Friday, March 21, 2008

Consumers, Marketers, Lawmakers, and Advocates Don't Get It

MediaPost is reporting on a pending bill in the state of New York that would regulate online ad targeting. The measure would require that companies monitoring users' Web-surfing activity for marketing purposes--which is pretty much every news and entertainment site--tell users about the practice and give them an opportunity to opt out. The bill also requires that companies get affirmative consent before merging personally identifiable data--names, addresses, phone numbers--with tracking information collected anonymously.

Of course, the article contains many quotes from both sides of this issue. "Absent consumer harm, why are we rushing to regulate this space--a medium that has been nothing but kind to consumers and provides free content and services to them?" says the fellow from the Interactive Advertising Bureau, making advertisers sound as selfless as Mother Theresa.

"The harm can be cumulative over time--like mercury poisoning from eating tuna," says the gal from the World Privacy Forum, equating the viewing of banner advertising with slow, agonizing, painful death.

Everyone is right. And everyone is wrong. None of the parties--not the advertisers, the consumers, the advocates, or the lawmakers--totally get it. Nor do I, but let's explore the issues from the two different perspectives.

Privacy Advocates and Consumers:
There's a growing industry in consumer privacy advocacy, and the people who work for advocacy groups don't get paid to be reasonable. They fight tooth and nail for the idea that companies should never collect or use consumer data without permission. Their stance isn't unreasonable--how can one argue with the idea that people should be permitted to understand what's being collected and control their own data?

But the stance is also rather silly, considering how little consumers seem to care about this issue. Sure, when asked by survey takers, consumer will express concern about their privacy online; and then they'll post the most personal of data and photos about themselves on Facebook and MySpace.

And if all these consumers were really concerned about privacy, wouldn't they visit the privacy policies on the sites they frequent? Trust me, they don't. A 2002 survey about privacy found that nearly half of consumers assess the visual design of a site when determining the site's credibility, but less than one percent mentioned the privacy policy. (When's the last time you visited a privacy policy page? And when you were last presented with the choice of accepting a Web site or software user agreement, did you read it thoroughly?)

The fact privacy advocates are so vocal about an issue to which consumers have very thin personal commitment doesn't make it wrong, but it does mean they should be cautious about the ramifications of the bills they're pushing. Consumers don't understand that laws such as the one in New York could have a profound impact on their access to free information, features, and entertainment. If tomorrow,, and disappear because the New York law makes it impossible for those sites to find a profitable economic model, will consumers throw a parade for privacy advocates or run them out of town?

As for consumers themselves, they don't think much about the free entertainment and information they enjoy online and in other media, but they should. That free news and content isn't free to the people who staff news bureaus, pay reporters and cameramen, buy cameras and editing equipment, and maintain Web sites and infrastructure. And the problem isn't limited to the Internet; all those ads you're Tivoing past while watching "Scrubs" were supposed to pay the $2 million per episode it costs to produce the show. (Zach Braff doesn't come cheap, you know!)

If consumers stop paying for content with their attention, they'll instead need to start paying with their wallets, and this is what may happen if laws like the one proposed in New York are enacted. If CNN loses the additional revenue that comes from being able to target ads based consumer data, their available choices to compensate will include many options consumers won't like--going dark, charging membership fees, or finding more annoying and disruptive ways for advertisers to reach them, such as forcing them to watch commercials or see ads before accessing news.

Finally, I understand the legitimate concern about so much data being collected and maintained by so few organizations, but really how different is this than the way smart business has operated for centuries? Consider the proprietor of Oleson's Mercantile from Little House in the Prairie: He knew everything about everyone in town, including when their babies were due, what medical issues they faced, and the brand of their favorite tobacco; as a result, he could provide better services and suggest new or different products his customers would appreciate.

Wanting to know your customer in order to provide them with products, services, or advertising that might be more appropriate and welcome shouldn't be an earth shatteringly dangerous idea.

Marketers, Content Producers, and Web Site Operators:
Based on my thoughts in the previous section, you might think that I have some empathy for the plight of content producers, marketers, and Web site operators. I do, but not much.

Here's a simple motto to live by: Give consumers what they want!

Here's another: Address consumer concerns before lawmakers do!

The fact this is even an issue should be embarrassing to people who offer free content sites and the folks who advertise on those sites. Instead of being forced to take excessive and unprofitable actions by the state, they should proactively and unilaterally be taking moderate action. This action should include informing consumers on the value to them of online tracking, educating them on what is being tracked, and giving them some reasonable options.

Education is a big component of the problem. People hear about "Web site tracking" and they imagine far more nefarious and wide-reaching data collection than is actually being done. In most cases, the tracking and use of consumer data is as simple as: This consumer is looking at auto reviews, is 21 years old, and is male--let's serve him an ad for a Scion. Or, this consumer is looking at parenting pages, is 30 years old, and is female--let's serve her an ad for Huggies.

I don't agree with eMarketer, which claims the proposed New York law "could be a blessing in disguise," because the law will inevitably go farther and be more costly than would simple, common sense and voluntary actions on the part of Web site owners. However, eMarketer is correct in their assessment that taking some action could benefit Web sites: "Clearer opt-out and opt-in mechanisms for online display advertising will likely make it more effective. It's similar to e-mail marketing: opt-in recipients are hugely more responsive than those who have not agreed to see the marketing messages."

Some of those Web sites feel they are already doing enough, since they are voluntarily complying with seven-year-old voluntary standards. In fact, the new proposed law is almost identical to the voluntary standards in place on the largest and most trafficked sites, with the primary exception being the proposed law's financial penalties for violating the rules.

I'd suggest that merely adhering to the voluntary standards is not sufficient, not because I say so but because if they were sufficient, there would be no call for new laws. It is clear this situation is being mismanaged by folks who have a lot to lose. A proactive campaign to inform and educate and to provide reasonable choices to consumers may prevent much more stringent and problematic steps in the future.

I hope site owners and marketers use this situation as an opportunity to act. Those actions must extend beyond simply lobbying in Albany and include proactive steps that will put marketers in the lead on this issue rather than playing defense.

No comments: