Online Ad Industry Assesses Latest Call for 'Do Not Track' List

FTC Chairman Leibowitz Casts Doubt on Self-Regulation Efforts

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NEW YORK ( -- One of the online ad industry's worst fears -- aside from federal online privacy legislation -- is that Washington will mandate a national "do not track" list akin to a "do not call" list for online advertising.

That's why the industry is carefully parsing comments made by Federal Trade Commission Chairman Jon Leibowitz, who told members of the Senate Commerce Committee in a hearing Tuesday that "we are gravitating to an opt-out of behavioral targeting [for multiple sites] through a single entity."

The idea of a universal opt-out is nothing new, and the industry has its own version in place through a trade group the Network Advertising Initiative, and companies such as Yahoo, Microsoft, Google and data exchange Blue Kai all allow consumers to opt-out of ad targeting.

But the idea of a federally-mandated system is reviving a long-held concern. "It could be devastating to the online ad industry," said Mike Zaneis, VP for the Interactive Advertising Bureau. "But it's not a new concept. It was first proposed a few years ago. It's not groundbreaking."

Indeed, behavioral targeting is becoming a more standard practice, as more advertisers continue to buy portions of the audience versus a specific set of destinations or publishers.

"The fastest growing segment is audience-based buying for sure," said Bill Todd, general manager for ValueClick Media. "We're also seeing some of the best performance from those areas. We see significantly higher click-throughs on audience-based buying than on channel buys."

Counselors to the advertising industry were keen to note that FTC Chairman Leibowitz has already done constructive work in the area of consumer privacy.

"I think all that the chairman was reflecting [on] was trying to find some simple choice for consumers, and a broader transparency -- and we support that," said Stuart P. Ingis, partner at Washington law firm Venable and counsel for a broad coalition of advertisers, including the Direct Marketing Association, Microsoft, Google and Yahoo. "But a proposal like this could stymie and prohibit such fundamental practices to the economy and internet offerings."

Still, some senators, such as Claire McCaskill, D-Mo., said behavioral targeting seems "creepy," and others expressed similar concerns over consumer privacy, which may be a fairly complex issue to legislate, but one that often plays well to constituents in advance of an election season.

But while that may be the case, some experts say that, given the increasingly complex arrangements in the online ad ecosystem, most consumers are unaware of how tracking works.

"Even people who have grown up with the internet do not necessarily understand it," said Joe Turow, a professor at the Annenberg School of Communications at the University of Pennsylvania. Mr. Turow was part of the witness panel that testified in front of the Senate Commerce Committee yesterday. "I see that with my students all the time," he continued. "They know how to do Twitter, but if you ask them the basis for how the economics of the online business work, they have no clue. They don't understand how the bits are connected behind the screen."

Mr. Turow, however, said that stringent regulations around the online ad industry could stem growth, but that some measured regulation may be necessary.

"With a lot of online privacy and tracking, it's the kind of thing where people have to do research to find out how it all works," he said. "They have a life. Most people go online to do what they need to do and then get off. They don't have time to figure all this out."

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