How to make cookies and influence people

The world of 1960s advertising as depicted by the brilliant Mad Men series looks pretty damn cool.

Who wouldn't want to hang out with Don Draper enjoying a morning whiskey while storyboarding ideas for the latest bra advert?

The world of advertising has changed a lot since then, and it is doubtful that Mr Draper would have found quite as much time for carousing in the modern world of digital advertising.

If the TV was the 1960s adman's new toy, these days it is the web. And the engine driving web ads is cookies, small data files stored within browsers that can be used to make connections between a particular machine and websites visited.

Cookies can be very useful - remembering details so that people don't have to register to build up a shopping cart of items on a retailer's site, for example - but they are also increasingly being used to track surfing and help serve up ads based on sites people have visited.

Behavioural advertising, the latest buzz phrase, relies on cookies to enable companies to target advertising based on users' online activity.

To date, consumers have had little choice about the cookies that track them but new legislation from Europe, due to come into force on 26 May, is forcing websites to be more upfront about what data they store and what cookies do with it.

Under the EU's ePrivacy directive, sites must provide clear and comprehensive information about the use of cookies, telling people what cookies are there, explaining what they are doing and asking for consent to store them on their computers.

The UK's Information Commission Office recognised that websites needed time to get their heads around the changes and gave sites a year to comply.

Now the time is up and those that have done nothing face fines.

Increasingly sites will offer pop-up boxes attempting to explain what cookies are doing and offering consumers the chance to turn them off.

BT was early to comply to the directive and has been held up as a good example of how to do things.

Visitors to its site since March have been met with a pop-up box which fades subtly in and out of view. The box explains what cookies are, and how to get rid of them. The whole process takes less than 10 seconds.

Crucially though, it doesn't ask for explicit consent to use cookies, instead asking customers who don't want to be tracked to opt out. According to BT, few customers have switched their cookies off so far.

According to data processing firm QuBit, the cost to the UK economy of switching off cookies could be huge.

"Cookies have become an integral part of the online economy and so anything that discourages their use is going to negatively impact on this market," said chief executive Graham Cooke.

"What many of the analyses to date have ignored is the indirect impact on businesses that rely on cookies for their services to function, rather than just the direct cost of lost sales. Put together the potential cost of this directive is frankly scary."

According to QuBit, behavioural advertising can generate 2.7 times as much revenue per ad as untargeted advertising and, it argues, a reduction in cookie consent would damage this technology, potentially costing up to £648m per year in lost sales.

If there is one thing that the modern day Don Draper does well, it is to make a mundane product look extraordinary, but ad men are facing one of the hardest sells of their lives to persuade the public that cookies are a must-have addition to their lives.

"It is quite a big sell," admits Nick Stringer of the Interactive Advertising Bureau (IAB).

"We haven't explained it well enough to the average consumer and people need to know the benefits of cookies in a simple practical way," he said.

Later this year, as the effects of the European directive kick in, the IAB plans a marketing campaign to do this.

"We will explain what targeted advertising is. If you don't like it, you can turn it off. You will still see advertising but it won't be personalised or relevant," he said.

Good websites and brands will work with customers, thinks Paul Doleman, chief executive of digital marketing firm iCrossing.

"The best brands will explain what they are doing and why they are collecting data," he said.

"Marketers gather information about people in order to create a better experience. Of course you are selling products, but that doesn't mean that you aren't trying to also trying to create a great experience for customers."

His view reflects a change of heart for marketers.

The industry had been vocal in its view that the cookie law, as it has been dubbed, is not properly thought through and difficult to implement.

A recent survey from online analyst firm Econsultancy found that 82% of marketers thought the directive was "bad for the web".

Now they appear to embrace it.

It could be a case of "if you can't beat them, join them".

"It is long overdue and is about putting the consumer at the centre of what we do. It is just another phase in the evolution of e-commerce," said Mr Doleman.

He even has a slogan: "The right content in the right form and the right place on your terms,".

But not everyone is convinced that all brands will be so keen to give power to the consumer.

Michael Forrester, a solicitor at Manchester-based law firm Kuits, predicts some will take a more aggressive approach.

"Some of these smaller websites are relying on advertising and may take the view that if you don't accept cookies, you won't get to access certain parts of the site," he said.

The evidence suggests marketers may face an uphill struggle in their campaign to persuade the public to like their cookies.

According to a survey of 2,000 consumers carried out by eDigital Research and IMRG last month, only 23% of consumers are happy for websites to use cookies to improve their browsing experience.

The survey suggests that there is a good deal of ignorance about what cookies are. A third of those questioned believed cookies could be used for viruses and Trojans, while 40% declared them "bad for the web".

Ultimately, the main message from the marketers and admen is that cookies are the price that people must pay if they want to carry on receiving free web content.

Whether it is a trade-off consumers are willing to make will become clear over the coming months as the cookie law kicks in.