Internet cookies used to be a treat for marketers looking for ways to measure advertising response, but lately they've become a lot less tasty.
Cookies are tiny text files exchanged between Web servers and browsers. They're stored as files on an Internet user's computer to anonymously identify the sites where people surf and shop. Lately, however, the effectiveness of cookies is being threatened, and experts say that could have a damaging effect on on-line marketing in general.
A recent study by international research advisory organization JupiterResearch has found that nearly 60 per cent of American Internet users have deleted cookies from their primary computers, with 39 per cent doing so on a monthly basis. According to the report, as more and more people block or delete cookies, it could cause the long-term measurement of consumer Web surfing behaviour to be "severely compromised."
"The effect that this will have on on-line marketers is fairly substantial," says Eric Peterson, a senior analyst with JupiterResearch and author of the report. "People doing affiliate marketing [revenue sharing between site publishers and advertisers] those with long lead times between marketing response and actual purchases, and any site that depends on cookies to identify users over multiple sessions is affected by this problem."
"The more people that delete cookies, and the more frequently that cookies are deleted, the more it will adversely affect campaign performance," echoes Jay Aber, president of ad network 24/7 Canada Inc., which sells advertising on more than 250 Canadian sites, including Lycos and YellowPages.ca. Mr. Aber notes that publishers and advertisers primarily use cookies to accurately measure a campaign's reach and effectiveness, limit the number of times a consumer sees a specific ad, and deliver "targeted" advertising to users based on their surfing habits and preferences.
Among the problems associated with deleting cookies, they say, is that repeat visitors can mistakenly be counted as new ones, skewing site and campaign statistics that marketers rely on to gauge audience reach and return on investment. Advertisers also stand to waste marketing dollars and irritate potential customers by repeatedly delivering the same ad to the same Internet user.
According to Mr. Peterson, the increase in cookie deletion can largely be attributed to consumers associating what he calls "harmless little text files" with spyware and the invasion of their privacy on-line.
"The attitude is there is something wrong with [cookies] when really they are benign," he says.
Jeff Fox, senior project editor with Consumer Reports Magazine, agrees. "Cookies aren't spybots hanging around people's computers," he says. "They are passive data files. Their only problem is that there's nothing to stop marketers in the future from associating anonymous information with personal information."
The proliferation of anti-spyware is exacerbating the problem for marketers. These programs routinely identify cookies as spyware, prompting users to delete them.
But while the usefulness of cookies may be crumbling, technology providers have already begun developing alternative tracking techniques. In March, United Virtualities (UV), a New York-based digital marketing company, became one of the first to release a substitute.
"It gives you accurate counting of users, impressions and clicks," company founder Mookie Tenembaum says of the Persistent Identification Element (PIE). The technology, which is already being used by UV clients, both restores original cookies and places Macromedia Flash MX files on users' computers that can't be as easily deleted.
"Cookies still work as usual, this is just insurance," Mr. Tenembaum says.
Ad networks such as 24/7 Canada are also working to find an alternative to cookies. Mr. Aber says the organization has upgraded its analytics tool in conjunction with its U.S. counterpart to include proprietary "Visitor Determination Methodology" that ensures more accurate tracking when cookies are deleted.
JupiterResearch analyst Mr. Peterson says that besides making things easier for marketers and research companies, there are spinoff benefits for Web surfers if they stop deleting cookie files. "Cookies are just designed to help marketers make better websites," he maintains.
The Internet marketing industry hopes Internet users will bite.