Wary Consumers Ward Off Tracking Cookies

For the Internet industry, a brewing consumer backlash against cookies triggers flashbacks to the privacy battles of Web advertising’s early days in the 1990s. Now, with more privacy threats and easier tools for ditching cookies, a growing number of consumers are reacting against marketers tracking their Web behavior.

If the backlash against cookies continues, it could impede advances in ad targeting and accountability, according to industry experts. Behavioral targeting, for instance, is widely considered one of the most promising advances taking shape for Web advertising, but it requires cookies to track browsing habits.

“I think we ignore this at our own peril,” said Trevor Hughes, executive director of the Network Advertising Initiative, which sets Internet cookie standards for marketers. “We need to realize there are still concerns in the marketplace, and respect those concerns.”

Estimates vary on how widespread cookie deletion is. Jupiter Research estimates 39 percent of Web users delete cookies monthly, and other estimates put the figure as high as 50 percent. Blocking of third-party cookies has risen from 2.4 percent in January 2004 to 13.2 percent this past June, according to WebTrends, a Net analytics firm. The end result, according to agency executives, is that it is more difficult to target ads and track results—the capabilities driving ad money from traditional media to online.

For now, the damage from deleted cookies is manageable for Web marketers, said TS Kelly, vp and director of research and insight at the Havas-owned Media Contacts agency. Advertisers’ frequency and reach numbers are still accurate. And since most direct-response ads are acted on within a month, advertisers can still measure their returns—certainly better than traditional media, Kelly added. The biggest impact Media Contacts has seen is for high-consideration goods such as cars and travel, which have longer sales cycles that can make it difficult to gauge the effect of online ads on conversions.

Industry executives said causes of the anti-cookie backlash are varied. Consumers in general are more sensitive to data-protection issues in the aftermath of highly publicized information breaches. The rise of spyware, phishing and viruses has contributed to a growing sense of online dangers, which is stoked in some cases, executives charge, by companies that provide software to combat such threats.

Industry trade groups are mulling how to explain cookies’ good points to consumers. The Interactive Advertising Bureau has convened a task force to tackle the issue. It is sifting through the conflicting cookie deletion and blocking reports to get a handle on the problem before recommending a course of action, said Greg Stuart, the IAB’s CEO. “There’s a lot of misunderstanding,” he said.

Web advertising executives complain anti-spyware vendors have muddied the waters for consumers by listing cookies in virus scans. The result: Many Internet users equate third-party tracking cookies with potentially dangerous computer intrusions. “We feel like we’re being unfairly targeted by anti-spyware tools,” said Jay McCarthy, vp of business development at WebSideStory, a San Diego Web analytics firm that uses cookies for clients like Best Buy and Nokia to track how visitors use their Web sites.

“I question the utility and value of an anti-spyware program that flags cookies that are already being handled completely and robustly in a person’s browser,” said Hughes. He points out that Internet Explorer and Firefox already offer easy-to-use tools to control the type of cookies allowed on their computers.

On the other hand, vendors of anti-spyware programs say they provide a similar service, allowing users who have not chosen to reject cookies at the browser level to see what tracking code has been put on their computers. Richard Stiennon, vp of threat research at Webroot Software, a Boulder, Colo., firm that has sold 5 million pieces of anti-spyware software in the past two and a half years, said many ad servers and ad networks are trying to shift attention from their own business failings. “They’re a little frustrated, and it almost feels they’re venting that frustration,” he said.

Industry groups are lobbying vendors like Webroot to change the way they treat cookies. Interactive agency executives and third-party measurement firms in April formed Safecount, a group dedicated to countering anti-cookie concerns. It is compiling a set of best practices that would enable a company’s cookies to get on a “good list” that could receive different treatment by anti-spyware software. “There is a middle ground that needs to be arrived at,” said Cory Treffiletti, svp and managing director of Isobar’s Carat Interactive in San Francisco.

While cookie critics have suggested Web sites should ask users before setting cookies, the sheer number of cookies makes this unrealistic. Yahoo!, for instance, lists in its privacy policy 34 ad servers and networks that might place cookies on a user’s computer. “It’s sausage works,” said Jason Krebs, vp of sales and marketing at NYTimes.com. “Nobody wants to see how a sausage is being made.”

Even some privacy advocates are surprised cookies are getting a bad rep, since cookies link behavior to browsers, rather than to personal identities. “While it seems scary, the reality is most Internet advertisers don’t really care about your identity—they care about sending you an ad that will get you to buy something,” said Larry Ponemon, chairman at The Ponemon Institute, a privacy consulting firm based in Tucson, Ariz. “[But] most people don’t see cookies as something that helps them.”

Web publishers and advertisers are wrestling with how to explain the benefits clearly to consumers without generating more unwanted attention to the tracking code. Some cookies do provide demonstrable payoff for users, such as first-party cookies from Web sites that remember passwords and personalize services.

Yet many third-party cookies from ad servers and networks offer only the reward of not seeing the same ad repeatedly, and receiving more relevant ads. Since effective ad networks compensate publishers, consumers end up getting free content. That is not a bargain users readily understand, admitted Young-Bean Song, director of analytics at aQuantive’s Atlas Solutions unit, which sets millions of cookies on browsers. “The consumers don’t derive any direct value,” he said.