Online Privacy Regs May Move Into the OpenBillions in targeted ads at stake in continued debate on high-profile issue 9/26/2011 12:01:00 AM Eastern
With the administration pushing broadband deployment
and adoption, protecting privacy in that online world
is getting traction. And given the increased attention, ISPs
and others are trying to make sure that does
not translate to overregulation of their space.
Upcoming elections could spur an effort
toward action on the high-profile issue, but
the Obama White House has been pushing
self-regulation, which sits just fine with industry
Both sides of the debate agree with what’s
at stake: the billions in targeted advertising
that relies on building online preference profiles, and the free-content model that drives
the Web. And under the banner of protecting
children and adults, many in Congress have
been pushing for a trust-but-verify system of
online protections that industry players fear
will take a big bite out of their business.
Putting an exclamation point on the issue
are current efforts by the European Union to
get U.S. companies to commit to tougher online
protections, along with upcoming Federal
Trade Commission and Commerce Department
recommendations that could provide
the basis for new laws.
At a Hill hearing earlier this month, MIT professor Catherine Tucker,
whose research the ad industry has used to make its point, said that
European-style privacy protections have done a number on the effectiveness
of online advertising there.
According to a study of the impact of EU regs, which include an optin
tracking regime that industry players in this country are trying to
avoid, online ads were 6% less effective.
That could be bad news for general news sites such as CNN.com,
Tucker says, since the biggest hit from behavioral ad restrictions was on
ads whose content “did not relate obviously to any commercial product.”
By contrast, ads that targeted surfers to sites for travel or baby tips
were least affected, since the content has already done the targeting—
surfers are likely to be interested in diapers or rental cars, for instance.
Tucker says marketers and Websites wouldn’t be the only ones adversely
affected by restrictions on behavioral targeting. Viewers might, as a result,
be bombarded with more “distracting” ads in an effort to get their attention.
Given that Republicans and Democrats would have a hard time agreeing
on the colors in the American flag, is there any real threat of new legislation?
Stephen Balkam, president of the Family Online Safety Institute (FOSI),
says yes. “I think there is always concern, simply
because it is one of the very few areas where
there is bipartisan support for something to
be done about protecting kids online,” he
says. And with an election coming up, “there
is certainly potential for not-wonderfullythought-
through legislation next year.”
Still, the Administration has been emphasizing
self-regulation, much to the chagrin
of some online privacy advocates. That perspective
is driven in part by the recognition
that targeted advertising supports all that free
online content that has come to seem like a
birthright of digital citizenship.
Balkam, for one, believes the White House
“gets it.” He cites the kids do-not-track bill
that has been pushed by Reps. Ed Markey
(D-Mass.) and Joe Barton (R-Tex.). He points
to “out there” proposals like an “eraser button”
that would “magically scrub” Facebook
postings or tweets from errant 13-year-olds.
“I don’t see Administration support for that,
and yes, I think this White House has been
pretty good at promoting the notion of self-regulation,” Balkam says.
The FOSI, whose members include the National Cable & Telecommunications
Association, Google, AT&T, Microsoft and Verizon, issued
a study two weeks ago showing that a quarter of the parents of kids with
smartphones were employing parental control tools, which Balkram says
is already more than those using the V-chip on TVs.
Balkam attributes that to the fact that Congress mandated V-chip technology.
“All innovation in the space pretty much disappeared,” he says.
While the study had no cable company backing, that doesn’t mean
the industry is sitting this one out. Balkam tells B&C to look for FOSI to
release a survey in early November, funded by cable companies—which
are among the leading ISPs—that focuses on kids and online behaviors.
As Balkam warns, if the government gets it wrong, “We could see a
decline in revenue, a decline in innovation and a decline in the ability to
provide free content. We have gotten very used to free services. I think
most of the administration gets that, but you never know.”