Shop.org -- Targeting, the War Over Data

Josh GordonHands down, my favorite aspect of the show (besides Rock Band...I had a feeling online retailers were all latent rockers) was Tuesday' s round table entitled "Privacy and Behavioral Targeting: A Capitol Hill Perspective." I attended for a couple of reasons. First, Knotice does have an interest in the future of BT because it is one of our capabilities (though it is specifically and intentionally limited to onsite, domain level targeting). Second, I'll admit that I'm a total geek for government. Party affiliations don't matter, I'm completely fascinated by the pomp and process of government. Feel free and post jokes at my expense.

A couple of quick notes on the folks at the table. The table was hosted by Elizabeth Treanor-Oesterle (VP, Government Relations Counsel for the NRF) and Paul G. Martino (a lawyer from Alston & Bird, and a Beltway vet). We were joined at the table by Thomas A. Cohn, a lawyer who recently spent 17 years at the Federal Trade Commission. It was a great perspective to balance out the table. There were two attendees at the table and only one other technology company besides me. I find this surprising. The stuff discussed at the table is crucial to the future of the industry as a whole, not just consumers. Seems to me if tech companies were interested in investing in technology built for the long haul, they’d want to learn how to avoid being the next NebuAd.

Speaking of NebuAd, they were a hot topic among those seated around the table. The folks hosting the table believed NebuAd had great technology and was a company on the rise. According to Martino, when consumer advocacy groups targeted NebuAd (how about that for turning the tables) for an infringement on customer privacy, the company actually welcomed the opportunity to testify before Congress. They thought they’d have an opportunity to put their name out there and actually gather customers based on the “there’s no such thing as bad press” rule of public relations. Turns out that was a slight miscalculation, as their meteoric rise was followed quickly by an equally rapid fall, and the consumer advocacy groups winning the first round.

The NebuAd portion of the conversation wrapped up with a bit of advice from the table hosts — don’t make a splash. They discourage making a splash with this type of technology now because of the potential backlash.

Okay, let’s get to the rest of the debate. There are two aspects — (1) what legally constitutes private versus public information online and (2) who enforces violations? The role of online marketers in all of this is to try and preserve the flow of information (data) between the online retailer and their direct consumer. According to the folks at the table, consumer advocacy groups pushing for privacy online have historically attacked how the data is collected. While that issue still has a seat at the table, they have shifted focus to include the other primary aspect of BT — how the data is being used once it’s collected.

Consumer advocacy groups are pushing for comprehensive privacy legislation that will mandate opt-in and opt-out protocols whose scope will essentially include the entire Internet. So, if this privacy legislation were to first make it out of committee and then pass, who would regulate and/or enforce them?

The FTC enters the conversation here, though their discretion is no longer crystal clear. Are they a regulatory agency? Are they an enforcement agency? They were originally designed to be an enforcement agency, but are attempting to stretch those boundaries according to Martino and Treanor-Oesterle. Those at the table are concerned about precedent here, among other things. What do you all think — should the FTC enforce or regulate and enforce legal violations of consumer privacy (as defined by Congress with the help of consumer advocacy groups)?

Here’s a scary tidbit. No one at the table (insiders and all) believed Senators, members of Congress, or any of their staffers actually know what they’re talking about when it comes to defining private information online or how the technology works. The quote from Martino is, “Senators and staffers are devoid of understanding the marketplace.” Yikes.

But, before I’ve scared anyone off, there’s hope for some forms of targeting. The ire of the consumer groups is focused primarily on affiliate and ISP level targeting, not at all on domain or onsite level targeting. It doesn’t appear that onsite targeting will enter the conversation because it’s hard to quantify legally. It’s no different than going into a physical store and seeing conditioner next to shampoo on a shelf because it’s a complementary product. Once you’ve walked into a store, you’ve effectively “opted-in,” just as once you’ve entered a website to shop, you’ve also “opted-in.” The debate becomes obviously silly if onsite targeting ever comes under attack.

Here’s another ray of hope: Martino and Treanor-Oesterle are not only gifted but passionate about this issue, about the rights of online marketers and they strongly believe that the technology enables better shopping. They’re pushing back on the attacks from privacy groups on how the customer data is collected and what it’s used for as well as the FTC’s attempt to shift their scope and purpose.

