Nuts & Bolts: Eye on Privacy

During the past few months, a great deal of attention has been paid to the issue of online behavioral advertising (OBA). It’s been driven mostly by large companies in the Internet advertising space and trade associations responding to a set of principles proposed by the Federal Trade Commission late last year and proposed legislation in New York and Connecticut.

Most of the responses from trade groups and Internet advertisers to these regulatory/legislative initiatives focus on self-regulatory regimes that are in place to balance the privacy interests of consumers with the business models that make much of the content we enjoy on the Web available for free or in a heavily subsidized fashion.

But, there seems to be a gap between the industry responses and marketers’ understanding of the steps they must take to benefit from OBA. In many responses, there’s a theme of consumer education. I submit that marketer education on this topic must continue. As I once heard Pat Kachura, the Direct Marketing Association’s SVP of ethics and consumer affairs, say, “Education never stops. It’s continuous because new entrants are always coming into the market.”

To be sure, OBA is one more manifestation of the democratizing effect of the Internet. For retailers with razor-thin margins, it’s another tool that promotes competition against bigger players. For consumers, it means the same ad space is used more effectively; as Randy Rothenberg, president and CEO of the Interactive Advertising Bureau, pointed out in some of that organization’s vocal commentary about what would happen if OBA were limited by onerous regulation, “Advertising relevance will diminish, and spam will have a renaissance.”

While balancing the needs and concerns of both groups is not always easy, it’s nonetheless worth doing. Retailers are constantly challenged with soaring keyword search prices, the risks of inventory and merchandising, and the buffeting economy. For consumers, too, saving money on products and services, learning about new products and services, driving less to get them, and enjoying advertising-subsidized content are all incredibly valuable benefits.

Personally, I think of OBA as another way I can choose to let retailers compete for my business. And, practical rules of the road for competing for that business are laid out by various marketer-facing organizations, including the DMA, IAB and Network Advertising Initiative.

All of these rules are premised on fundamentals that have driven targeted marketing for decades. For example, Article 38 of the DMA’s Guidelines for Ethical Business Practices gives advice to marketers on how to strike the right balance between the efficiency and effectiveness of personalized Web advertising while providing consumers with notice and choice about participating in such programs. The subsection delves into specific topics of data transfers, security and other important considerations that marketers should take into account in any OBA program. Here’s an excerpt:

If your organization operates an online site, you should make your information practices available to visitors in a prominent place on your Web site’s home page or in a place that is easily accessible from the home page. The notice about information practices on your Web site should be easy to find, read, and understand so that a visitor is able to comprehend the scope of the notice. The notice should be available prior to or at the time personally identifiable information is collected.

As a former employee and a current member of DMA, I’m proud to say that the association adopted this self-regulatory practice in 2001. Article 38 can be found easily at http://www.dmaresponsibility.org/Guidelines.

This guideline and similar self-regulation promulgated by IAB and NAI, which is updating its principles at the time of this writing, form the foundation for how marketers can take advantage of behavioral advertising to personalize the Web experience for consumers.

But marketers should not stop there. They also should look to build additional practices and controls that take into account the types of relationships they have with their customers and the specific types of data being leveraged.

All of these steps, if taken together, will form the strong protections consumers demand and deliver the promise of a personalized Web experience without the need for additional regulation.

Lou Mastria, CIPP, is chief privacy officer and vice president of public affairs at NextAction Corp., a Westminster, Colo.–based provider of cooperative data solutions for multichannel retailers. He can be reached at (908) 363-0983, or by e-mail at lou.mastria@nextaction.net.