Apr 072008

How consumers are tracked online has been an issue for years. Until recently the main vehicle for this tracking has been the cookie, a small file placed on a visitor’s browser that identifies repeat visits and online activity. The latest chapter of this debate to reach critical media mass concerns Internet Service Providers (ISPs) contracting with companies to place hardware inside their networks to track all user online activity. This tracking produces profiles that aim to target advertising of interest to users, better supporting the online advertising market and giving ISPs a slice of the revenue.

Saul Hansell of the New York Times wrote a good article recently that has attracted over 60, mostly angry comments:


Bobby White of The Journal had it back in December: http://online.wsj.com/public/article/SB119690164549315192-9g6E0Km1JMR4eAm55Es_16QrvkU_20081205.html?mod=rss_free

The technology has progressed, yet these are the same exact issues I dealt with when I was VP of Corporate Communications at Advertising.com. It was the beginning of the pay-per-click (PPC) era, and cookies were a new and scary concept. People were upset that their travels could be seen across the Internet — recall the famous New Yorker ad with the caption “On the Internet, no one knows you’re a dog!” Well, that level of anonymity was never accurate, and it’s getting less so every day.

Back then (circa 1999-2000) we were active with industry groups like the Network Advertising Initiative and the Online Privacy Alliance and worked hard to educate consumers regarding exactly what was happening when they were online. We (and hearings at the FTC) helped put in place a set of principles that tried to balance the needs of advertisers and the rights of online users. Basically they’ve been in place since then and encompass:

1. Adoption and Implementation of a Privacy Policy

2. Notice and Disclosure

3. Choice/Consent

4. Data Security

5. Data Quality and Access

The online advertising market has grown immensely since that time, growing to $21B in 2007 according to the Internet Advertising Bureau and PricewaterhouseCoopers, who have put out the best numbers since the late 90’s. I understand and sympathize with ISPs that don’t just want to be “dumb pipes” and want a piece of the economic activity their networks support. And I get the fact that ads that are more and more relevant are a good thing for consumers in theory. But there’s a big difference between cookies — which as a web user I can delete at any time — and having my ISP share all my online activity with a third party.

Most of the media coverage on this includes claims there will be some kind of consent given, but how clearly will it be spelled out? Supposedly there will be safeguards so the data can never be personally identified with me — but what exactly are they, and how will they be enforced? Surely there will be an economic incentive to include more and more personally identifiable information to justify higher advertising rates.

And what’s the benefit to me as a user — more and more advertising, albeit the “right” advertising based on my interests? How compelling to the average consumer does the advertising industry really think that is? There isn’t enough transparency about exactly what is going on. If companies are not very clear about what’s happening, there is a huge risk for a big public backlash and resulting clumsy government regulation.

There’s a very old and established way that a free market economy assigns value to something, and I’m surprised none of the coverage I’ve seen mentions it. It’s pretty simple — PAY PEOPLE for agreeing to allow their online activity to be tracked. I pay good money every month for my broadband access, too much in fact if you compare it to what people pay in other countries.

You want my data — then take $10 off my monthly bill, or guarantee me my rate won’t go up as long as I participate. Be very clear about what’s going on — for example, as clear as my monthly bill is — and cut users in on the action. That bargain IMHO will be accepted by a good percentage of consumers, and represents a big first mover advantage (market AND PR) to whatever major ISP jumps in first.

7/1 UPDATE — ISPs are backing away, better offer that cut to end customers fast:

One week after Charter Communications voiced concerns about controversial behavioral targeting company NebuAd, two other Internet service providers appear to be distancing themselves from the company.


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