When Eric Schmidt argued recently that online display advertising could become a $200 billion industry within the next decade, his words triggered thousands of bullshit detectors across the media industry.

Today, online display is worth a mere $17 billion globally. Relatively few publishers buy the story that Mr. Schmidt is selling.

For many, online display remains an island of potential in a sea of disappointment. As a media agency executive told me on the sidelines of a recent conference: "Online display has been broken for a long time, and everyone knows it."

This, however, remains the medium that will not die. In fact, online display remains central to the post-print future of the news industry. Even at Wapping, where locked-down paywalls are proliferating, online display has a role to play. (Which explains why News International is putting research like this into the market.)

The good news is that online display has been experiencing a determined, if patchy, renaissance. Growth has returned in the wake of recession. But data is also playing a role. FT.com, for example, employs a team of 12 data analysts to mine the clickstream for insights that encourage advertisers to pay higher prices. At Associated Newspapers, home of Mail Online, eight data analysts crunch the numbers. It's a start: the most optimistic publishers talk of arresting the downward trend in CPMs and running big brand campaigns worth £1m plus. Some even think that publishers might be able to generate additional revenues by selling user data to advertisers.

Yet as so often in the history of online display, there's a challenge on the horizon: an amendment to article 5.3 of the EU's ePrivacy Directive 2002/58/EC, which is scheduled to be incorporated into UK law on May 25.

The amendment is the legacy of Viviane Reding (pictured), the former journalist who has just rounded off a five-year term as European commissioner for information society and media. Here, for the record, is what the amendment says:

"Member States shall ensure that the storing of information, or the gaining of access to information already stored, in the terminal equipment of a subscriber or user is only allowed on condition that the subscriber or user concerned has given his or her consent, having been provided with clear and comprehensive information... about the purposes of the processing."

The suggestion is that publishers, in very near future, will need to obtain prior consent from users before dropping cookies into their browsers.

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The implications could be unpleasant for publishers. Already, a large minority of browser users regularly flush away their cookies. Requiring users to opt-in to cookie-tracking would force publishers to treat another large slice of their audience as dumb clicks. Just as a data-based renaissance for online display is taking shape, it seems, the new law promises to stop it in its tracks.

The other day, Christopher Graham, the Information Commissioner, popped up on the Today program and reinforced the gloom. "Everyone is going to have to adapt to a new world where cookies need explicit consent," said Graham. "Industry needs to wake up and realize this isn't some kind of Brussels nightmare. This is really happening and we've got to make sure that we change the way we use websites."

If that sounds like a hardline stance, consider the position of the Article 29 Working Party, a high-level panel of data protection officials who advise the European Commission. Article 29 argues that publishers and ad networks should "swiftly move away from opt-out mechanisms and create prior opt-in mechanisms." Users should offer an "affirmative action" that signifies "willingness to receive cookies and the subsequent monitoring of their surfing behavior."

To say the least, the online ad industry isn't impressed. Ciarain O'Kane, editor of ExchangeWire, a specialist ad industry site, foresees "a tsunami of pop-up boxes looking for our consent to collect information." Like many in the online ad business, he also suspects that the new rules could "drive us closer to paywall hell."

He's not alone. At a conference in London recently, Nick Stringer, director of regulatory affairs at the Internet Advertising Bureau, put a picture of Reding up on the screen and said: "If you don't know her, you will know her because she is coming to get you." The audience – mostly geek practitioners – responded with pantomime-style booing.

Stringer describes the EU's directive as "mad" and "nuts." Yet he sounds surprisingly relaxed. In an interview, he voices his "surprise" at the Information Commissioner's tough-sounding words. Privately, he says, both the government and the Information Commissioner's Office have been "very supportive" of publishers and the ad industry.

As it turns out, Stringer has two aces up his sleeve. The first emerged last Thursday, as the Department of Culture, Media and Sport quietly announced that it is "working with browser manufacturers to find a way to enhance browser settings" in an effort to "meet the Directive's standards."

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The second ace up Stringer's sleeve is his expectation that the government will soon ("before the end of the month") announce its support for a pan-European self-regulation effort. The outline of this regime is already visible on the IAB's website. Ultimately, says Stringer, users who click on a standard-issue icon that runs within online ads will be allowed to opt out of behavioral targeting altogether. Stringer sees this as a way of getting "informed consent" from consumers.

The sight of the government bending an EU directive in favor of the ad industry won't please everyone.

The Article 29 Working Party remains skeptical about browser-based solutions, which, it says, will only prove acceptable if browsers "by default reject third party cookies" – a solution that seems unlikely to placate advertisers and publishers.

Likewise, Privacy International, the London-based privacy advocacy group, has already dismissed the idea of allowing consumers to "opt out via complex multiple choices on industry websites." Self-regulation of this kind, says PI, "will be no different from the current one": it won't provide "meaningful protection" for consumers.

Oddly enough, this claim found an echo at last week's ExchangeWire conference in London. At the end of Nick Stringer's presentation, one delegate queried the usefulness of the IAB's opt-out site by asking how many consumers had used a similar site in the US.

The answer: one in 700,000 web users. At this point, there was a short silence before someone in the audience asked pointedly, "So what is the point?"

Posturing and maneuvering, self-regulation versus dirigisme: in some ways, Britain's relationship with the European Commission never changes. Yet as data moves toward the centre, the conflict between publishers and privacy advocates can only intensify. In the balance hangs the future of online display, and with it, the post-print fate of the news business.

Photo: Vivian Reding at the EPP conference on Lisbon Strategy, Nov. 25, 2004. Courtesy of European People's Party/Flickr