UK retailers warned to prepare for EU cookie legislation

Online retailers in the UK are being warned that they must act now to address new EU cookie legislation, or risk damaging user experience and constraining opportunities for customer conversion when the law comes into force later this year.

The so-called “cookie law” is an amendment to the European Union’s Privacy and Electronic Communications Directive, and requires anyone running a website to get explicit opt-in consent from their visitors before deploying cookies.

According to website testing company Maxymiser, online retailers in particular will struggle to comply with the new legislation, because cookies are critical components of online marketing.

“With e-commerce businesses having spent millions of Euros in removing website usability barriers, enhancing the online customer experience and optimising real-estate positions, the EU cookie legislation seems to put a pause button on marketers’ optimisation, analytics and attribution efforts,” said Peter Ellen, head of product at Maxymiser.

Cookies are small sections of code that websites put on a user's computer so that they can remember something. They are used primarily to enable websites to remember users’ preferences, but can also be used to track consumers’ browsing behaviour for targeted advertising purposes.

The technology has been treated with some hostility since the Phorm controversy in 2006 and 2007, when BT was discovered to be secretly trialling the behavioural advertising technology. Phorm uses tracking cookies to build a profile of users’ habits and interests based on the websites they visit and then assign targeted ads.

The EU cookie law gives people greater choice about whether or not they want their online behaviour to be tracked. The law actually came into force last year, but the Information Commissioner’s Office (ICO) decided to give UK businesses 12 months to “get their house in order” before enforcement began.

Ellen explained that, in order to comply with the law, online retailers need to make sure their websites include an appropriate method for attaining user consent. However, they also need to check that this does not break the website or damage user experience.

“Finding out which approach works and assessing the right wording and design elements will be a critical part of ensuring ICO demands are met without affecting the bottom line,” said Ellen. “But brands need to act now to put those tests in place so the results can be acted on before May 2012.”

In a paper, entitled “The Information Storage and Access Rule: Designing an Awareness Tool for 'Cookies'”,  Maxymiser provides legal information and advice for online retailers, to help them comply with the forthcoming legislation.

It explains, for example, that the word “consent” is not, on its own, enough to guide someone who wants to build a compliance strategy, as producing appropriate evidence of consent depends on how well the end user grasps the impact on his or her life as a result of the cookie's placement and subsequent use.

The paper can be downloaded for free here.

Maxymiser offers a suite of 'customer experience optimisation' solutions that allows organisations to launch marketing campaigns without the need for IT resources. Its customers include ASDA, Homebase, Kwik Fit Insurance, Virgin Media and HarperCollins, among others.

Last week the compnay announced a strategic investment of $12 million from Investor Growth Capital (IGC), along with additional investment from the company’s Series A investors, Pentech Ventures.

“We are excited that these venture funds have chosen to invest in Maxymiser, enabling us to accelerate our global growth — particularly in the US,” said founder Mark Simpson.

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Copyright © 2012 IDG Communications, Inc.

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