Cookies & E-Privacy: The Changing Landscape 2012

Published at OnIslam.net

With UK advertisers spending £1 in every £4 on-line, it is of no surprise that the internet is aflush with advertising, this is despite low conversion rates. Between three of the leading platforms iPad, Android and Blackberry, for every 1 click, the consumer is screened with 270, 714, and a massive 1428 adverts respectively.  Is it any wonder then that just 14% of people trust digital adverts?

However this digital real estate is measured, one thing is certain, change is about to take place, but change which few of us know about and even fewer of us understand. The law firm Kemp Little recently ran an event entitled “The Internet: half way there, but to where?” Addressing the subject of analytics and consumer targeting, the biggest shift has been in the new regulation for on-line display adverts with regards to Online Behavioural Advertising (OBA) – in a word, cookies.

In the simplest of terms, a website sends data to your browser, which returns information to the website. The information is then stored and saved to improve your browsing experience both by the site and by your computer. The BBC’s website for example has more than 2,000 cookies, many of which relate to the way the end user customises their BBC webpage experience. However OBA is one of the tools that ad-servers are using to identify your interests in an attempt to deliver more ‘relevant’ adverts to you; and this raises issues with regards to privacy.

Changing legislation

Updated, Article 5(3) of the ePrivacy directive states, “the user has given his or her consent having been provided with clear and comprehensive information.” In short, the user has to give their permission specifically for their data to be collected and used for advertising.  How many of us recall doing this? All is however not lost.

The leading internet companies have paid attention and are looking to deliver meaningful solutions. Speaking on behalf of Yahoo! Manu Kanwar outlined a service option on their website which has been in beta for the past 18 months where the user is presented with an “Ad Choices” icon. Delving further, they are shown a menu, after which they can manage their advertising preferences.

In contrast, many years ago when setting up my free e-mail accounts I recall not ticking every box option under ‘interests’ with a belief that it would reduce my exposure to advertising. And while I do occasionally use Yahoo! I do not recall seeing this option. Still, it seems that a similar model is being presented for the browser experience which allows the browser to authorise the collection of data for advertising purposes.

Opt-out vs Opt-in

In her presentation Georgina Nelson from the publication Which? shared their research indicating that 51% believe OBA is an invasion of their privacy and yet 64% would actually prefer relevant advertising.She further observed that still today there is no one-touch cookie removal function available.

For example: I visit a website, have a look around, then upon exiting, the cookie is removed. I would probably not want this feature after spending 10 minutes customising my personal interface on a website such as the BBC, however I would want this feature after visiting an e-commerce website.

The underling problem facing the advertising industry is that the structure of offerings today is as an opt-out: they provide adverts and the user opts-out. The legislation in theory outlines an opt-in model, yet the practicality of an opt-in service has been questioned given the impact it may have on the user experience.  In recent years we have the example of the mobile phone network Blyk, where adverts were delivered based on pure opt-in. Despite being co-founded by the former president of Nokia Pekka Ala-Pietila, Blyk’s failure shows the difficulty of sustaining an opt-in service.

The influence of mobile

By 2014 the number of users globally who access the internet via mobile phones will overtake the number who do so via desktop. This significant transition adds to the measure of context where today legislation focuses on user permission for advertising, tomorrow, even more focus will be placed on advertising and services based on location.

Discovering the future

In his presentation entitled Internet Trends & Predictions, Tim Bratton from the Financial Times wrote, “In 5 to 10 years time, we’ll all rely on the services of five global Internet companies we’ve never heard of now.” The sentiment was echoed by GPBullHound who cited Ben Horowitz and identified technology cycles to last 25 years. We’ve had the mainframe cycle, followed by the pc cycle, and we are still in the midst of the Internet cycle.

 Industry insight

Question: How will these regulatory changes for on-line advertising which come into effect in May this year,impact mobile coupon marketing-distribution and their potential redemption?

Answer from David Snow, Senior Analyst, Head Mobile Commerce, Juniper Research:
“I’m sure these requirements will have an impact on the mobile advertising market. As for mobile coupons our research showed that all players we spoke with were acutely aware of the need to avoid mobile coupons being targeted indiscriminately spoiling the mobile market in the same way as Spam has done online. In our report we saw that of all the new mobile channels being used to distribute coupons, the mobile app is growing the strongest and has the greatest potential for higher redemption rates.  This is because the user willingly enters into a relationship with the provider by downloading the app and then disclosing information about themselves in return for well-targeted offers.  The mobile web coupon channel is more likely to suffer, but again, players are very keen to ensure that consumers get only relevant offers presented to them.”

Closing thoughts

While I do not believe in the current Facebook advertising offerings deliver, I do believe Mark Zuckerberg was right when he said, “Every industry is going to be rethought in a social way. You can remake whole industries. That’s the big thing.” Thus what cookies, links and OBA reflect is an exciting opportunity for innovators to develop permission-based advertising. But for the time being, I wonder what will happen next as I do not recall giving permission for advertising.

Useful links:

Google: http://www.google.co.uk/goodtoknow/manage-data/

Yahoo: http://info.yahoo.com/privacy/us/yahoo/relevantads.html

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