Web Analytics Special Report: Serve Better Cookies for Happier Holidays

It’s midsummer, but holiday sales are top of mind for online retailers as they prepare for the most important time of the year. One out of five retailers we recently surveyed through an outsourced list said the holiday season accounts for half or more of their annual revenue.

Though retailers have many things to focus on before holiday shoppers arrive, one critical aspect is the accuracy of their marketing metrics.

The online channel is indeed the most measurable, yet accuracy is under siege. Many hosted Web analytics services rely on third-party cookies, and recent research we conducted shows that third-party cookie blocking has increased fourfold since the start of 2004, rising from an average of 2.8 percent of visitors in January 2004 to 13.2 percent in June 2005.

If cookies are blocked and the Web analytics solution doesn’t use backup sessionization methods to associate page views with visits, then significant events from that visitor, such as campaign responses over time, may not be reported at all. Topping it off, retail is the most affected industry vertical, with an average blocking rate of 16 percent.

The Web has helped fuel the marketing industry’s transformation from an indirect to a direct paradigm through increasingly detailed measurements of prospect and buyer behavior. But marketers are still developing the necessary appreciation and understanding of how these metrics are calculated.

In fact, 39 percent of marketers we surveyed during an industry Webcast had no idea what method their sites used to identify unique visitors, even while unique-visitor metrics factored into nearly every report they look at, including campaigns, merchandising, conversions and ROI.

Not only does cookie blocking make it harder to measure and compare efforts, segmentation and targeting strategies are undercut from the get-go. And wouldn’t you know, this is the year that retailers are under more pressure than ever to achieve more sales from existing customers. Shop.org’s FirstLook 2005 report predicts the number of new households shopping online will be half of what we saw last year.

Online retailers need accurate marketing insight as they prepare for the holidays so they can determine which campaigns, segmentation and merchandising efforts have been effective.

Retailers need a complete, accurate picture of their successes to continue optimizing spends and, perhaps most importantly, to avoid drawing the wrong conclusions. We’ve seen customers go from 17 percent of their audience rejecting cookies to less than 2 percent overnight, simply by moving from a third-party cookie to our first-party cookie solution.

The immediate solution to the biggest accuracy issue is simple: Use the first-party cookie your site already serves as the basis for your analytics. Assuming your analytics vendor can use your site’s first-party cookie, the solution can be implemented easily in minutes and can maintain the integrity of your historical visitor records.

First-party cookies are blocked at low-single-digit rates, less than 1 percent to 4 percent. They are also less likely to be deleted later by visitors because first-party cookies help them use Web sites by remembering their logins, preferences, shopping cart contents and more.

Cookies have become a fundamental issue, and unfortunately the average consumer largely misunderstands them. Though we can educate consumers and help them understand the benefits cookies offer, it is incumbent upon retailers to adopt best practices that minimize cookie blocking and consumers’ fears. It is accuracy that will empower online retailers to make thoughtful decisions that drive business results and positive visitor experiences.

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