Cookies link your online, offline identities

— -- Think about the websites you visited recently. You shopped, checked airfare prices and researched a medical condition.

How would you like marketers to trade this information, along with your name and address? They may very well have.

Increasingly, online tracking is becoming more personal. Cookies used to be relatively harmless. Now, cookies can tie your surfing habits to your offline identity.

How cookies work

A cookie is a small text file placed on your computer by a website. Some cookies are useful. They identify you to your favorite sites. With them, you can bypass site log-ins. The site remembers your preferences.

But advertisers and third parties also place cookies on your machine. For instance, you may see an Acme Widgets ad on one site. The ad places a cookie on your computer.

You visit a second site running an Acme ad. This time, Acme reads the cookie on your machine. It knows the content of the first page you visited. It knows the content of the second page you visited. It can now offer an ad better targeted to your interests.

Now, consider this. Acme ads are placed on sites via an advertising network. Goliath Advertising tracks and profiles you as you move from site to site. And it displays ads based on your interests.

Many people don't like the idea of online tracking through cookies. They find the targeted ads creepy and invasive. Well, that's not the half of it.

Online meets offline

Data companies like Acxiom and Datran have gotten in on the game. These companies gather information from public records. They know the value of your home and your net worth. They know how many kids you have.

Now, imagine that the offline data is used in conjunction with cookies. You click on a link in a marketing e-mail. Or, you register on a website. A cookie tying your computer to your offline data is set.

Targeted ads suddenly become more targeted. Retailers may customize prices to suit your income or buying habits. You end up paying more than those who shop online infrequently.