Consumers to be notified about profiling

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Major companies that provide ads to Web surfers are giving consumers the ability to opt out of profiling, but believe that few consumers will actually do it.

At a workshop sponsored by the Federal Trade Commission and the U.S. Department of Commerce Nov. 8 and later at a news conference, the 10 companies that serve more than 80% of the third-party ads on Web pages unveiled a plan to notify consumers about what information is being collected about them with a way to let users turn off the collection of profiles by some or all ad servers.

Web sites using third-party ads will have to mention data collection in privacy policies, refer consumers to the Network Advertising Initiative site, then let consumers choose to opt out of tracking. Consumers still will get ads if they turn off the tracking, but the ads will be tied to the Web sites they visit, not to personal-profile information.

Yet the companies suggested any consumer anger over profiling is because consumers weren't aware of it. They predicted that few consumers would actually turn off the profiling.

"About 3% to 4% of consumers have opted out of the [Direct Marketing Association's] list and we would expect something similar," said Jonathan Shapiro, senior VP-business development for DoubleClick. He predicted Web consumer opt-out rates will be similar or smaller.

Daniel Jaye, chief technology officer of CMGI-backed Engage Technologies, wasn't so sure on a number. "We have no idea," he admitted. However he said the number of consumers dropping out wouldn't affect ad servers' intention to go ahead with profiling activities.

The ad-serving companies said consumers won't turn off the profiling because consumers prefer ads that are useful to them, something profiling allows.

Mike Griffiths, chief technology officer of Excite@Home's MatchLogic, said ads tailored to consumers' profiles get three to six times "the lift," or response, of other ads.

Profiling critics, however, told the workshop that consumers are concerned. Critics compared the current surreptitious tracking of consumer's activities online to subliminal advertising and B.F. Skinner's reward-response psychology experiments on rats.

They also charged that information gathered from individuals' Web activities that is supposedly not personally identifiable because it contains no name or e-mail can easily be identified later.

CONSUMERS WOULD REBEL

Jeff Chester, executive director of the Center for Media Education,

cited an ad from Naviant, a company that provides ad-targeting, that promises to give marketers "name, address, demographics, psychographics and click-stream behavior." He said consumers would rebel if they had any idea of the information being gathered.

Deirdre Mulligan, staff counsel for the Center for Democracy & Technology, warned that consumers could grow very angry if they find someone has collected data "that will follow them around like a little friend, dictating experiences at other Web sites."

Critics of profiling called for an immediate halt to the gathering of data on people's habits and called for the FTC to conduct a study within 90 days and quickly report its recommendations to Congress.

Advertising groups, however, contended that what is needed is more notice, not restrictions.

"The problem isn't [consumers] giving away information. The problem is do they know about [profiling]," said Dan Jaffe, exec VP of the Association of National Advertisers. He also said critics who complained earlier about ads on the Web being largely irrelevant to Web surfers and a waste of time are now complaining about ads that will be relevant.

Jodie Bernstein, director of the FTC's Bureau of Consumer Protection, said the agency would study the comments.

"The real problem here is that no one knew what was going on," she said. "Whenever the American people find out about something [like this], they get very upset."

Copyright November 1999, Crain Communications Inc.

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