While I would like to think “everyone” cares as much about
online advertising, behavioral targeting and consumer privacy as I do, my gut
says most advertising folks didn’t gallop over to the Federal Trade Commission
website to download and pour over the Staff Report on behavioral advertising
last Thursday. Based on that assumption, we’re going to devote a bit of effort to getting the
word out because the implications of this report are far greater than may be
apparent at first glance. With this
report, and, perhaps more importantly, the two concurring letters from
Commissioners Pamela Jones Harbour and Jon Leibowitz, the FTC has fired their
warning shot to each of us whose business exists because of online advertising. The call-to-action starts with the first two
words in the title – “self-regulatory”.
Full disclosure – we’ve built our company on the belief that
advertisers own their relationship with consumers, and the information defining
that relationship should belong to them, not to some third-party technology
company or ad network. For that reason, I
was pretty excited when the FTC explicitly validated our approach to data and
behavioral targeting. Their endorsement
of the ‘first-party’ model as “more likely to be consistent with consumer
expectations, and less likely to lead to consumer harm, than practices
involving the sharing of data with third parties or across multiple websites,” profoundly
confirms our position. But as this warm
glow of self-satisfaction waned, and we read further into the report, another
message became clear – ignore this report at your own peril.
To offer some perspective, since the 1990s, the FTC has kept
a careful eye on the online advertising space, but has refrained from directly
regulating. They’ve consciously allowed all
of us to go about our business and figure out models that bring value to
consumers, and revenue to our top line.
The FTC Town Hall early this decade was the impetus for the formation of
the Network Advertising Initiative
and is as close to imposing regulation that they’ve come. Now that we’ve developed more sophisticated
methods of collecting data and targeting online ads, and a track record that
includes the rise of über-data hound Google and the AOL search debacle in 2006,
the FTC no longer feels they can stay on the sidelines. Commissioner Harbour goes so far as to layout
a timeline “directing staff to complete, by Summer 2010, a report that
evaluates the efficacy of self-regulation in the realm of behavioral
advertising.”
To stoke the fires even further, Commissioner Leibowitz warns all of us to keep
our promises regarding the use of consumers’ information. “If they fail to do so – whether first party
or third party, online or offline – we will go after them.”
I’ve been calling for advertisers to actively engage in this
process since before I gave a presentation to the FTC’s Town Hall on eHavioral
Advertising in November, 2007. But companies
whose business models are dependent upon the development of third-party profiling
databases and targeting solutions are likely to not heed the FTC’s call
sufficiently to prevent the drafting of regulation or even legislation. The folks controlling the media budgets must
insert themselves by helping to define acceptable practice. Already, advertisers are struggling to
allocate more of their (dwindling) media budgets to online, failing even to
keep up with consumer adoption. (Only 8%
of media dollars are flowing online, even though we consume 28% of media from
the internet - Forrester Research, January 2008.) If regulation or legislation is forced down
our throats, further impairing a brand’s ability to make the most of every
media dollar, we will only see that gap widen.
Next week I’ll be participating in a workshop hosted by the Future of Privacy Forum in Washington D.C. This will be a great opportunity to learn from some of the leaders in our industry. Perhaps one of the most encouraging aspects of the event is the fact that some of the largest advertisers in the world are planning to participate. Perhaps they’re taking “self-regulatory” more seriously this time around.
– Scott Nelson
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