[opendtv] The Looming Battle Over Targeted Ads
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Fri, 25 Sep 2009 07:08:39 -0400
http://www.forbes.com/2009/09/24/online-advertising-privacy-business-media-regulation.html?partner=alerts
Privacy
The Looming Battle Over Targeted Ads
Evan Hessel, 09.24.09, 04:57 PM EDT
Legislators and consumer groups are pushing for curbs on firms that
track Web users' behavior. A primer on the coming showdown.
LOS ANGELES -- No one disputes that ads are a critical part of the
Web's information ecosystem. News Web sites like this one depend on
them for nearly all their revenue, as do sites like Facebook and
YouTube that have changed the way we communicate online.
What generates a lot of debate are the increasingly sophisticated
methods for selling ads targeted to narrow segments of Web users.
Today, Web sites ranging from tiny blogs to newspaper publishers to
digital giants such as Google engage in a practice called behavioral
targeting, a method of compiling data about which sites people visit,
what topics they search for and an array of other Web activities to
better surmise what types of ads might prompt them to make purchases.
Earlier this month, representatives from 10 consumer advocacy groups,
including the Electronic Frontier Foundation and Consumer Federation
of America, urged Congress to enact a set of laws governing what
types of data Web sites and data collection firms can compile. To
date, the Federal Trade Commission has issued a set of recommended
principles for behavioral targeting and left companies and trade
groups to regulate themselves. Privacy advocates call the current
system inadequate.
Rep. Rick Boucher, D-Va., the chairman of the House Energy and
Commerce Subcommittee on Communications, Technology and the Internet,
says he is working on a bill that would outline broad restrictions on
certain types of data collection and ad targeting. Speaking in front
of Congress this month, Boucher said he hopes to draft a bill of
rights, of sorts, regarding online ads.
Meanwhile, the Federal Trade Commission is studying existing behavior
marketing practices and whether it needs to make its principles
legally binding.
Driving the interest in the public impact of behavioral targeting is
the recent introduction of targeting products by some of the Web's
biggest players. In March, Google launched an "interest-based
advertising" service, which compiles data on what types of Web sites
users visit and uses that information to deliver targeted ads for
publishers that use Google's AdSense product. Microsoft expanded its
behavioral targeting services this month to cover Web sites, mobile
phones and its Xbox game console.
Unsurprisingly, ad tech firms and publishers that rely on ad sales
for the bulk of their revenue oppose new laws regulating their
business and prefer to maintain the status quo of self regulation. In
the coming months, Web users and marketers should expect the debate
over Web ad privacy to intensify.
The Stakes
For publishers of news and entertainment ranging from newspapers to
TV networks to nascent Web-only operations, deploying increasingly
powerful targeting technologies is critical to their future business
plans. Web sites typically rely on third-party advertising brokers,
called ad networks or ad exchanges, to sell more than 90% of ad
inventory. The prices for ads sold by third parties have plummeted in
recent years due to the social networks, blogs and other new players
flooding the market with ad space. Behavioral targeting systems could
help big publishers make their lowest-priced ads more useful for
advertisers and could lift revenues.
Advertising technology companies, including Yahoo!, Google, AOL and a
swarm of smaller players, have invested billions of dollars in
technologies to automatically analyze Web audiences and sell relevant
ads.
For consumers, new restrictions on ad targeting could help stave off
data leaks and unfair marketing practices. Yet if the new laws are
too restrictive, they could damage the ability of innovative media
companies like Facebook and YouTube to make money selling targeted
ads, thereby reducing the availability of useful, free Web services.
How Targeting Is Currently Regulated
Earlier this year, the FTC updated its recommended principles for
behavioral targeting. Its policies boil down to four main themes:
--Transparency and Consumer Control: Web sites have to tell customers
what type of data they are collecting and how it will be used. They
also have to give users the choice of opting out of data collection.
--Data Security: Companies can only retain user data as long as it
fulfills a legitimate business purpose and must prevent information
from falling into unauthorized hands.
