FTC Privacy Review Could Mean Trouble for Online Marketing

A Worst-Case Scenario: Online Advertising Would Be Legislated Into Oblivion

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Bob Garfield
Bob Garfield
Hey, you know what would be totally hilarious?

If the already-tenuous internet-advertising economy were to be obliterated by the stroke of a pen.

LOL, right? I mean, after scratching and clawing its way onto the media pie chart, and after decimation at the hands of first the dot-com bubble then the Great Recession, and somehow surviving negligible click-through-rates and structural supply-and-demand issues that are driving CPMs immutably downward, how hysterical would it be to be for online advertising to be legislated or regulated into oblivion?

Bob Garfield
Bob Garfield

OK, maybe not ha-ha funny. But sort of O. Henry ironically funny.

Or not. But it's hardly an insane scenario, as pressure builds on the FTC and Congress to safeguard consumer privacy from behavioral targeting and other online wizardry. Privacy hawks have been on the FTC's neck for years demanding regulatory intervention. And for nearly as long, Rep. Rick Boucher (D-Va.) has been promising a bill to deal with loose personal data -- by statutory means either moderate or draconian, nobody quite knows.

'Please stalk me'
On the draconian side: an "opt-in" requirement for every user to affirmatively acquiesce to accepting cookies on their internet browsers (see "legislated into oblivion," above). The industry's future resides almost entirely on being able to boost CPMs with ultra-targeting, but it's hard to imagine any wording of the opt-in language that wouldn't sound to Joe Laptop like, "Yes, please stalk me."

See, no matter what the Interactive Advertising Bureau says, the results of behavioral targeting and even simple Google AdWords contextual targeting are creepy. Super-creepy, actually. For instance, this week I sent an e-mail in which I copyedited some text that had been sent to me. When I opened the reply, here's one of the Google ads that was served in the right rail:

grammar correct

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Now I'm not quite sure how Google divined that my suggestions for removing an apostrophe and a stray conjunction were evidence of grammar taking place; I sure didn't use that word. But, ewwwww, The Machine knew! Granted, that's a visceral reaction. I certainly understand that this process is fully automated, and that The Machine doesn't know who I am personally. Furthermore, I am myself a loud advocate for anonymized data mining. Yet AdWords makes my gut clench every day, and it doesn't even know which porn/gambling/jihadist/American-League websites I've been surfing.

FTC chairman's stance
Enter FTC Chairman Jon Leibowitz, who has been staging workshops on online privacy and who himself has been a loud advocate -- for the online-ad-business to self-regulate seriously, or else. In a chat last week, His Excellency made clear he's absorbed the message of the IAB, DMA, AAAA, ANA, BBB and I think also the NBA:

"Obviously," he said, "there is a benefit from things like behavioral marketing. Consumers get more targeted ads -- which generally, but not always, they like. And more importantly than that, it supplies the free content on the internet that we all use and have grown to expect." He also called self-regulation "more nimble" than government enforcement and praised the industry for being responsive to privacy issues.

Then he uttered the four words that make gonads shrink from Madison Avenue to Silicon Valley: "On the other hand." Um, on the other hand?

"Imagine that you were walking through a shopping mall, and there was someone that was walking behind you and taking notes on everywhere you went and sending it off to every shop or anyone who was interested for a small fee. That would creep you out; that would be very disturbing, I think, for most people."

Uh oh. As the FTC goes before Congress to seek more rule-making authority, the chairman has seized not on the rational but the visceral. He also made clear that even in an opt-out world, consumers had better be extremely well-informed about what, by default, they face.

"You can't take away consumer rights by burying them in the fine print," Leibowitz said. "That would be an unfair or deceptive act or practice under the FTC's bread-and-butter statute and a violation of the FTC act."

And there is no further rule-making authority required to enforce that.

Bob Garfield, now a consultant, has reported on advertising, marketing and media for 28 years.
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