November 10, 2005

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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.
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Gauging Google's Gameplan Google is on the march. The announcement of Google Analytics extends the search firm’s easy, intuitive interface and its tracking mechanism to a broad range of Internet advertising and in no time it can be extended to other forms of inbound and outbound communication. Not only does the move to give away these services threaten an array of web tracking vendors, it points to a Google strategy to concentrate, aggregate and dominate how messages are distributed, measured and valued in cyberspace and beyond. The new service will allow any marketer to track clicks on banner or text ads, clicks on rival search engines and clicks through to websites from e-mail campaigns. In tracking this activity, it will be easy to track content sequences, frequency of visits and make some generalizations about the effectiveness of selected vehicles and selected messages. If the tools for accessing this data will be as easy-to-use as Google Adwords, the new service will potentially give marketers a faster insight into the efficiency and effectiveness of their messages and media choices. It could also cue publishers about the true use and value of their inventory which might lead to different pricing and bundling models. Based on technology developed by Urchin, a firm Google acquired earlier this year, the free provision of analytics could spark an embrace of metric tools; a category still in its infancy both it terms of acceptance and use by marketers and technical sophistication. This development provokes two thoughts … I. Knowing is just the first baby step. If less than 20% of million dollar companies with web sites have adopted web metrics, the Google move could instantly expand access to data about web surfing. And while FREE is a powerful incentive, you still have to have a sensibility for measurement and people who know something about metrics to meaningfully grasp the Google largess. Yet this just starts the process. Once things get counted, someone has to apply some intelligence and experience to “read the tea leaves” and to understand what the patterns mean or to hypothesize and test assumptions that can be drawn from data. And assuming you have an interest and a capability to do so, then you need to figure out what to do about the data to achieve your own stated goals. The beauty of the Internet is the ability to track and count all kinds of things. The challenge is to figure out what all this data means and how to use it to get what you want. Google Analytics will collect and display numbers, lots of ‘em. Google Analytics won’t do it for you, nor will it tell you what to do with the conclusions and inferences you draw from the data sets. Google Analytics is a shot across the bow. It will make web tracking and metrics firms paranoid and possibly prompt a scramble for cheaper, more powerful tools to overcome the Google offering. But for the mass of marketers, its not much more than a clarion call to embrace tools that can make your money go farther and your messages work harder. II. Google has a Grand Vision They didn’t hire a zillion computer science geeks just fine their search engine. Google is thinking big and constructing a broad universe of offerings that they expect to change the game. Expect them to leverage the strengths of the net and the strengths of the technology they are building and acquiring like mad. They are thinking big. They have a vision of mass, value and dominance just like Gates and Ballmer. Their moves are provoking worries about scale and changing business models. For little guys the Google vision could mean extinction. But the real impetus is the coming battle of giants that will pit Google against Microsoft and Yahoo. For some this clash of titans ironically subverts the promise of the digital age where technology was supposed empower everyone to take a shot at the American dream. But like most maturing markets, roll-ups and dominant players look for opportunities to corner the market and use either innovation or distribution (think MS Explorer) to create captive or long term customer relationships. And while many will lament the emergence of conglomerates in the digital space, we have always countenanced the price, speed and innovation benefits that big, well organized companies with a vision have brought into the market and into our lives in other contexts. Google will be no bigger or no badder a “big brother” than GM, GE or...

Danny Flamberg

I am a veteran marketing consultant working with leading and emerging brands

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