Time Will Tell…

What a difference six months makes! Six months ago, the staff of the Federal Trade Commission released a set of proposed principles to guide the development of self-regulation in online behavioral advertising, which it described as an “evolving area”. Industry groups reacted by agreeing to a set of principles focused around ensuring that all behaviorally targeted ads carry a label leading to a behavioral advertising notice and a link to allow users to opt-out. Many privacy advocates responded by renewing their call for national privacy legislation. At the Future of Privacy Forum, we felt strongly that regardless of self-regulation or legislation, work needed to be done to figure out how companies who wanted to be transparent about behavioral ads could do so in a way meaningful to users. Together with WPP and a number of other leading companies, we launched an initiative to develop effective messages to communicate with users about online data use and hope to be able to provide an update on our work before too long.

When announcing the principles, the FTC referenced years of study and workshops and said “The purpose of this proposal is to encourage more meaningful and enforceable self-regulation to address the privacy concerns raised with respect to behavioral advertising.” In developing the principles, FTC said its staff was “mindful of the need to maintain vigorous competition in online advertising as well as the importance of accommodating the wide variety of business models that exist in this area.” The FTC explained: “The proposed principles acknowledged that behavioral advertising provides benefits to consumers in the form of free content and personalized advertising but noted that this practice is largely invisible and unknown to consumers.”

A piece in today’s New York Times, reports that the new head of the Bureau of Consumer Protection at the Federal Trade Commission, David Vladeck has embarked on a “broad mission to redefine how the Commission look[s] at online privacy” and that he has “outlined plans that could upset the online advertising ecosystem” . At the same time, the article reports Mr. Vladeck as saying “We’re not committing ourselves to imposing regulation. What we would like is to figure out useful tools and a more comprehensive way of looking at privacy protections that may obviate the need for rules.” Still, he observed that “Privacy policies have become useless, the commission’s standards for the cases it reviews are too narrow, and some online tracking is ‘Orwellian.’” And he is reported to have said he would consider “requiring sites collecting personal data to get consumers’ assent whenever they visit the site (an “opt-in”).” He continued: “Let people vote with their feet. If the marketers are right, and the consumers like behavioral advertising, then it should be no big deal.”

Recall that in the February report, the FTC staff was careful not to suggest that opt-in is the new paradigm, writing “Every Web site where data is collected for behavioral advertising should provide a clear, consumer-friendly, and prominent statement that data is being collected to provide ads targeted to the consumer and give consumers the ability to choose whether or not to have their information collected for such purpose” (emphasis supplied). Thus, the door was open to effective opt outs as well as opt-in.

But, six months later, based on the New York Times report of its interview with Mr. Vladeck, online advertisers may be dealing with a regulator that believes that “opt-in” is the new required default. Time will tell. But we continue to believe that the regulatory and legislative environment should not be the only reason that companies should be seeking to innovate around the ways they communicate to consumers about how data is used. As more and more information is used, across platforms and devices, we are heading for a day when behavioral advertising will either feel incredibly intrusive to users – or it will be a valued and appreciated as a relevant and personalized experience. If industry focuses on meaningfully engaging users and ensuring that the experience is transparent, profits and personalization are surely possible. If behavioral advertising continues to be largely invisible to most users, regulatory stress is certain to continue and soon we will see consumers voting with their feet.