Will The Cookies Crumble?

The latest paranoia among online marketers is anxiety about the demise of cookies, those web objects that contain no code but enable all web recognition and tracking.

Without cookies there is no tracking, no stored passwords, no purchase history, no instant recognition and no way to make or attribute sales. Absent cookies the Internet is as blind as network television or national magazines.

Cookies come in two flavors. First-party cookies directly link your computer with a favored site. These cookies allow you to quickly log-into your bank account and make it easy for Amazon and others to welcome you by name and serve you content that you have already specified or expressed an interest in. When first-party cookies are present you can be identified 99.4% of the time according to Coremetrics.

Third party cookies come from ad servers and are imbedded in everything from ads to porn to the viruses that capture and destroy your hard drive. They mostly enable somebody out there to anonymously track your behavior and, in some cases, record your every click.

Cookies are under attack from several directions. Microsoft Internet Explorer 6, the current version in universal use, responding to consumers’ privacy needs and its own security concerns, already blocks some cookies. There are rumors that in “Longhorn”, the next generation of MS Explorer, all cookies will be blocked, though to do so Gates & Company would screw themselves by disconnecting millions of Hotmail and MSN users.

But privacy concerns are real and growing. It turns out that cookies and spyware are pretty much two sides of the same technical coin. Therefore many of the new anti-spyware and anti-virus software programs sweep away cookies along with pop-ups and porn. And average consumers, between 35 and 56 percent of those online depending on whose prognostication you believe, manually dump cookies once a month.

But before you become Chicken Little over this, keep in mind that cookies enable the unique accountability feature that distinguishes the Internet from other media and directly feeds the coffers of MSN, Yahoo, Google and everyone else cashing in on ecommerce. Cookies are the only way to identify unique visitors; the metric that supports all ad pricing and facilitates counting and ranking site traffic. So there are plenty of tech-savvy players with a direct and urgent incentive to solve the cookie problem.

The smart money is betting that first party cookies will remain and 3rd party cookies will be toast in 18 months or less. The hitch is the need to extract the historical data and purchase histories from third party cookies, before they disappear, so that your favorite sites and merchants can maintain continuity and continue to recognize you for who you are; a best customer.

WebTrends has a system that they’ve patented. I suspect others are close on their heels. So if you are looking for something to worry about, put this one to bed. Assume that some form of cookies will continue to exist and fuel Web metrics. Figure they will be some variation of first party cookies and that you’ll have to add money to the budget to make the transition before 2008.