IPA Lobbies Government on EC Internet Threat

02 November 2001

The Institute of Practitioners in Advertising is lobbying DTI minister for e-Commerce and competitiveness Douglas Alexander over an upcoming EU privacy directive on the use of 'cookies'.

The IPA believes the directive could cripple an already vulnerable e-commerce industry if the current amendments are allowed to go through unchallenged. These, the IPA believes, will not be welcomed by users and will prove a severe blow to the fledging medium if website operators are forced to make costly modifications.

The directive in question, which includes modifications to existing EU law on ‘cookies’, relates to the processing of personal data and the protection of privacy in the telecommunications sector. The IPA is calling for a public debate on cookies whose function, it believes, is widely misunderstood.

Of greatest concern to the IPA is an element of the directive containing an 'opt-in' or 'opt-out' clause. This requires publishers to obtain explicit user permission before they can store a 'cookie' – the electronic data which identifies the source of a computer terminal.

An IPA survey of its digital media members reveals that 75% (around £187 million) of their total online advertising relies on cookies, as does practically every major website on the net.

The IPA argues that:

• In overall terms, cookies enhance the web experience because users currently do not have to re-register and remember their password every time they log on to a website, while they also ensure that any online advertising which is served is kept to acceptable levels. In e-commerce terms, cookies are particularly important for online shoppers who would have to re-enter their delivery address and payment details on every visit. The IPA believes that an 'opt-in/opt-out' clause would therefore be a massive inconvenience and irritant to users.

• There would be a huge cost impact for e-commerce sites who would have to redesign their site architecture. The IPA believes this could force many companies out of business which would reduce choice, quality and competitiveness within the marketplace.

• Online advertising is currently seen as one of the more accountable mediums because of the personal relationship it has with its users. It is not a mass medium. Advertisers are able to target specialist sites and track the effectiveness of their campaigns. Cookies allow advertisers to rotate their ads and to ensure they are relevant to their target audience. Without them online advertising is likely to be largely irrelevant.

• Online advertising currently pays for content, particularly on news sites (just as it does in the print medium). The IPA believes that consumers will not want to pay for site content.

• Cookies are anonymous and their use already complies with the Data Protection legislation. Given that any user can also set their browser to refuse cookies, the IPA believes that additional legislation is unnecessary.

The Interactive Advertising Bureau and Incorporated Society of British Advertisers are also beginning to proactively lobby their members on this issue.

Said Alan McCulloch, chairman of the IPA Digital Marketing Group: "While it's important for consumers' privacy to be protected, this legislation is throwing the baby out with the bath water. The commercial impact of this directive is a potential 'death blow' to internet advertising in the UK, and a multi-million Euro bill for companies using e-commerce in Europe. Everyone working in the new economy will be affected."

News source: IPA Online (UK)