EU Law on Cookies, Affiliate Marketing, Wider Implications

Earlier this week, it was announced that “the Council of the European Union has approved new legislation that would require Web users to consent to Internet cookies”. The text of the legislation reads:

Third parties may wish to store information on the equipment of a user, or gain access to information already stored, for a number of purposes, ranging from the legitimate (such as certain types of cookies) to those involving unwarranted intrusion into the private sphere (such as spyware or viruses). It is therefore of paramount importance that users be provided with clear and comprehensive information when engaging in any activity which could result in such storage or gaining of access. The methods of providing information and offering the right to refuse should be as user-friendly as possible. Exceptions to the obligation to provide information and offer the right to refuse should be limited to those situations where the technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user. Where it is technically possible and effective, in accordance with the relevant provisions of Directive 95/46/EC, the user’s consent to processing may be expressed by using the appropriate settings of a browser or other application [underlining mine].

In essence, the new legislation proposes that no cookie is installed on the end user’s machine without his/her explicit consent which must be sought every time a cookie is about to be recorded.

This legislation is not yet signed into a law, but is expected to become one if signed within the next 18 months (implementation due: 04/26/2011).

Will the EU Law Bury Affiliate Marketing?

If such a legislation becomes a law, will it really bury affiliate marketing in Europe as some are already being afraid? I do not believe so. While the majority of present day affiliate marketing tracking solutions do rely on cookies, the industry’s existence does not have depend on them. There is a way to track affiliate-referred sales/leads via cookie-less solutions, and at least two European affiliate networks are already employing them (AffiliateFuture and Webgains). So, while the is little joy for affiliate marketers behind the newly proposed legislation, it is certainly not the end of the world.

Bigger Picture — Wider Implications

The real problem is that if this draft becomes a law, many other areas of online marketing will be automatically affected. To mention but a few scenarios, cookies are being extensively used for/in:

  • Affiliate marketing
  • Ad serving
  • Personalization and optimization of user experience
  • Shopping carts
  • Web analytics

The implications are significantly wider than just the affiliate marketing. In fact, as suggested above, affiliate marketing does have alternative solutions on hand. Are there effective ways to deal with the possible complexities on the other fronts mentioned?

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5 thoughts on “EU Law on Cookies, Affiliate Marketing, Wider Implications”

  1. Here in Germany one can see really growing hate against Google, and this regulation may well be connected to that.
    Google analytics depends on cookies, and Google Adwords depends on Google analytics.
    Any way I think the bigger problem is that all kind of analytics, split testing etc. would be much more expensive, had to be moved to the server side. This way life would be very difficult for independent internet businesses in Europe.
    On the other hand, even an European can move his website oversees and incorporate in the US, Australia or Hong Kong.
    Add a disclaimer to your website stating that due to European government regulations this website may not be viewed in an EU country, and we would see how permissive Europeans are in permitting their governments to decide what they information they may or may not see.

  2. I think it’s important to mention that cookies are not mentioned in this law, so even the other forms of tracking (such as AF’s Veracitag and it’s various imitations from other networks) will still be affected by the same law.

    That being said, I’m really not concerned about this law just yet. I can’t see it working / being enforced outside of cracking down on some potential abuse.

  3. Johannes, thank you for your comment. Moving your business/website overseas may solve some of the problems, but with the addition of the disclaimer (and rule that the website cannot be viewed from within Europe), many will simply lose their primary markets. Do you personally think such a law will pass?

    James, thanks for your two cents (or, I guess, “pence” would be a more appropriate currency)! 🙂 Never thought of Veracitag falling under the same rule as cookies. You’re right, everyone’s been focusing on cookies only. The EU Council’s concern is third parties who “may wish to store information on the equipment of a user, or gain access to information already stored”. So, any tracking solution that relies on a file stored on the end user’s machine would be affected.

    Yes, from what I’ve been reading since posting the above opinion, many online marketers are very skeptical about the future of this legislation. I’ll be monitoring the situation.

  4. Hi Geno, I would like to pick up on your “at least two European affiliate networks” and point out that Paid On Results a UK based network is only one as far as I know that have publicly shown the break down of different tracking methods they use, see blog post at Very interesting reading especially for the US readers when you think some of your biggest networks are not using other tracking methods and losing out additional sales for themselves and Affiliates, I even done a blog post at that explains how you could be missing out on up to 10% Additional Sales.

    I will be watching the EU legislation with interest but to be honest every site uses cookies and this will be incredibly unworkable for the average user and indeed I see browsers having a built in option to accept cookies on your behalf, oh wait they already do 😉

  5. Clarke, interesting comment (especially about the additional 10% of sales missed by affiliate networks that rely on cookies on only).

    A questions to you: if the new EU legislation ever becomes a law, which of PaidOnResults’ tracking methods will still work?

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