June 1, 2012, 12:00 AM

Who's Watching

(Page 2 of 2)

"No one is interested in targeting one consumer," says Mike Balducci, senior vice president and general manager of digital advertising services at Experian Marketing Services. "It's not cost-effective for any marketer to do that. This is about segmentation and being able to apply optimization tactics against those audiences." Experian Marketing Services is a unit of Experian Information Solutions Inc., a vendor of business and consumer data and analysis services.

Do not track

But while data owners say they're not interested in identifying individuals, privacy advocates fear that there's nothing in the law that says they can't. They call for laws and tools that enable consumers to block anyone from tracking their behavior. That would include the addition of "do not track" buttons to web browsers that, when activated by a consumer, stop all tracking by companies not related to the web site being visited. The web site the consumer is visiting should be able to collect data, the FTC suggests, so long as they don't share that information beyond what is necessary to complete the transaction, such as a retailer providing a credit card number to its payment processor.

Mike Zaneis, senior vice president and general counsel for the Interactive Advertising Bureau, says the IAB supports giving consumers more control, however he fears a browser button that immediately opts consumers out of tracking will only generate fear. "If you put a big red flashing button on a browser, it will get more clicks, no doubt. Using scare tactics and fear mongering will get you great adoption, but that's not an educated consumer choice," he says. "If you had 50% of Internet users opting out that would have a devastating impact on the industry," he says, because online ads would be less cost-effective and ad dollars would dry up. "Instead you communicate to consumers how their information is being collected, and an educated consumer is a less scared consumer."

To this end, the Digital Advertising Alliance, an umbrella group of the IAB and six other trade associations, in January launched a public education campaign to inform consumers about online behavioral advertising.

The campaign comes on the heels of the DAA's Ad Choices program, which requires members of the seven trade associations to display the Ad Options icon on ads that are delivered to a consumer based on previous browsing behavior. Clicking the icon takes the consumer to a page with more information about online behavioral advertising. From there, a consumer can choose to opt out of receiving behaviorally targeted ads; however opting out does not prevent companies from collecting his browsing data. Federal Trade Commission chairman Jon Leibowitz in March said he expects Congress will take legislative action on "do not track" if the advertising and data collection industries don't by the end of the year implement a "persistent, easy to use and effective" solution that lets consumers control how their online information is gathered and used.

Both the White House and the Leibowitz of the FTC have voiced support for the industry's Ad Choices program, but say more needs to be done. Yet, there is a reluctance to legislate on the issue, says Trevor Hughes, CEO of the International Association of Privacy Professionals, a professional association for privacy practitioners. "The FTC and others are kind of stuck. No one wants legislation that stifles innovation and that prevents the U.S. from innovating and becoming an even more information-based economy," he says. "But we probably do need some baselines."

The European Union has already gone the regulatory route. It strengthened its existing data protection rules to grant individuals more control over how their information is collected online. While many EU member countries have yet to finalize how they will enforce the rules, starting last month U.K. web sites were expected to comply with the new rules or face fines up to 500,000 pounds ($795,000).

The most visible rule requires web sites to get consent before installing cookies from outside vendors on consumers' computers. An analysis of 55 major U.K. private and public organizations in April found that 95% of companies weren't compliant with the new cookie rule, according to accounting and consultancy firm KPMG LLP.

Get prepared

Zaneis says 1 million U.S. consumers have opted out of receiving behaviorally targeted ads via the AdChoices program in the last year, which equates to about one-half of 1% of all adult Internet users, according to the Pew Internet and American Life Project, a research think tank. Makers of web browsers that offer consumers built-in do-not-track settings, like Microsoft Corp.'s Internet Explorer and Apple Inc.'s Safari, do not say how many consumers choose that setting, so it's unclear how many U.S. consumers are taking action to keep from being tracked online.

E-retailers like Logullo at Southern Fulfillment Services and Merrill at StubHub say they're keeping an eye on how customers react to behaviorally targeted advertising. Merrill says StubHub includes a link in the footer of each e-mail sent to customers that connects consumers to StubHub's one-page privacy policy, which describes, in plain English, how the ticket company collects and uses consumer data. "We aim to be completely transparent," Merrill says. He says if complaints become a problem, he would consider making the privacy policy link more prominent by moving it to the top of the page. Logullo says to his knowledge not a single customer has inquired about how the e-retailer tracks consumers.

For now, e-retailers should keep abreast of the practices of the ad networks they work with, Hughes says. "Any e-retailer needs to be asking their ad network what it is doing on this, and make sure they are participating in the self-regulatory programs," he says. He adds e-retailers should consider whether the data they collect, or others collect on their behalf, fall into high-risk subject areas, such as health or sexual orientation. "Know that inquiries will likely start in areas where sensitive data exist," he says.

Allison@verticalwebmedia.com

@AEnrightIR

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