--Consent for Policy Changes: If a company decides to change the way
it exploits previously collected user data, it must notify users in
advance.
--Consent for "Sensitive Data": Companies must obtain prior consent
from users before collecting sensitive personal information. The FTC
doesn't define sensitive information, but suggests that it includes
data about children, health and personal finances.
What Privacy Advocates Want
Much of the wrangling over privacy and online ads concerns whether
the media companies should be regulated by trade groups or by actual
laws and regulations.
The 10 consumer groups want legislation regulating online privacy
that formalizes and expands the FTC's current recommended principles.
While the FTC suggests that companies obtain consent before
collecting sensitive information, the privacy coalition wants to ban
the practice outright. In the privacy watchdogs' eyes, sensitive
information refers to data about health, finances, ethnicity, race,
sexual orientation, personal relationships or political activity.
For personal data volunteered by users and behavioral data gathered
automatically, the consumer groups want laws that would force sites
and data collection firms to specify what the data will be used for
at the time of collection and provide users an easy mechanism to
block data gathering. New uses of data would require Web firms to
secure users' consent for each new marketing application.
The privacy groups also want laws requiring increased disclosure.
Companies engaged in behavioral tracking should have to register in a
database at the FTC and consumers should be able to request a copy of
all information a targeter has on them in a form that is intelligible
to laymen.
What Publishers Want
The Online Publishers Association, the trade group representing big
ad-supported Web publishers, opposes establishing actual laws
regulating behavioral targeting or making the FTC's current
self-regulatory principles a de-facto legal system that would assign
liability to Web sites that violate them.
Regarding how consumers can opt out of data collection and behavioral
targeting, the publishers think consumers should have to use controls
on their Web browser, or additional software, to block the Web sites'
collection of user information. Forcing Web sites themselves to allow
users to opt out of ad targeting would make it difficult for the
publishers to collect data used not for advertising but to better
customize sites and content to individual users.
The publishers trade group also opposes calls to ban changes to data
use policies without user consent. Web sites should be able to change
their policies regarding privacy and user data without consent as
long as users were previously advised that changes could take place
and they are given ample opportunity to opt out of the new data
applications, the group argues.
The publishers also oppose the privacy advocates' calls to outlaw the
collection of sensitive data regarding personal medical conditions,
financial situations and politics, among other characteristics,
without consent. As long as the information is not attributed to a
specific person's name, the publishers group thinks it should not
have to obtain personal consent and that such a restriction would cut
off users' access to valuable ad messages.
What Advertising Tech Companies Want
The Network Advertising Initiative, a trade group representing
data-gathering outfits and ad brokers, also wants to stick to self
regulation and avoid formal laws on targeting. Like the publishers,
the ad tech group doesn't want to ban collection on non-personally
attributed information pertaining to medical issues, personal
politics or finances.
The group already requires its member ad brokers and data collectors
to force Web sites using their services to disclose what type of data
is being collected and offer a link to a mechanism to opt out. The
group wants to take a bigger role in facilitating the blocking of
behavioral targeting and makes available on its Web sites tools for
blocking data collection by many members, including Google, Akamai
and Yahoo!.
What Happens Next
Until February 2010, FTC officials will examine behavioral targeting
practices and consumer concerns, says FTC spokeswoman Betsy Lordan.
If the FTC believes then that formal rules, as opposed to just
recommended principles, are necessary--and Boucher or another
legislator has not already introduced legislation--the FTC will
either issue legally-binding guidelines or will help Congress craft
new behavioral targeting laws.
The FTC has been studying privacy issues related to online ads for
more than a decade and is clearly reluctant to install any formal
restrictions that could impede the growth of Web ads. So privacy
advocates will likely have to mobilize consumers and appeal to
lawmakers like Boucher.
There is some precedent for Web users organizing to protest unpopular
privacy practices. In 2007, 50,000 enraged Facebook users signed an
online petition after the company began automatically sending ads
notifying members of their friends' purchases on other sites.
In that case, Facebook listened to its users and killed the program.
Convincing Congress to change its perspective on online privacy will
be a bigger challenge.
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