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New technology serves ads sans cookies

An ad technology company is hoping to turn concerns about Net privacy to its advantage, offering a way for companies to deliver ads without using markers known as cookies.

An advertising technology company is hoping to turn concerns about Internet privacy to its advantage, offering a way for companies to deliver online ads without using electronic markers known as cookies.

The service, unveiled by Raleigh, N.C.-based Interadnet on Monday, comes as new rules take effect governing data-gathering practices of government Web sites and as Congress considers limits on online consumer tracking. The company said it believes its cookie-less ad service could also be attractive to companies such as financial services firms, health care companies and pharmaceutical agencies that deal with sensitive customer data.

"The main privacy concern is that Big Brother is watching you," said Chris Valas, Interadnet's vice president of engineering. "And cookies are being perceived by the public and lawmakers as part of the problem...Once you lose cookies, you don't have the calling card that comes with every visit."

Ad technology companies typically place cookies on individuals' computers when an advertisement is delivered, giving them the ability to track consumer behavior online and gauge the effectiveness of an ad campaign or target marketing to consumer preferences. Web sites also use the markers to hold passwords and personal information for custom services such as Web-based e-mail.

But consumer advocates have long criticized the tags for their technical vulnerabilities and potential privacy problems in the event of a computer breach. The mere fact that cookies can hold years of data about consumer travels on the Web is enough to raise the ire of privacy advocates.

Such technology hopes to cut the fat from data collection on the Web--a hot point with legislators this year and a no-no for government Web sites.

Last year, after several revelations that federal agencies were using cookies to collect data about consumers visiting their sites, Congress passed an act to prevent such tracking. Now, in the 107th Congress, there are several pieces of legislation for commercial businesses involving cookies indirectly that restrict technology promoting the collection of data for profiling, even anonymously.

A real need?
Despite mounting concern about consumer privacy online, at least one analyst said that marketing a cookie-free product is mostly a public relations play.

"Cookie-less ad serving is more for the benefit of the press than for marketers," said Marissa Gluck, an advertising analyst at Jupiter Research, a division of Jupiter Media Metrix. "Using cookies for ad serving is not inherently evil. It is the accepted standard."

But Interadnet's Valas said that because this is a big year for privacy, his company's product is answering an unfulfilled need for government Web sites and others. Businesses targeting products at children must be especially careful not to collect personal data; otherwise, such companies risk breaking guidelines of the Children's Online Privacy Protection Act (COPPA), Valas said.

By not using cookies, companies could lessen their chances of violating COPPA. Without a cookie, an advertiser is unable to track a consumer over multiple uses of a Web site or view any personally identifiable data that cookies sometimes contain. It also is unable to target ads based on consumers' online preferences.

"You're going to give something up in the cookie-less world, (which is) the ability to build a longer-term picture of online behavior. This gives a more in-the-moment picture of online behavior," Valas said.

The ad-serving technology does give advertisers data on how many ads were delivered and how many times a visitor clicks to the marketer's page. Interadnet said the technology can report a consumer's geographic location, pulled from data within IP addresses. It can also evaluate the success of an ad campaign through comparisons and track the number of sales at a site not specifically pinned to the ad campaign.

Valas said that one government agency is already using Interadnet's product for an ad campaign and that it has received calls from companies in the health care, pharmaceutical and financial industries, all areas dealing with sensitive consumer data.

Cookie alternatives
Privacy advocates mostly support ad serving without setting cookies on an individual's machine. Richard Smith, chief technology officer of the Privacy Foundation, has been a proponent of cookies with a short life span. In contrast to how the digital tags are used now, time-limited cookies could expire daily or monthly, essentially restricting the amount of data collected about consumer habits.

Two major ad-serving companies, DoubleClick and Engage, don't market "cookie-free" services, but both say that it's possible to offer it.

For example, DoubleClick said it has had a large-brand advertiser and an online federal Web site run online ad campaigns without using cookies. The company also doesn't use cookies in Germany because of local laws.

"We do it on a customer-by-customer basis, so the possibility exists with the technology. But with that you lose the ability to get detailed reporting and targeting capabilities," a DoubleClick representative said.

Still, Jupiter's Gluck said the government and others could have uses for the technology.

"But it's such a small segment of the market," she said. "And financial services firms have bigger fish to fry--they have to deal with the new anti-spam bill in Congress. That's what's worrying them more."