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FTC Chair calls for ad transparency

FTC Chair calls for ad transparency Brad Berens

Much of the digital advertising industry's success has been built on technological advances in targeting in order to put the right advertisement in front of the right consumer at the right time. Marketers and agencies love it, technologists love to build it, but consumers sometimes find it downright creepy. Standing at the crossroads between a growing, vibrant industry and the privacy rights of our citizens is Jon Leibowitz, chairman of the Federal Trade Commission. Leibowitz is both a longstanding advocate for industry self-regulation -- rather than governmental regulation -- but also argues that it's time for our industry to step up to the plate and take consumer privacy seriously.

Next week, Chairman Leibowitz will keynote "ad:tech inspire" at the Javits Center in New York on Nov.8. In this interview, he gives us a sneak peek at what his remarks will address.

Brad Berens: What is the biggest challenge to industry self-regulation?

Jon Leibowitz: It is always challenging to implement self-regulation, but here there are no challenges that can't be met. To date, the online behavioral advertising industry, led by the Digital Advertising Alliance (DAA), has done well to put together a very broad membership of advertisers, online publishers, third-party advertising networks, and other organizations to participate in the DAA's self-regulatory program. 

The DAA's efforts have advanced the ball, and the DAA can continue making progress by cooperating and collaborating with other stakeholders, including browser vendors that are offering a header-based "Do Not Track" mechanism. The biggest hurdle, though, is the advertising industry's unreasonable fear that advertising will dry up if consumers are given choices about tracking. 
Berens: One of the most common statements in the digital ad industry is "consumers want relevant ads," and folks use this to legitimize behavioral targeting in order to serve those relevant ads. But do you agree with the initial statement that consumers actively desire advertising that is relevant to their online behavior?

Leibowitz: I do believe that most consumers would prefer to receive an advertisement that is more relevant to them than an ad for a product or service in which they have no interest. It is not a stretch to imagine that a person who is interested in purchasing a new car might prefer to receive an ad targeted to that interest as opposed to an ad for teeth whiteners. That being said, numerous consumer surveys, new reports, and comments filed with the FTC show that many consumers have strong concerns about being followed around online. These consumers want greater transparency about the practice of online tracking and, after understanding what they would give up, the ability to say, "No thank you."  And of course, if they like relevant ads, only a few of them will say, "No thank you."       

Berens: In the next three years, how likely is either a "Do Not Track" registry for digital advertising modeled on the "Do Not Call" list or a "Consumers Bill of Rights" with regard to digital ad targeting? What is the likelihood of legislation?

Leibowitz: Privacy is a bipartisan issue. The FTC and many members of Congress are encouraged by the efforts of the online advertising industry, browser companies, and others. Still, that said, there is always the possibility of legislation, so these groups would be best served by continuing their work to give consumers choice about tracking.

Berens: Do you believe that consumers understand the implicit bargain that they get free or subsidized content in exchange for advertising?

Leibowitz: Based on what we have seen in the comments to the Commission's proposed privacy report, many, if not most, consumers do not understand this implicit bargain. Indeed, there is a huge opportunity for companies to do a better job of articulating the value proposition at work in this space. If companies explain to consumers what information they collect, how they use that information, and what the consumer receives in return, and if they give consumers the ability to say "No thanks," consumers will be less worried about the practice. Companies that are forthcoming about their practices can engender more consumer trust, and can distinguish themselves from those that would prefer to hide in the shadows. 

Berens: Consumers ultimately may embrace, reject, or be resigned to targeted advertising, but at worst the stakes are still pretty low so long as we're just talking about ads. However, that's not true if their browsing history is used in other ways, say when they're applying for health insurance. In its most recent report, the USC Annenberg Center for the Digital Future argued that Americans are more concerned about "big business" encroaching on their lives than "Big Brother." How legitimate are these concerns? What does the industry need to do to reduce them?

Leibowitz: There have been a number of reports, including The Wall Street Journal's "What they Know" series, detailing the pervasiveness of consumer data collection and discussing the variety of ways companies may use and monetize such data. And, as these reports indicate, much of this data collection is invisible to consumers and out of their control. Consumers have legitimate concerns about such practices. To allay those concerns, the advertising industry needs to step up to the plate by making its practices more transparent and by developing effective tools to give consumers more control. Now that does not mean burying some cryptic or unlimited disclosure in a long privacy policy -- something like, "We collect whatever data we can and use it however we want," or "There may be other parties collecting your information while you are on this site but we're not sure." Rather, consumers should be able to make informed and meaningful choices about whether their data is collected, and if so, how it is used. 

Berens: How does the phenomenal recent growth of both social media and mobile internet access -- not to mention how the two work together -- complicate the privacy debates and the work of the FTC?

Leibowitz: Social media and mobile services provide substantial benefits to consumers. They both also raise a variety of different privacy challenges. For example, because social media services are extremely popular with young consumers, there is the basic concern about who can access the information they post. Moreover, as anyone with a young teen in the home recognizes, there is the related concern about the extent to which younger consumers are able to fully comprehend the long-term repercussions of sharing their data. With respect to mobile services, the small screen size on hand-held devices raises practical challenges for presenting privacy disclosures or other information to consumers.  Similarly, the number of different entities involved in providing mobile services -- including operating system vendors, device manufacturers, app developers, third-party ad networks -- means that a consumer may find it extremely difficult to determine who is providing what service and which entity's privacy practices apply in a given situation. Finally, because of its sensitivity, the use of geo-location data in connection with certain mobile services raises additional privacy concerns despite the real-time benefits it provides.

Berens: Does the FTC have any comment on what credit card companies are doing with behavioral advertising, as per this story in the WSJ this week?

Leibowitz: The Commission is aware of the reports regarding this, and FTC staff is currently following up. 

Learn more about ad:tech New York here.

Brad Berens is chief content officer, digital marketing sector (iMedia, ad:tech, Digital Collective, MLX & CMO Executive Summits).

On Twitter? Follow iMedia Connection at @iMediaTweet.

A trusted advisor to companies of all sizes and a respected voice within the interactive media industry, Dr. Brad Berens has enjoyed a wide-ranging career that features storytelling as an organizing theme. These days, he divides his time among...

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to leave comments.

Commenter: Jonathan Fox

2011, November 07

As I read FTC Chairman Leibowitz's characterization of DAA's Online Behavioral Advertising (OBA) Self-Regulation program as simply enabling users to say "Thank you" or "No thank you" to ads that are targeted to them based on their interests, it occurred to me how much the science of advertising (yes, science -- it is becoming a data driven science, especially in the OBA space, after all) could learn from the art of customer service. Good customer service excels at listening. Good customer service imbues trust. This is no accident. Trust requires listening and respecting what is heard. If customers are to trust OBA, they need to have the option to say "no" to it. Advertisers need to learn they need to give users this option and listen to it. If it was clear that users trust OBA, then I would suggest providing this "trust" is simply a matter of good customer service. Unfortunately, advertisers have yet to fully establish a base level of trust with consumers in regards to OBA, so creating this trust, giving users the option of saying "no", is a matter much greater than customer service, it is a matter of OBA's survival. If advertisers using OBA don't learn to adopt trust enabling programs such as the DAA's Self-Regulatory for Online Behavioral Advertising, then OBA may not be a method available to advertisers.

Commenter: Kevin Lee

2011, November 05

Surprised at how pro DAA Leibowitz is. I'd prefer if one could choose to go beyond the DAA without the licensing costs and build on one's own system of transparency.