by Ben Cooper, Head of Data, Tullo Marshall Warren.

On May 26^th, European and UK laws will dictate that businesses and organisations operating in the digital sphere must obtain an individual’s positive consent before a cookie is used to retrieve and use information gleaned from online browsing behaviour. This results from changes to the EU E-Privacy and Electronic Communications Directive.

Until now, businesses have been allowed to use cookies without obtaining an individual’s permission, as long as their use, and how they could be disabled, was stated in company privacy statements and T&Cs. The change in legislation could potentially revolutionise the entire marketing landscape and will certainly have major ramifications for brands and marketing industry professionals alike.

The fact is that companies will no longer be able to use this information to inform their marketing communications, without first having obtained an opt in from the consumer. The impact on marketing communications could therefore be immense as currently the information gathered from cookies is used to personalise communications and target consumers. If this information becomes unavailable, brands will need to find other ways of obtaining the sorts of information that they receive from cookies.

For brands, the challenge will be to convince consumers that allowing cookies to be placed on their computers will actually benefit them. Until they work out the best way to get consent from consumers, their marketing insights will be restricted in a way that they have not been in the past.

In addition, analytics providers will need to find different ways of working out what drives value on the net as fewer cookies could lead to analytics that are less robust and less representative. Marketers from all types of agencies will have to rethink and amend their strategies. In a financial context, a study by the Office of Fair Trading in 2010 estimated that online behavioural advertising is worth between £64-95 million each year and rising.

In the absence of any best practice guidelines, what should brands be doing to prepare for the new law? The Information Commissioner’s Office issued an initial advisory paper detailing what actions they expected organisation and brands to take to ensure compliance, with the immediate recommendation being the initiation of a project to understand the scale of the problem they potentially face.

UK government has stated that it was not expecting full compliance by 26^th May, and indeed it has emphasised how it is taking a ‘light touch’ to these changes, which will come as a relief to most companies as the new legislation has rather crept up on the industry.  Indeed, on 24^th May the Department of Media, Culture and Sport issued an open letter effectively indicating that organisations would have a grace period of a year to put appropriate solutions in place before any enforcement actions might be considered. 

However, this latest communication has caused considerable confusion, as it seems to contradict earlier guidance, now suggesting that new, yet to be delivered, browser based solutions may be acceptable, when previously they suggested that these alone may not be adequate.  Furthermore, it suggests a “dumbing down” of the meaning of positive and prior consent.  Indeed, it gives an example of an individual leaving his browser settings as they are, on the assumption that they are adequately informed about cookies and what those settings mean, and that as such consent has been given.  The important point here is ‘adequately informed’, and this is probably where organisations should be applying most effort; this law is about organisations needing to be even more open and transparent about how they collect data and what they do with it.

What businesses need to do now is demonstrate that they are addressing the legislation by putting a plan of action in place to comply with the law.  The marketing industry particularly needs to take it seriously and act upon it without delay.  This could prove to be a challenging time for brands and marketing agencies and one which will change how consumers are marketed to forever.  The balance that brands need to strike now is between delivering an effective marketing communications strategy while respecting an individual’s privacy.