Best Little Blog

Self-Regulation No Longer An Option

It's no secret that the behavioral marketing industry has been working to implement self-regulation policies for the past year. The initial purpose of this was to avoid impending legislation that the government is exploring due to concerns brought forth from advocacy groups about consumer privacy and data protection online. The thought was if we could self regulate, the government would be appeased and the threat of litigation would go away. Well, that really isn't the case. In my opinion it's not 'if' legislation will come -- it's 'when' it will come and 'what' will that legislation be.

Now, I'm not predicting that legislation can come any day now -- this is a complex issue. Complex when you take into account the number of forms of behavioral targeting available, the fact that this is a worldwide issue, and that this legislation needs to take into account how to speak to new and emerging technologies in the mobile and RFID sectors.

While I don't believe we aren't going to prevent legislation, I do believe that can still do something about it.

My hope is that our industry would be open and able to quickly change our position. Will we continue to fight or immediately jump in to help craft it? Remember the telemarketing industry, if you will. They were given some of the same warnings we have received, and they chose to fight legislation until the biter, biter end. I think that if they would have accepted that legislation was inevitable and worked with legislators that things could have turned out very differently for them. I believe the same can be true for our industry.

We live in a new environment, in a world that is leaning more and more towards regulation and legislation. There is no way that those who are pushing for get strict measures in place are going to just go away. In fact, their voices are going to get louder as new and more aggressive forms of marketing come in to play.

Do I think legislation in our industry is going to really solve anything? No, unfortunately I don't. The issue is growing too complex to be dealt with via regulation. I still think it will be up to those in the industry to fight the bad characters that will enter our space, much like we are working to do now with self-regulation. It's the complexity and the confusion that legislation can cause is what is the most concerning. Will the powers-that-be truly understand what is going on inside our industry? Will the future legislation bring innovation to a halt? Hopefully not if we give our cooperation and input into the process. That decision is completely up to us -- and I suggest it's time.

What a behavioral opt-in world looks like

Saul Hansell from The New York Times sat down with Representative Rick Boucher (D-VA) to discuss his priorities as the chairman of the house subcommittee on communications, technology, and the internet. When asked about privacy concerns with Google's behavioral ad targeting capabilities, Boucher stated, "That would clearly need an opt-in."

He isn't referring to deep-packet inspection; this is for common behavioral targeting that generally uses non personally identifiable information. As an industry we need to step up our education game to legislators. If you disagree or find yourself on the fence, allow me to present what the future of advertising (online and offline) might looking like should opt-in become the rule for behavioral targeting.

Online behavioral marketing disappears
Opt-in for behavioral advertising is not a viable model -- it's an issue of scale. The math behind, the market potential for, and the methods to create a reasonable opt-in scenario don't exist. I don't believe anyone has a firm grasp on how much of the market is behaviorally driven. There are a few studies that attempt to quantify the revenue driven by behavioral advertising, but no one knows how deep this form of marketing penetrates ad networks, publishers, and search. If you also factor in simple targeting features that rely on cookie data to increase campaign performance, I wouldn't be surprised if 20-30 percent of the $25 billion market would be eliminated off the top.

Prices drop
Behavioral targeting produces targeted ads, which perform better than non-targeted ads. With greater performance, comes greater value. Without targeting, advertisers will pay less money for less effective ads, and publishers can expect CPM erosion.

Punch the monkey!
As CPM drops on display inventory, the amount of untargeted ads we see will substantially increase. Dancing aliens and that damn monkey will reign supreme -- cheap, untargeted ads everywhere. 

Aggressive interruption advertising
The ecosystem will do what it can to increase ad performance. As innovation stalls, expect run-of-network ads to return, and to be even more aggressive than ever. Ads will have to be more interruptive, so screen flyovers, page takeovers, interstitials, and other "must view" ads will become the norm.

Publishers will seek new answers
Some will invest in ad sales teams to increase revenues, as network ad volume will continue to decrease. This will further fragment the ad buy for advertisers, now buying directly from a few publishers here and some networks there to get the reach they want. Some publishers will decide it's not worth the effort and discontinue producing original content.

Search monopoly increases
Search will be the only game in town that is targeted enough for all size advertisers, while display will work only for the few advertisers at the top. Advertisers interested in building awareness will buy ads on name brand sites, and CPM's will increase on those sites. Everyone in the middle to low end of the market that can't afford name-brand sites will turn to search, and prices will increase. You think Google is a monster now? Just wait.

Offline pressures
There's no other form of marketing (at least that I'm aware of) that's Opt-In only. Email marketing isn't. Information bought and sold by credit card companies that then send you an offer isn't. If they can regulate similar forms of marketing online, regulation may be coming to the offline market as well.

What does this mean for consumers?

• Ads will still appear; however now less relevant and more aggressive.
• Valuable services will disappear, and the quality of free-content will decrease.
• Paid content/services will increase.
• Dancing aliens will rejoice and monkeys will once again fear the floating bull's-eye.

Based on Boucher's statements about the need for opt-in permission, our industry has to change our perspective -- and fast. It's not about if there will be legislation. It's about what will the legislation be. Remember the telemarketing industry? It was given similar warnings, and it chose to fight legislation. Maybe if it would have worked with legislators, the result could have been different. I believe the same for us.

Is legislation is going to solve anything? I don't believe so. But I do believe it's coming, and now is the time for us to educate, educate, educate. Opt-in isn't the solution for behavioral marketing. Let's help decide what is.

Should Advertisers Play A Role In The Privacy Debate?

Now that behavioral targeting has become more pervasive (and more effective), it is being talked about not only by publishers and advertisers, but also by privacy advocates -- organizations like the NAI and IAB and, in Washington, the FTC.

At issue is if BT players are doing enough to disclosure to consumers how BT works and offering them the opportunity to opt out of being tracked by BT vendors and publishers. There has been much discussion about how to regulate behavioral marketers; but no solution that satisfies everyone.

The BT industry so far has contended that website privacy policies are sufficient disclosure since many of them contain links to opts out opportunities like the NAI site. Google and Bluekai have announced 'preference pages' or registries that allow Web users to say what type of BT they are interested in receiving. But, the other, more common option is to put that information in the Privacy Policy of the site. But the problem with that is that no matter where disclosures are placed on the service provider's site, most people won't ever see them. How will a customer visiting Retail SiteX know that Company Y is going to use their browsing behavior to later display relevant ads to them as they surf the Web on Network Z? The average customer won't. The only way a customer will know what forms of BT advertisers are using is if the advertisers themselves tell them.

I think that it's time for advertisers to step up in this privacy debate. Thus far the pressure for disclosure has been placed on networks, behavioral marketing providers and publishers. The key players in those industries have done a good job of becoming more transparent (though there is still work ahead of us), while advertisers haven't been asked to do anything. Advertisers are clearly benefiting from behavioral marketing, and its time they disclosed what type of behavioral marketing they participate in, and allow customers to opt-out. How they do this is open for discussion: Tag each ad with an opt-out of future ads from the same company? Put a notice on manufacturer's page with the headline "Did You Know We Are Tracking You?" that links to a kinder, gentler explanation?

How should an advertiser disclose that information?

We at FetchBack have asked advertisers we work with to include information in their privacy policy that says they utilize retargeting services, and provide a link to NAI to opt-out of FetchBack's retargeting network. We feel it's an important step for any organization involved in behavioral marketing to take; at least if the industry is serious about being more transparent and self-regulating.