Online sales grew by more than 30% in the fourth quarter, but store sales slid by 6.1% year over year.
Consumers would be able to opt out of getting tracked online for behavioral advertising.
The Federal Trade Commission, contending that the online advertising industry’s efforts at self-regulation have been too slow and ineffective in protecting consumer privacy, today proposed that consumers be able to easily opt out of online tracking methods that let advertisers target them with ads based on their online behavior.
The FTC also said it would “take action against companies that cross the line with consumer data and violate consumers’ privacy.”
The advertising industry responded by suggesting the FTC was overlooking the efforts that advertising trade associations are already taking to protect consumer privacy and allow consumers to opt out of online tracking systems. “We disagree with them,” says Jerry Cerasale, senior vice president of government affairs at the Direct Marketing Association, a trade group that has worked with several other marketing and advertising groups to devise a new system of interacting with online consumers.
The FTC, however, contends that the advertising industry’s efforts to protect consumer privacy have been cumbersome to consumers, making them read through confusing language without making it simple to opt out of online behavior-tracking ad programs. Although the DMA and others say the ad industry’s new opt-out feature will be easy to use, the FTC appears to be suggesting a more universal approach to opting out of behavioral-targeting ad programs.
The agency didn’t spell out exactly how a “Do Not Track” feature might work, but suggested that it would act as a persistent setting or cookie on consumers’ web browsers that would provide a general signal to advertising programs indicating whether the consumer was willing to be tracked for advertising purposes.
The FTC’s report, "Protecting Consumer Privacy in an Era of Rapid Change: A Proposed Framework for Businesses and Policymakers," also says that advertising companies should provide limited collection and retention of consumer data with procedures to promote the accuracy of that data, and assign personnel to oversee privacy issues and review new products and services to ensure they meet privacy standards.
Shar VanBoskirk, an advertising industry analyst and vice president at Forrester Research Inc., says the most important thing to consumers is that they can control their personal data while getting good value from targeted ads.
“Our research shows that consumers are not necessarily concerned about sharing their data with marketers, provided there is good value they receive as a result,” she says. “What they are concerned about is the lack of control they have over their data. Consumers need education to understand how their data is used, when data sharing has a benefit for them, where their data goes, who knows what about them, and then how to elect out of data sharing if they choose.”
Woolley contends that the FTC is failing to acknowledge that the recent surge in holiday online shopping points to widespread consumer confidence in online commerce. “We don’t think there is any basis for saying that consumers are reluctant to use the Internet because of information practices,” she says. “They just spent over $1 billion online on Cyber Monday.”