On March 15, 2010, a coalition of marketing associations will require members to display a unique “I” icon with ads that are targeted at users based on data collected about their web activity which includes search queries, web pages visited and content viewed. It is an attempt by the industry to alleviate user privacy concerns by showing its commitment to the public on being transparent as to how they use the information collected about individuals in targeting ads.

Placing information about behavioral targeting into the privacy policies has proven not to be a good choice as the Federal Trade Commission (FTC) has highlighted that privacy policies of companies are often not clear or easily accessible for users to under as to whether their online data is being used appropriately. This is quite troubling because majority of consumers are unaware what information is being collected with regards to their online activity along with no clear explanation as to how it is being used. These actions could be viewed as a invasion of privacy especially for consumers who feel they did not authorize to have their information collected for the purposes of having specific ads directed at them.

The FTC’s interest in area stems from the growing sophistication of data collection and profiling applications that as a direct result has generated massive amounts of rich data for the purpose of online advertising.  As stated by George Steely in Ad Week “ The Federal Trade Commission has voiced specific concerns about storing and combining Internet-use information, such as a consumer’s restaurant preferences, neighborhood housing values and online research on medicine or medical conditions.”  The potential for fraud or other harm to consumers has been noted as another reason as to why the FTC has pushed the issue forward.

The FTC seeks to remedy this by placing expectations see in their2009 Self-Regulatory Behavioral Guidelines on companies and marketers to provide not only clear notice about behavioral advertising but also a way for consumers to choose whether to have their information collected.

The added fact that eMarketer, a digital marketing research company has forecasted that advertisers in the U.S. will spend more than $1.1 billion on behaviorally targeted ads this year only further draws attention to the issue by regulators and heighten concerns.

The development of the “I” icon and its implementation was brought forward when the FTC warned that unless the industry wanted it to step in, it had to devise stricter self-regulatory principles.  Companies including Microsoft, Google, General Electric, and more helped developed their own  self-regulatory guidelines document which is where the idea for the icon was conceived from in an attempt to meet the demands of the FTC and consumer advocacy groups against online behavioral advertising targeting claiming the process is violation of individuals’ rights to privacy. The principles range from giving Internet users a choice to not have their information as to what they do online collected to making sure organizations that collect such data  have protocols in place to keep the information secure.

The new icon will display phrases such as “Why did I get this ad?” when users move their mouse over it. If they choose to click on the icon, it will take them to a page that explains more about the process used to serve the ad to them, including the use of behavioral data collected.

In my opinion, the icon will serve to be a beneficial tool for educating consumers. It is an important step to provide transparency in terms of what information is being collected about individual consumers and how it is being used.  As stated by Lora Bentley of IT Business Edge “consumers are often oblivious to the fact that some businesses share a great deal of their personal information with other businesses who deliver targeted behavioral.” Exploiting this fact for profit is a violation of consumer privacy. How can consumers control what they reveal about themselves online when they don’t even know what’s being collected? The guidelines that have been set forth by the coalition of companies and marketers have shown promise as they attempt to provide consumers choice to opt out of having their online behavior collected

However, the underlying question here is not simply if the informative icon will be good for the consumers but ultimately who should enforce it’s use along with the other regulatory guidelines set to protect consumer privacy. The current guidelines show promise in educating consumers and giving them some kind of control as to what information companies can collect especially with regards to personal identifiable information (PII).

But some have argued that regulation and enforcement should fall into the hands of the FTC as seen below:

In BtoB Magazine,  Lee Peeler, president of the National Advertising Review Council mentions that “the criticism of self-regulation is that it’s good for those who do it voluntarily, but if an advertiser doesn’t do it, there are no consequences” (Hosford, 2009)

According to Robert M Brecht, Ph.D. Director of Research & Education at the DMN3 Institute has stated that “It is safe to say that, without the pressure of the FTC and congressional hearings on the subject, we would not be seeing these efforts at self regulation”

Others view the current voluntary self-regulation by companies and marketers to be a much more effective approach in alleviating consumer concerns about privacy. Many companies and marketers argue that that legislation or regulation by the FTC would move too slowly to reflect technological changes and would choke Internet revenue. Below are some of the statements made in support voluntary self-regulation:

According to Commerical Alert, Nancy Hill, president-CEO of the American Association of Advertising Agencies, said she was “heartened by the FTC’s continued understanding that the people best equipped to regulate this new technology are the practitioners who use it daily and are evolving it at seemingly warp speed.”

George Steely in Ad Week states that “ultimately, as we have seen, consumers want convenience along with value. They are willing to trade some privacy to store their financial information on retail sites, just as they are now comfortable with allowing cookies to make it easier to log onto certain sites.” He view that people will trade privacy for convenience in the long run which is why it is not necessary for the government to step in.

Overall, I’m in favor of voluntary self-regulations for the immediate future because the FTC has no clear expertise in this area. Especially, in balancing the privacy concerns of consumers on the internet and advertisers business need to have access to a wide range of data about users to create better ads. There needs to be a dialogue between both the FTC and marketers to generate ideas that will benefit both sides. It is impossible for the FTC to enforce some mandatory regulation as the ramifications is can have is uncertain. What is going on now, should be treated as a learning experience to see what works and what doesn’t. It is inevitable that marketers will push to meet the FTC needs inorder to maintain this self –regulation system. This is evidenced by the creation of the “i” icon that will be incorporated in many behavioral ads in the future. However, should marketers and companies fail to follow through with the guidelines they set forth. Only then, should the FTC consider intervene in making those accountable.

Sources:

http://www.corporate-eye.com/blog/wp-content/uploads/2010/01/behavioral_advertising_privacy_icon.jpg

http://mediadecoder.blogs.nytimes.com/2010/01/11/ftc-has-internet-gone-beyond-privacy-policies/

http://www.revenews.com/andrewbaer/ftc-sounds-off-on-online-behavioral-advertising-privacy-issues/

http://www.adweek.com/aw/content_display/community/columns/other-columns/e3ifa3e60e2b52e22815c0a927cd26011d6

http://www.ftc.gov/os/2009/02/P085400behavadreport.pdf

http://www.btobonline.com/apps/pbcs.dll/article?AID=/20100308/FREE/303039999/1445/FREE

http://www.iab.net/media/file/ven-principles-07-01-09.pdf

http://en.wikipedia.org/wiki/Behavioral_targeting

http://www.itbusinessedge.com/cm/community/features/interviews/blog/are-you-ready-for-regulation-of-targeted-advertising/?cs=38111

http://en.wikipedia.org/wiki/Personally_identifiable_information

http://www.dmn3.com/_blog/DMN3_Blog/post/Online_Advertising_New_Consumer_Alert_Icon_for_Behavioral_Advertising/