Revived Spyware Bill Could Crunch Cookies

  |  January 6, 2005   |  Comments

Experts say HR 29 could devastate frequency caps and CPMs.

A reintroduced anti-spyware bill threatens online advertisers' and publishers' widespread use of cookies, ad executives say. If enacted into law in its current form, bill HR 29 could result in plummeting publisher CPMs and an end to frequency capping and behavioral targeting, along with other consequences.

The federal "Securely Protect Yourself Against Cyber Trespass Act" (SPY-ACT) was first introduced in 2003 as bill HR 2929. It passed overwhelmingly in the House of Representatives in October, 2004, but didn't reach a vote in the Senate before the end of the 108th Congress. California Representative Mary Bono reintroduced it this week as HR 29. The bill now starts from scratch in its march toward legislation. It begins in the House Committee on Energy and Commerce and, if successful, comes to the House floor for a vote.

Odds are in the bill's favor, according to Trevor Hughes, executive director of both the Network Advertising Initiative (NAI) and the International Association of Privacy Professionals (IAPP).

"It's notable that [House Commerce Committee] Chairman Barton is one of the co-sponsors on the bill," Hughes said. "That's a strong indication there will be committee support for this bill's movement. I would expect to see it emerging on the House floor sometime this year."

Congresswoman Bono's press secretary, Kimberly Pencille, confirmed Barton's backing, but said the Committee welcomes input from marketers concerned about the bill's language. "The door is open, if they want to come and comment on it," she said.

The proposed legislation primarily seeks to regulate privacy-invading spyware commonly installed on hard drives without users' knowledge or permission, hence the name. However, its definition of "cookie" doesn't distinguish carefully between the various uses of code to capture user information.

While SPY-ACT creates cookie exceptions for publishers wishing to identify return visitors, those exceptions don't apply to third parties or network advertisers. "In the current bill, cookies that behave like cookies are exempt," said Pencille. "If it's monitoring your behavior when you leave [the site that placed it], then it's not covered." The bill wouldn't permit publishers to share cookie information with partners, which would cripple their ability to target ads. Passage of the bill would make illegal such widespread marketing practices as behavioral targeting, cross-site frequency capping, and network traffic analysis. Publishers and site owners are also dependent on third party tracking tools to earn the higher CPMs they've enjoyed of late.

"If cookies go away, it dumbs down publishers' ad inventory and makes it far less valuable," said Hughes. "It potentially devastates the CPA market as well. You use cookies to determine whether actions have occurred."

He believes the passage of the bill could mean a "return to the stone age" of interactive marketing, and he laments a lack of industry awareness of HR 29's negative consequences.

A "notice and consent" clause in the bill allows the placement of cookies that monitor Web surfing, so long as a site owner obtains permission to place the cookie file. Pencille said consent must be granted only once.

"There's a misunderstanding out there that this would create a swarm of pop-up ads, which is not the case," she said.

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ABOUT THE AUTHOR

Zachary Rodgers

Until March 2012, Zach Rodgers was managing editor of ClickZ's award-winning coverage of news and trends in digital marketing. He reported on the rise of web companies, data markets, ad technologies, and government Internet policy, among other subjects. 

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