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Trade groups respond to FTC’s proposed behavioral advertising principles

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Eleven industry trade groups last week filed responses to proposed principles for online behavioral advertising that were released for comment by the Federal Trade Commission in December (Specifics of the proposed principles can be found at: http://www.ftc.gov/opa/2007/12/principles.shtm).

The groups are part of a coalition of trade associations representing the advertising, marketing, financial services, retail and Internet industries lobbying against government regulation.

The FTC’s proposed principles came out of a two-day forum it held in November on behavioral targeting. The government and privacy advocates have been gunning for a “do not track” list that would allow consumers to opt out of behavioral tracking, as well as make the tracking process itself more transparent.

The trade groups and marketers contend the FTC’s proposed self-regulatory principles are overly broad and would stymie online growth.

“The guidelines are too broad,” said Jerry Cerasale, senior VP-government affairs at the Direct Marketing Association. As an example, he cited Amazon.com’s book recommendations based on prior purchases. “If I go in and buy a book on the Civil War, they suggest similar titles the next time I visit,” he explained. “There’s no reason to have that kind of content regulated. That’s a relationship between a marketer and its customer.”

One marketer who agrees with this argument is Lauren Robinette, senior manager of marketing at Cisco Systems.

“Consumers go to sites and participate in communities in full awareness that they are being profiled, and if they didn’t want to play, then that is their choice,” Robinette said. “I am not in favor of regulation before the clear need for regulation.”

Another b-to-b marketer said behavioral targeting helps customers.

“As a marketer, I strive to provide just-in-time information, just in time for our prospective customers,” said Robert B. DeRobertis, director of marketing programs, Digital Signal Processing Systems Division at Analog Devices. “The Web is a great tool to meet this need. When working with a customer from an anonymous perspective, there is only so much targeted information we can provide. Using behavioral information based on several visits and tied to the user being registered provides the marketer the ability to give more refined information. This helps the customer substantially.”

In his blog, ANA Regulatory Rumblings, Dan Jaffe, exec VP-government relations of the Association of National Advertisers, argues that government should not impose “rigid, overly broad rules on the collection and use of consumer information that would undermine that vital role played by advertising.”

He added: “The privacy interests of consumers can be best protected by strong industry self-regulation and positive industry leadership.”

John Greco, Jr., president-CEO of DMA, echoed that sentiment in a note to members. “As with any marketing channel, advertising not only supplies the lifeblood for the Internet as we know it but it also supports innovation and free content that the world enjoys and has come to expect,” Greco wrote. He said targeted advertising techniques that employ behavioral advertising are nothing new.

In its comments to the FTC, American Business Media indicated the proposed guidelines are “premature, overbroad and unwise.”

“The proposed self-regulatory guidelines are not based on any empirically demonstrated need, and indeed even the advocates for regulation of this field can offer only highly speculative hypotheticals in support of their desired regulations,” ABM wrote. “The proposed guidelines would sweep broadly in imposing a plethora of new rules and regulations on a nascent advertising methodology of great promise, and would therefore inevitably chill and inhibit this promising new methodology.”

However, because the proposed guidelines are just that, some say there is time to appeal to the FTC.

“It’s not a rulemaking,” Cerasale said. “I think the FTC is going to get a huge amount of comments, and they will take the time to look at them. I think even if the FTC determines to go forward, there will be a lot of future steps. There will be a lot more opportunity for us to comment.”

The 11 trade groups that participated in the response to the FTC were: American Advertising Federation, American Association of Advertising Agencies, Association of National Advertisers, Consumer Bankers Association, Direct Marketing Association, Electronic Retailing Association, Interactive Advertising Bureau, Magazine Publishers of America, National Retail Federation, Retail Industry Leaders Association and the U.S. Chamber of Commerce.

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