Before I leave you contemplate all of this, I’ll reiterate a point I’ve made on this blog before. I can’t help but wonder if this debate would have happened if a public relations firm had stepped in and articulated the reality we live in by saying, “You know what, industry? Behavioral Targeting is a bad, bad name for this stuff. Consumers don’t want to feel targeted, like Big Brother is following them around trying to get them to spend more money. Instead of Behavioral Targeting, let’s call it Marketing to Un-Authenticated Site Visitors.” Though it’s far less catchy, it’s more descriptive and less likely to be the bamboo under consumer advocacy groups’ collective finger nails.

Okay, this entire debate on consumer privacy basically boils down to one central issue. Who controls customer data, individual consumers or online marketers? The privacy groups argue that the consumer purchase data is a private, intellectual property right; whereas online retailers believe there is nothing wrong with knowing what online customers have looked at and purchased before.

Let’s get to the questions! What do all you loyal readers believe? Who owns the data? Are privacy groups going after this simply because online shopping has quantifiable data? Is a consumer’s individual data theirs as a intellectual property right? Should the FTC’s scope increase?

4 Comments

  1. Ted S
    Posted September 20, 2008 at 1:27 am | Permalink

    Great report, thanks for sharing.

    It sounds like the future of data really is stuck between a couple of rocks with the wrong people left to decide its fate. I know it’s a tangent subject here but one has to wonder how long it will take before we see enough “internet era” types in political office to represent something so much different from anything before. As things stand I worry more about laws being passed that make it nearly impossible for smaller companies and startups to comply with data rules than the industry being limited. Limits on data are one thing when everyone limited has an entire compliance team but online it’s just not the same and the people deciding what goes into place just aren’t connected to the dot-com world. Even with staffers aiding them how can someone who never logs on hope to expand logging on?

    That all said I agree with your statement. A lot of this gets back to naming conventions and public perception. A few years ago my family thought cookies were bad because some news channel reporting on mis-uses of them. Unfortunately we as an industry tend to name things literally without long term thinking about how customers will read into them and the result here is that I suspect many people think targeting is far more invasive than it is.

    That isn’t to say that it shouldn’t be looked at however. There always needs to be some way of insuring consumers are protected but the privacy organizations and legislative bodies need to understand that along with the dangers of tracking too much comes the benefit of marketing effectively. Seeing the right ad and offer is not detrimental to the customer… in fact I would argue that if anything, it’s preferred.

  2. Posted September 20, 2008 at 9:13 am | Permalink

    Wow, thanks for the insightful comment, Ted. Great point on cookies, too.

    It will be interesting to see what happens as more savvy types begin to land in political offices. It’s extremely important that both sides of Internet issues are represented. Right now it appears as though the debate is heavily one-sided in favor of decision-makers that don’t understand the complexities of what they’re dealing with, or the enormous upside of the technology.

    Hopefully folks like Martino and Treanor-Oesterle will erode some of the misinformation floating around the beltway about technology.

  3. Posted January 30, 2009 at 9:27 am | Permalink

    Not to be Pollyannish, but the “plus” side of behavioral targeting is that — if done right — the customer can more quickly find the products and/or information they need. Just like in the store, where the conditioner is next to the shampoo, the customer finds a quicker path to what they’re looking for. Combine this with the implicit agreement to be tracked that comes with entering the Website/store, it seems like that’s a win-win for the buyer and seller.

    • Posted January 30, 2009 at 9:46 am | Permalink

      By all means be Pollyannish! 🙂 I agree 100% that the value to the customer is off the charts. The real issue is the industry’s ability to fight and win the PR battle, and tamp down the fury of cautious consumer advocates. BT is interested in saving people time and creating a personal experience with the traditionally impersonal Internet.

      Our new President has yet to announce the new head of the FTC. When that happens, it will be interesting to watch the Commission’s new direction.


One Trackback/Pingback

  1. […] Riley provided some interesting commentary on the state of the so-called “behavioral targeting” industry. Lots of statistics get thrown around about how 50% of marketers prefer to use BT whenever possible, and consumers are becoming increasingly accustomed to and accepting of these technologies. All that information is great and encouraging. But, without true, widely-accepted definitions of BT types, the growth and adoption of these technologies is stunted… and the decision makers in Congress who govern the impact of privacy laws on the industry will remain uninformed when passing laws. […]

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