even though the internet is decades old now, we're still only trying to figure this thing out, so all these regulations are part of the learning process. That, unfortunately, is the cost of doing business.

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