Will Ad Industry's Opt-Out Program Entice Consumers?

Early Data Indicate Advertisers May Have Less to Fear

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NEW YORK (AdAge.com) -- Last week, a sweeping coalition of advertising industry groups announced an ambitious self-regulation policy that would allow internet users to opt out of being tracked through the use of a new icon that will sit on every ad. It may be the most comprehensive opt-out program available.

But is it something consumers want?

It'll be hard to tell until it's up and running en masse. But according to the most recently available data from Network Advertising Initiative, which has had an opt-out mechanism for over a decade and is a key member of this new coalition, 1 million people visited its opt-out page in 2009 and 300,000 people actually unsubscribed. NAI members include advertising networks and data exchanges such as Advertising.com and BlueKai.

SCOTT MEYER: Better Advertising CEO says it's too early to read into the numbers.
SCOTT MEYER: Better Advertising CEO says it's too early to read into the numbers.

Technology company Better Advertising, which won the initial contract to supply agencies and marketers with the opt-out technology, has already been providing do-not-track solutions to major online advertisers like AT&T. According to data from Better, which launched its program in July, of the "several billion ad impressions" they've served so far, less than 0.02% of users have opted out of being tracked.

"It's still early days, so you don't want to read too much into those numbers yet, but it is very low," said CEO Scott Meyer. "This sets the stage for what we're studying next: how does being transparent affect your brand favorability?"

But some consumer experts say the current opt-out notifications haven't done a fair job of characterizing how advertisers view the data they collect, which has been a point of concern for the FTC.

"These notices don't say things like, 'We know you're a woman who is most likely looking for shoes,'" said Joseph Turow, a professor at the University of Pennsylvania's Annenberg School for Communication who testified before the Senate Commerce Committee on digital privacy this past summer. A study conducted by Mr. Turow, along with Princeton Survey Research Associates International, found that 66% of people said they did not want online ads tailored to their interests. But when respondents were told how they would be tracked online to generate the advertising, as much as 84% said they did not want tailored advertising. Mr. Turow said that discrepancy highlighted the fact that, despite online privacy notices, many consumers didn't understand how tracking worked.

The study further showed that even if consumers were not concerned over their privacy, they may not trust a third party to cultivate information relevant to them.

The online ad industry has been aggressively maneuvering to solve the issue of online privacy as part of its efforts to maintain self-regulation over its $24 billion industry. The coalition, which bills itself as the Digital Advertising Alliance, lets any advertiser sign up for the self-policing program. The Council of Better Business Bureaus will be responsible for monitoring participating advertisers. While the FTC has not said it would regulate online marketers, such a circumstance could be a possibility if the industry doesn't successfully prove it is serving the privacy interests of online consumers.

Stuart P. Ingis, partner at Washington law firm Venable and counsel for the Direct Marketing Association, said the coalition is responding to the government's main concern with regard to notification, which is offering information to the consumer as soon as the ad is present. "That's the whole reason we have an icon," Mr. Ingis said. "It will take some time to educate consumers as to what the icon means, but we believe this fully responds to concerns of being clear."

The coalition is composed of the Interactive Advertising Bureau, the American Association of Advertising Agencies, the American Advertising Federation, the Association of National Advertisers, the Direct Marketing Association and Network Advertising Initiative.

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