Behavioral targeting, a technique used by online publishers and advertisers alike to deliver content and marketing messages to Web site visitors based on their Web-browsing behavior, is under increasing scrutiny by Congress and consumer privacy advocates.
While advertisers and publishers say the approach is an effective way to deliver relevant information and messages, privacy groups have voiced concerned over who controls vast amounts of personal data and how those data may be used for years.
With the pending release of final guidelines from the Federal Trade Commission, one result of the controversy may be more rigorous self-regulation.
More worrisome to marketing and media companies, however, would be new federal legislation curtailing behavioral targeting tactics.
“Privacy is perfectly legitimate, but there have been an increasing number of legislative proposals and hearings headed down a fundamentally inaccurate and inappropriate path,” said Randall Rothenberg, president-CEO of the Interactive Advertising Bureau.
The IAB in February released its own recommendations for online advertising privacy, urging advertisers to provide Web viewers with the ability to opt out of targeted ads and to ensure that viewer information is secure.
Rothenberg said the call for more stringent regulation was being
promoted “by a handful of groups with an avowed anti-advertising, anti-marketing agenda.”
“Their premise is that this is a threat to Americans' privacy, which could be true if marketers were looking at names, addresses, social security numbers, bank [account] numbers and other personal identity items,” he said. “But behavioral targeting today includes processes that have been used by media companies and agencies for decades.”
For many if not most b2b Internet users, targeted advertising may be a nonissue.
“On the consumer side there could be concerns, but I'm hoping the b2b world won't be dragged into this fight,” said Gary Slack, chairman of b2b agency Slack Barshinger & Partners. “The practice just helps publishers and advertisers display more relevant ads targeted to the business interests of the viewer, nothing related to their personal lives.”
For example, professional social networking company LinkedIn has eased into target advertising based on its members' profiles, and with no attendant controversy. The company recently partnered with The New York Times and CNBC to present targeted ads to LinkedIn members who elect to view content relevant to their interests.
“We haven't seen any mention in Washington on information you've voluntarily submitted, such as registering for a white paper,” said Steve Patrizi, director-advertising sales at LinkedIn. “But there could be a spillover effect. Anything is possible.”
Whatever the views of business users, consumers are ill at ease with behavioral targeted advertising. In a nationwide survey of 2,513 U.S. adults, polled online in March by Harris Interactive, 59% said they were not comfortable when Web sites use information about a person's online activity to tailor advertisements or content. It's a sentiment echoed by consumer advocacy groups that are pushing for legal restrictions on such ads.
“We believe that some sort of legislative backstop is necessary to regulate the bad actors,” said Alissa Cooper, chief computer scientist with the Center for Democracy and Technology.
“Increasingly as companies merge, they combine consumer data to create as rich a profile as possible,” she said. “When it's used for advertising, that's one thing; but when used to set differential pricing on insurance or credit, it's another. Consumers don't know what's going on.”
The FTC's final recommendations concerning self-regulation, which could come as early as this fall, would urge clearer privacy disclosures, more viewer control over opt-out choices, greater security of consumer data and full disclosure on how personal data may be used.
Meanwhile, Congress is investigating to determine if there is a need for federal restrictions.
In July, the U.S. House Committee on Energy and Commerce began a probe into the data collection practices of Internet network operators, requesting information from 34 companies, including AOL, AT&T, Cablevision, Google, Microsoft Corp. and Yahoo.
The committee also looked into a new tracking technique known as “network-based tracking” or “deep-packet inspection” (See sidebar, this page).
Attention focused on a version of that technology from Nebu-Ad Inc. So intense was the scrutiny that this month a number of NebuAd customers canceled trials of the technology in which they were engaged—tests that were conducted on Web surfers without their knowledge. Bob Dykes, the company's founder and CEO, resigned.
It's possible that Congress will leapfrog the FTC's self-regulatory guidelines and impose legal restrictions on behavioral targeting.
“That's my overall concern about legislation,” said Mark Sableman, a partner with law firm Thompson Coburn and general counsel for American Business Media.
“When people are spooked about privacy, a law could get laid down too broadly, restricting information,” Sableman said.
On ABM's behalf, Thompson Coburn has filed comments with the FTC urging studies on the supposed harm of target advertising, rather than having the commission rely on anecdotal complaints. The law firm also recommended that the FTC distinguish between business and consumer advertising.
Sniffing the winds of change, some major brands already are taking voluntary steps toward self-regulation before the FTC or Congress acts.
Last week, search giant Google announced it was reducing the amount of time that it would store personal data gathered from users' Web surfing habits, a move the company attributed to improving its privacy policies. Google had been storing such data for 18 months, but will now trim that to nine.
Earlier this summer, in response to the congressional probe, Yahoo said it would allow viewers to opt out of targeted advertising on Yahoo.com. Microsoft Corp. already allows users to shut off targeted ads. M