Self-regulation: 4 A's, ANA issue online data warning

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Consumer profiling and online privacy were key issues at last week's @d:tech Internet marketing show in New York, where Daniel Jaffe, exec VP-government relations at the Association of National Advertisers, and John Kamp, senior VP of the American Association of Advertising Agencies, warned the online industry to embrace self-regulation or risk government action.

Here are excerpts from a Q&A session with Advertising Age Interactive Editor Bradley Johnson.

Advertising Age: There have been a lot of meetings in Washington about Internet privacy. How important is the Federal Trade Commission's Nov. 8 meeting?

John Kamp: You never know for sure how important a hearing is going to be coming into it. But in this one, I think the FTC is looking at the right thing. They're trying to go to the next level on online privacy and make sure that all the people who are gathering data online are visible to the consumer, that there aren't people out there that we don't know of when we're surfing the Web that are gathering data. That's a reasonable thing for [the FTC] to do and I applaud them for doing that.

AA: What's at stake?

Mr. Kamp: What many of the consumer groups are trying to do with this meeting is to delegitimize all database marketing. Much of the discussion that they intend to bring to this meeting is to try to instill fear and distrust in all of database marketing, to try to convince the FTC and other policy makers to take on this whole issue, not just online.

The very question itself to me is kind of scary for our industry, because database marketing is what marketing is. Good advertising is well-targeted, and you only can target advertising well in this kind of environment by doing good database marketing.

AA: Where does the FTC stand?

Mr. Kamp: It is a very close vote. There are four commissioners right now. It could be an even split. But what I'm most concerned about is the setting of the public policy agenda that might not be done at the FTC, but would be done elsewhere in Washington. We're going into an election year.

One of the things we're concerned about is a privacy vote--a vote in favor of government regulation of privacy--might be considered a "free vote" by some members of Congress.

AA: Where has the industry made the most progress in addressing privacy?

Daniel Jaffe: There is enormous progress in the major advertisers, the major sites coming up with privacy policies. We moved in our own association from about 6% of advertisers having privacy policies in just six or seven months to over 67% of our members having them.

AA: How bad of a job has the industry done in promoting the consumer benefits of data gathering?

Mr. Kamp: Let me put it another way, the positive spin. We haven't done as good of a job as we should, and we're dedicated in FAST (industry group Future of Advertising Stakeholders) to doing a much better job. We're talking about a consumer (online public service announcement) program. It may be time for us to begin to look [to] offline [PSAs] to do a better job of [reaching] the American people--those who are not online.

AA: Where has the industry not made progress on the privacy issue?

Mr. Kamp: I sort of turn it another way. If you look at the "sweeps" (studies) from the FTC, the last two sweeps have been to look to see if there is a privacy policy at all (on sites), and the inquiry ended there.

What the sweep will be looking at in March of 2000 is not only is it there, but (what) does it provide. If you do gather data online, is the choice that you offer sufficient? Do you provide adequate security for your data? Do you have some kind of audit mechanism to make sure that data is secure? Do you offer people some type of access to correct mistakes?

What the FTC is doing now, and the government is increasingly asking, is for self-regulation to go beyond just having a privacy statement to having more depth.

Mr. Jaffe: We've been very fortunate in that the government--there are certainly major exceptions--has generally understood that this is an incredibly fast-developing new medium, and that they should be careful about jumping in too soon, because none of us on any side [has] really learned enough to really understand how to do this right. And so, they have allowed business a fair amount of leeway to solve these problems.

But we've been told by our friends--not our enemies--in government that the time has run out. That now we either in the next year or so really show real movement in this area, or the government will step in.

AA: How big an issue will data collection and privacy be in the 2000 elections?

Mr. Jaffe: If you see the polls, the polls say that consumers are concerned. Somebody is going to run with this issue. The question is how they run with this issue.

Mr. Kamp: It would be unusual for something this esoteric to become a presidential campaign issue. But there are some things about it that make it possible for it to be a campaign issue. I have taken the whole concern about privacy, as it shows up in the polls, as a concern more about technophobia. One of the safe places to put that concern is to say, "Oh, I'm concerned about privacy." If there is that general feeling about it, and it's a "free vote"--a vote to protect privacy becomes an easy thing for someone to do--it could become something that could be talked about in the public and could become a presidential campaign issue.

But the bottom line is I don't think it will. I think it's too esoteric for a presidential campaign.

AA: What can the industry do to keep the government at bay?

Mr. Kamp: Two things. We have to do a much better job of communicating to the American public the value of target marketing, the advantages to consumers to be able to better ensure that the marketing that comes to them has to do with matters that they're interested in. We just have to do a much better job of creating the atmosphere where people understand that this is a thing that works for the American public, not something that's a pariah.

And the second thing we have to do--the thing we've been focusing on--is to make damn sure that every Web page has a privacy policy up there, that people do what they say, and they do all of the things on security, audit processes and other things to make sure that people actually have a safe place; that when they go to the Web, they feel safe because their experience is that their privacy is more protected there than it is [in] many other places in our society. We just have to make sure that people experience that in ways that work.

AA: You've painted a picture where the industry has done a compelling job of addressing self-regulation to keep regulators at bay. If that trend continues, then Ad Age readers can simply forget about the issue?

Mr. Kamp: I don't think it matters whether the legislation passes or not. [Companies] must have privacy policies on their Web sites and they must follow them.

They must do that for two reasons: The first is important to multinational companies--if you don't do it, Europe won't let you operate there. And the second reason is that consumers are concerned. Three-fourths of the consumers who don't buy on the Net say that they're not buying on the Net because they're concerned about their privacy. If we don't fix this problem, we don't have consumers using this medium.

Copyright November 1999, Crain Communications Inc.

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