Complying with the new EU ‘cookie law’ could cost the UK economy up to £10bn if it’s not implemented correctly, according to analysis by online customer data platform QuBit.
QuBit says the figure comes both directly from lost sales as well as from damage to existing technology and advertising businesses as well as the migration of online businesses overseas as they look to avoid the cost of compliance.
The study comes as UK retailers prepare for the arrival of new legislation governing the use of cookies by on UK websites. From May 26, the EU ePrivacy Directive will be adopted in the UK bringing with it new rules that demand companies tell visitors to their website how their cookies will be deployed and get upfront consent. Fines for those who fail to do so could be up to £50,000.
QuBit says this change is “one of the most important” in web development of the last five years. Its ‘worst case’ analysis suggests that business could lose £2.6bn as new visitors are discouraged from visiting websites that request consent for cookies.
Some companies may opt for mandatory registration in order to avoid losing the personalisation and tracking capabilities offered by cookies, says QuBit. It cites research that shows registration can hit visitor numbers by up to 23% – costing a potential £2.37bn.
The web analytics market – put at £104m in value – would be hit as their services become less valuable if a significant number of people start to decline cookies. That, says QuBit, could cost the sector £21m.
The loss of the impact that personalised recommendations and targeting have online could hit online sales by £1.389bn, says QuBit. The impact of behavioural advertising could also be hit, costing up to £648m in lost sales. Similar impacts on affiliate marketing, which uses cookies to track user activity and claim payment for a sale, could cost up to £80m.
Finally, QuBit says many businesses will move abroad to avoid the cost of compliance with the directive, costing some £2.922bn in total.
Graham Cooke, chief executive of QuBit, said: “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. 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.
“There is, however, a solution to this problem. Our assumptions have been based on a strict interpretation of the law by site owners and regulatory authorities, and a worst case estimate of the impact on cookie consent. Site owners can minimise this cost by doing their best to explain the benefits of cookies to end users and by making the consent process as simple and seamless as possible.
“Meanwhile, the authorities can minimise the impact by interpreting the directive in a way that enables companies to soften the consent process and thus maximise acceptance. Implemented correctly the law could have a much smaller cost impact on businesses and could also bring about greater transparency and choice for consumers.”
