PEOTUS Behavioral Targeted Advertising Adventure

by Nick Brown on January 16, 2009 · 7 comments

in Privacy, Regulation, Tech & Telecom

The prevention of regulation and the Rule of Law pounding its mighty fist within a medium or sector of business is generally something that is lauded around these parts.  On occasion, though, an industry will find that it is possibly pushing the envelope ever so much over the line and chooses to act on its own behalf.  This self-supervision, for the most part, tends to deter government involvement and the creation of legal regulation, which can in many cases be far more costly than self-imposed rules.

In December of 2007 the FTC notified the online advertising industry that Behavioral Targeting-style advertising was pushing the boundaries of privacy.  Their letter–entitled “Behavioral Advertising: Moving the Discussion Forward to Possible Self-Regulatory Principles”–should have made it abundantly clear that this was a warning shot and the hammer was about to drop.  The industry, quick to respond, and taking congressional action very seriously, announced yesterday (some thirteen months later) that they would seek self-regulation.

The announcement of the proposal to self-regulate came from a partnership between four advertising industry trade associations, including, American Association of Advertising Agencies (AAAA), the Association of National Advertisers (ANA), the Direct Marketing Association (DMA), and the Interactive Advertising Bureau (IAB).  They plan to work with the Council of Better Business Bureaus to develop their guidelines.

Behavioral advertising is not a new idea.  Advertisers have been seeking better ways to target market specific consumers since the first caveman opened a tool shop.  There is nothing wrong with this.  If I make widgets for men that work in coal mines in West Virginia, I’m going to set up billboards for my product outside the tunnel to the mine.  This is just good business sense.  But the modern computer age’s concern with targeted marketing is that it has become extremely personal, so personal that some are concerned with the privacy factor and how much personal data they may be giving up as they surf the web.

While surfing your favorite website, the site will send your browser (Firefox, Internet Explorer, Chrome, etc.) what is referred to as a “cookie”. It is essentially a small text file, quite harmless in nature, and is generally used to track things like web site shopping cart contents or personal settings on that website. It can, however, be used by advertisers enlisted on that site to determine what types of things you are interested in so that targeted marketing of ads can be implemented.

In these cases a cookie is sent to your machine from an advertiser on the site.  This creates a sort of road map for the advertiser of what you like based on the content of the website you were viewing.  Then upon viewing a different website, the advertiser can take the information it recorded about you from the cookie, and display adverts based on things you previously viewed that the advertiser assumes you would want to see.  What results is a totally personalized advertisement experience for you while you surf the web.

So where’s the rub?  While the identity of a user cannot be revealed by a cookie, a user that has registered with a website can be linked to a cookie.  What results is a privacy dilemma because instead of an anonymous individuals surfing habits being recorded, very specific information about who this person is could then be revealed. Additionally, the advertiser could also then tie a specific person to what they are looking at online.

“When you start to get into the details, it’s scarier than you might suspect,” Marc Rotenberg, executive director of the Electronic Privacy Information Center, a privacy rights group told The New York Times’ Louise Story. “We’re recording preferences, hopes, worries and fears.”

Most Internet companies would provide the rebuttal that a user’s account information was seen as just an ID number.  But the concern is that an ID number is attached to an account, an account contains the user’s personal info, and at some point the data could be accessed.  The privacy concern may be far fetched, or it could be completely legitimate.  It would all come down to the ethicality of the company.

So why the sudden movement toward action by the advertising trade associations after 13 months of ignoring the issue? Because PEOTUS Obama is days away from becoming POTUS. And rumors are that lobbyist fear behavioral targeted marketing will be the main privacy issue examined by Congress this year.

“There are no immune companies or business models from Capitol Hill or state regulation,” said Mike Zaneis, VP-public policy at the IAB.

Obviously the move is to get out in front of the issue. A self-regulating industry could deter Congress from considering legislation to legally enforce guidelines. But a self-regulated industry is also watch dogged by its own people. Only time will tell if they have the will power and character to maintain that approach, but it is certainly hoped for as less government legislation is the favorable outcome.

Ben Waugh January 16, 2009 at 1:59 pm

I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you down the road!

Dan January 16, 2009 at 5:47 pm

Congrats on the new posting! Looks great and very scholarly. I guess I could be biased.

Alan January 17, 2009 at 5:31 am

We have seen in the (recent) past the failure of self-regulation. We have also seen some success, such as content labeling of movies and video games.

Being a responsible citizen, even at the expense of your own self interest, is always a good policy.

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Joshua January 19, 2009 at 4:00 am

Great job articulating the concern… enjoyed the post!

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